FLT Gambling with Taxpayer Dollars?

“FDIC hits Cambridge bank with consent order” read the headlines in the 6/3/10 County Star newspaper. The story described how the U.S. Federal Deposit Insurance Corporation (FDIC) has taken drastic legal measures through a court order to bring the Cambridge State Bank into financial compliance before it fails.

At the Fish Lake Township (FLT) re-organizational meeting in April 2009, Supervisors Carter, Cupit and Larkin voted unanimously to designate the Cambridge State Bank in Isanti County as the official depository for the township. They made no changes to the designated township bank at the FLT re-organizational meeting in April 2010.

As of March 2010, FLT records show that more than $345,000 taxpayer dollars are presumably held by Cambridge State Bank for Fish Lake Township. Are these taxpayer monies adequately protected by the FDIC if the Cambridge State Bank fails? Current FDIC regulations provide for a standard maximum deposit insurance amount (SMDIA) of $250,000 per depositor per bank. Monies held in excess of $250,000 by a failed Cambridge State Bank would be lost to Fish Lake Township taxpayers. Recent FDIC regulation changes in the SMDIA will also reduce the current $250,000 per depositor figure to $100,000 effective January 1, 2014.

Given current warning signs and persistent economic instability, why would Fish Lake Township continue its risky business relationship with the financially unstable Cambridge State Bank?