By Dave Porter

(AXcess News) Reno - Federal Regulators shutdown Nevada's Silver State Bank on Friday, marking the 11th bank to fail this year thanks in part to unscrupulous real estate developers around Las Vegas with political ties to Democratic Senator Harry Reid that borrowed on land slated for home construction.

A pro-Democratic AP reporter from Carson City tried to somehow soil Republican Presidential candidate John McCain's name by throwing up the fact that his adopted son from a previous marriage, Andrew McCain, had been a member of the board of directors of the Bank's parent company, Silver State Bancorp. (Nasdaq: SSBX), but for the most part it went unnoticed.  Andrew McCain had first joined Silver State's board of directors in February, but resigned in July for what he called "personal reasons".  The AP story pointed to a WSJ article on McCain's adopted son as if to say, 'the usually conservative Journal pointed it out first'.

Silver State Bank, which is (was) headquartered in Henderson, Nevada, was deemed insolvent by Nevada banking regulators and the Federal Depositors Insurance Corporation.

In a Statement released Friday, Nevada Institutions Division Commissioner George E. Burns said, "Silver State Bank's demise is of significant concern to Nevada's financial industry."

Silver State Bancorp's failure fell on the heels of 1st National Bank of Nevada's closing, which was seized by regulators in July.  1st National was headquartered in Reno and had 10 branches.

The last Nevada FDIC bank to fail was Dec. 14, 1990, when Frontier Savings Association, Las Vegas, failed.

While regulators laud over the fact that by stepping in behind the failed lending institutions, they're 'protecting depositors', in the case of Silver State Bank some $20 million of deposits will go unprotected.

Behind the failure of Silver State and 1st National Bank of Nevada were land developers who borrowed on land around Reno and Las Vegas that was slated for home development during the home-building boom when it appeared that homes could be sold as fast they were built.  Apparently the banks themselves never considered using the words 'risk or sufficient collateral' when lending millions to the developers perhaps because of the number of construction loans and ARMs provided to homebuyers.

Some depositors are angry at the fact that what appears to be a daisy chain of transactions made in good old boy fashion behind closed doors that stretched from the developer to the realtors involved were feeding home buyers into the very banks that provided the developers funding in the first place.

"No one mentioned investigating the deals that sank my bank," said one Silver State depositor, angry that his meager savings were put at risk.

Senate Major Leader, Harry Reid (D-NV),  took credit for the amount of financing being provided to Nevada's real estate community in a July press release in which Reid stated: "This is not a perfect bill, but we can be proud of our achievement here."  Sen. Reid also said "It addresses the root of the broader economic crisis - helping Americans keep their homes and keep their home equity."

Yet what Reid lauded was $99.8 million in Nevada's cut of $11 billion in mortgage revenue bonds that were part of the housing legislation passed by Congress which is earmarked for developers looking to construct low-income rental property, though it could be used to extend financing to first-time homebuyers or refinance subprime loans.  Critics say Reid's developer cronies who've supported his campaign in the past will most likely see the bulk of those funds for their own Vegas rental developments.

An additional $500,000 is being made available in Nevada in low income tax credits to develop affordable housing.

With a Democrat in the governor's seat in Carson City and Reid profiting from his personal ties to Vegas real estate developers, the odds of any kind of formal investigation into the lending practices of Silver State and 1st National will fall by the wayside.