Word: fdic
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...defaults. American banks have an exposure of close to $100 billion to Third World borrowers; a 50% loss in the market value of these debts, if it were to be officially acknowledged, would require nearly $50 billion of capital support, more than three times the size of the present FDIC fund. Existing loan-loss reserves would provide part of the capital, but not nearly enough to cover the exposure. Estimates on the ultimate cost of rescuing the S and Ls increase almost daily, with some experts predicting $50 billion to $70 billion as the possible charge to the taxpayers...
From 1982 to 1987, the FDIC, which collects premiums from member banks and insures deposits up to $100,000, shut down or bailed out 600 banks at a cost of $9.99 billion. By far the worst trouble spot is Texas, where the woes of the oil and real estate industries have caused 192 banks to fail since 1982. The First RepublicBank case almost guarantees that the FDIC will operate at a loss this year for the first time in its history. Its reserves now stand at $15.8 billion, down from $18.3 billion in January, and the fund is likely...
...knows when the FDIC's hemorrhaging will stop. Almost 1,500, or roughly 11%, of the 13,700 commercial banks in the U.S. are still on the agency's list of troubled institutions. Many of these banks are already doomed, and hundreds of others could be sunk by a continued rise in interest rates, which means they would have to pay more to depositors...
...Wall of the Bank Board estimates that with the $10.8 billion and premiums from member institutions, the insurance fund will bring in nearly $30 billion during the next decade -- almost enough to take care of all the insolvent S and Ls. But other experts are not so optimistic. The FDIC's Seidman has told Congress the bailout figure could reach $50 billion, and some analysts put it as high as $100 billion. Few people believe the FSLIC can avoid going to the taxpayers for billions of dollars...
DESCRIPTION: Four charts: Bank failures; costs to FDIC from bank failures; costs to FSLIC from savings and loan failures; savings and loan association liquidations, mergers and acquisitions; all 1981-1987 figures; color illustration: crying piggy bank...