Word: fdic
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...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...
...losers under this plan probably would be Continental's stockholders. The FDIC continues to honor its earlier promise that all the bank's depositors will be protected against losses, even those with accounts larger than the legal $100,000 coverage limit. Stockholders, though, could lose the largest share of some $2.2 billion in equity if the Government takes over. Stockholders have already taken a beating in the market. Since last September, Continental stock V, has fallen from 25¼ to 3½. Said one Chicago investment analyst last week: "This is as if you were in the Viet...
When the run on the bank started in May, sparked by rumors that Continental was unsound and was about to be sold to three Japanese financial institutions, the FDIC, the Federal Reserve and dozens of banks began supplying billions in funds in an effort to stop the panic. A package of more than $10 billion in loans was offered, but it was only the FDlC's pledge to protect all deposits, no matter how big, that halted the outflow of funds...
Once the run had been stopped, the FDIC tried to find a private buyer for Continental, but it had no takers. Such interested parties as Citicorp, First Chicago and the wealthy Bass family of Fort Worth all considered the deal and decided that Continental had more problems than they could handle. Since no one else was willing to step forward, the FDIC seemed to face no alternative but to take over the bank. Last week Continental and the FDIC still hoped that some private group might step forward, but they were fast losing all optimism about that possibility...
...banking system was still recovering from the shock of the near collapse in May of Continental Illinois Bank. The bank revealed last week the stringent terms that it had been forced to accept to receive an emergency $1.5 billion loan from the Federal Deposit Insurance Corp. The FDIC insisted that it have the power to fire Continental directors, that the bank suspend its 50?-per-share quarterly dividend payment and that the bank's officials refrain from giving themselves large severance bonuses, known as golden parachutes, in the event another financial institution takes over Continental...