Word: depositer
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...history. The group of three dozen rescuers shuttled from one drab Government conference room to another, working 120-hr, weeks and pausing only occasionally to munch on fried chicken or hamburgers. Until the last minute, dozens of details were still undecided. But finally, William Isaac, chairman of the Federal Deposit In surance Corp., announced at a Washington press conference that the FDIC would put up $4.5 billion to rescue Chicago's failing Continental Illinois Bank. The commitment dwarfs the biggest previous U.S. bailout, the Government's 1979 guarantee to Chrysler of more than $1.2 billion in loans...
Since early May, Continental has been eroded by the most relentless run on a major bank since the Great Depression. At least one-third of its $30 billion in deposits has drained away. Despite an unprecedented $7.5 billion in emergency loans from the Government and 28 private banks, the outflow could not be stemmed. The banking system's difficulties in helping one of its key institutions have diminished public confidence in all U.S. banks. Even though each deposit up to $100,000 in a federally chartered financial institution is insured, many Americans began wondering about the safety...
...part of one plan being discussed last week, the Federal Deposit Insurance Corporation would accept most of Continental's bad loans, estimated at $4 billion, in return for an estimated 80% stake in the bank. FDIC Chairman William Isaac would then dismiss Taylor and other top officials and install new bank management. In addition, observers say, the FDIC would substantially reduce the bank's $34 billion in assets by selling some holdings. The regulators may spin off the Chicago institution's weakest units into another bank, already dubbed "Trashco" by Continental employees, which could then be declared...
...proposals for easing the cost of their debt, ranging from longer periods of repayment to reduced interest rates. One plan, suggested by Mexican Finance Secretary Jesús Silva Herzog, calls for Latin borrowers to pay a level of interest tied to the rates on bank certificates of deposit, currently about 11½%. This would give debtors a break of about 2½%, worth some $7 billion annually, while still allowing the banks to make a slight profit on the loans. Though bankers as a group will find these proposals hard to accept, at least one leading financier buys...
...same currency-rate imbalances that made it advantageous to stock up on foreign consumer goods spurred wealthy Latins to buy property abroad and deposit their money in U.S. and foreign banks. Even as loans poured into those countries, the rich were investing their money overseas. Says Richard Mattione, a research associate at the Brookings Institution: "Individuals and firms did the very sensible thing: they moved money out of the country. It was a mistake of government policy to have such an extremely overvalued exchange rate." The exact amount of this flight capital is unknown, but experts believe that since...