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Reeling from bad loans and famished for new capital, Unitedbank was a prime candidate for closure. Still, when an army of FDIC liquidators marched without warning into the bank's headquarters in a downtown skyscraper, the staff of 100 were traumatized. Secretaries wept as the intruders posted notices on the inlaid-glass walls, changed the door locks and dismantled automatic-teller machines. "We kept hearing the rumors, but nobody thought that this time it would be us," sighed Teller Erica Joiner, 30, who watched as armed guards took up positions in the lobby and federal officials affixed blue seals...
Last Wednesday 150 FDIC liquidators began gathering in Houston. To avoid | detection that could lead to a run on the bank, they slipped into a downtown hotel under the cover identity of "Gulf Coast Tours." At 3:12 the next afternoon, minutes after the end of the banking day, they started streaming into the classy marble headquarters and three downtown branches. After assembling the headquarters employees in a basement lobby, Liquidation Specialist Timothy Putnam told them, "As of now, you're on the payroll of the FDIC. You'll get overtime tonight. Balance your windows. Finish your processing. Dinner...
About 130 investigators from the FDIC arrived at First National early last week to close it down, claim its books and transfer its accounts to the new owner, Los Angeles-based First Interstate (assets: $50 billion). First Interstate reopened the bank the next day, so the institution's 33,000 account holders never had an opportunity to panic over their money. The FDIC will pay First Interstate $72 million to take over the accounts and assume $1.2 billion in First National loans. The deal should turn out to be a profitable plum for First Interstate's expansionist chairman, Joseph...
Despite its huge size, Bank America can lose money for only so long before needing an injection of outside investment. Many experts think the bank will struggle along without needing any bailout from the FDIC. A more likely possibility would be a merger with another bank, perhaps even with one of the Japanese institutions that have gained a foothold in California in recent years. "Stranger things have happened," says Chairman Leland Prussia. "If someone comes up with a good proposal, we would consider it seriously." Time could be running out for the bank's president and chief executive, Samuel | Armacost...
...strain on BankAmerica and banks in the Southwest, experts see no significant threat of failures that would overwhelm the FDIC. The agency's bailout fund, now more than $18 billion, has grown every year recently despite a surge in bank failures. Profits in the overall banking industry are growing at an estimated 10% or better annually, and last week four of the major New York City institutions reported robust quarterly earnings. Along with the painful contraction taking place in the steel industry, the regional banking woes are the natural result of the ebb and flow of economic tides. While some...