Other banks have eye on failed institution Bank of New England attracts BankAmerica and Banc One

January 08, 1991|By Newsday

As Bank of New England opened its doors yesterday under federal control, two other banks said that they were interested in taking the failed institution off the government's hands.

BankAmerica Corp., based in San Francisco, and Banc One Corp., headquartered in Columbus, Ohio, both expressed interest in bidding for the fallen Boston bank.

The Federal Deposit Insurance Corp. took over Bank of New England Sunday after customers staged a run on deposits. The government will operate the renamed New Bank of New England and sister banks in Connecticut and Maine until it finds a buyer.

Both Bank of America, the second-largest in the United States behind Citibank, and Banc One, one of the nation's strongest, have been active buyers of failed banks in recent years.

The New York Times reported that other potential buyers mentioned by analysts as having the experience to acquire other banks include National City of Cleveland; First Union of Charlotte, N.C.; Corestates Financial of Philadelphia; Mellon Bank of Pittsburgh; and Wells Fargo of San Francisco. All declined to comment.

* The Bush administration is considering a plan to dilute the Federal Reserve Board's regulatory power over commercial banks, even though the Fed is considered the best regulatory agency of financial institutions.

The Los Angeles Times reports that a new banking reform package under study by the Department of the Treasury would reduce the Fed's power to regulate banks and transfer many of its current powers to a new bank regulatory office at the Treasury, according to government and banking industry sources.

* New York state Attorney General Robert Abrams assailed federal bank regulators yesterday for fully protecting big depositors at the failed Bank of New England, while those who had more than $100,000 at Freedom National Bank in Harlem, one of the largest minority-owned banks, received only 50 cents on the dollar.

Mr. Abrams accused the Federal Deposit Insurance Corp. of using different standards when dealing with Freedom depositors, the Associated Press reported.

"The FDIC has failed to explain how and why it decides that some banks are 'too important to fail' and that some depositors are to be protected while others are not," Mr. Abrams said in a written statement.

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