Word: fdic
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...money soon? That fear was magnified last week when the Congressional Budget Office predicted that the fund, which contains only $8.5 billion to cover $2 trillion in deposits, could run dry by the end of the year because the recession has aggravated the cost of bank failures. The FDIC may need to borrow $11 billion from the Treasury to keep from going broke, the CBO predicted. The House Budget Committee further undermined confidence in the FDIC by criticizing its 1988 rescue of First Republic Bank of Dallas, charging that "preposterous tax breaks" could double the original cost estimates of more...
...federal insurance per bank; in the S&L bailout, some big customers are being repaid the full $100,000 for each of several accounts in a single institution. Yet any move to cut back this blanket coverage could lead to the type of bank panics that the FDIC sought to avert in New England. "You only exacerbate the problem of runs when you limit insurance," says Lawrence White, a New York University economist who advocates bailing out all depositors at failed banks in the name of fairness...
...fact, the FDIC has consistently covered all depositors in large bank failures to prevent runs. "The government can get away with relatively small- scale pocket picking," says Bert Ely, a financial consultant based in Alexandria, Va. "But on a major scale you cannot do it. The consequences are just too significant...
...England, after the firm predicted a loss of up to $450 million for the fourth quarter of 1990. On Jan. 6, a Sunday, the government seized the banks and said it would immediately pump in $750 million as part of a $2.3 billion bailout financed by the FDIC fund. The rescue covered more than $2 billion in accounts worth more than $100,000, and $55 million in uninsured deposits at foreign branches...
...part, the FDIC hopes to sell the failed banks to a strong institution by the end of the year. But the agency will have to swallow up to $6 billion of sour loans, and the messy task of liquidating them, to make the deal appealing to buyers. The FDIC said it was talking with six possible suitors for the banks, including Ohio's prosperous Banc One Corp. and San Francisco-based BankAmerica Corp., the second largest U.S. banking company behind Citicorp in New York City...