Economic Crime- Collapse of Franklin National Bank Essay

Economic Crime- Collapse of Franklin National Bank - Essay Example The failure of the bank invited changes in the existing banking regulations as well as practice. The failure tempted the banking policymakers to devise new international banking methods. Cooperation was encouraged in the international financial markets so to avoid financial disasters in the future. During the 1970’s and 1960’s, many American banks were internationalized. This included the Franklin national bank also. This bank even acquired an international owner named Michele Sindona (Spero.1999). On October 1974 the US core banking sector was severely shaken by the demise of the 20th largest bank in the country, the Franklin national bank. The failure of the bank was mainly caused by mismanagement as well as fraud. The failure of the bank caused severe after effects in the economy as well as in the social setup of the country. Jail sentences were awarded to many bankers who were associated with the Franklin bank. There was a suicide in Italy. The share holders of the bank lost heavily. But the depositors of the bank were saved by the Federal Reserve form suffering loss. The bank was declared insolvent in October 8 1974. The assets of the bank were taken over by the European American bank. The Federal Reserve was responsible to save the world financial sector from a major disaster. Going back, the bank attained success under the chairmanship of Mr. Arthur. T. Roth. He joined the bank in 1934 and rose to the position of chairman. He remarkably changed the identity of the bank which was established in 1926 through a variety of measures. He changed the small time bank during the great depression times into one of the largest banks in the US history. He invested huge money in the build up process of long island. The capital of the bank when it was opened in 1926 was around $50000. During the downfall period, it had assets worth 4 billion$. Roth introduced credit cards and drive in