Word: fdic
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Nonetheless, some experts question the ability of regulators to keep up with the field they are supposed to be watching. Concedes a former FDIC official: "Getting good people and keeping them is very hard to do. They really are not compensated very well for their talents." The problem is made tougher because responsibility for overseeing the country's banks is shared by six federal and 50 state agencies...
...recent string of bank failures has raised worries about whether the $17 billion in the FDlC's insurance fund is enough to protect the banking system and depositors. Officials contend that the regulators have enough money to get the job done. Says FDIC Chair man Isaac: "We have the capacity, along with the Federal Reserve, to deal with any scenario you can imagine." Some bankers have already made strategic changes that may help keep them profitable in an increasingly competitive market place. Says Manufacturers' McGillicuddy: "When people say the banking industry hasn't responded, it just doesn...
Bankers got many of their current problems the old-fashioned way-they earned them. Says William Isaac, chairman of the FDIC: "The common thread in the industry's troubles is bad management. You can get away with a fair amount of poor management when the economy's in good shape, but if the economy turns sour, as it did in 1981-82, your mistakes are magnified." This does not mean that all bankers have turned into casino gamblers. "I don't think that bankers as a whole have become reckless," says Carlos Arboleya, vice chairman of Barnett...
Isaac was quick to point out that "not one nickel of taxpayers' money" will be spent on Continental because the rescue funds will come from FDIC reserves, which are made up of earnings collected on insurance premiums from banks. Yet the chairman of the House Banking Committee, Rhode Island Democrat Fernand St Germain, objects to any Government agency committing itself to such an expensive bailout without getting congressional approval. Said St Germain: "If there are enough Continentals, then we can rest assured that Mr. Isaac will be standing here, hat in hand, asking for congressional appropriations to replenish...
Other critics believe the Continental rescue proves that the FDIC has a big-bank bias. Said Democratic Senator David Boren of Oklahoma: "The result of FDIC policy seems to encourage concentration of banking in a few large institutions and requires discipline only of small banks. Oklahomans are justifiably bitter about this double standard, especially when the collapse of Penn Square Bank doubled the state's bankruptcy rate...