SAN FRANCISCO -- BankAmerica Corp. said it is interested in a possible acquisition of three former subsidiaries of Bank of New England Corp., which was taken over during the weekend by federal authorities in one of the biggest banking failures in U.S. history.
BankAmerica, the nation's second-largest bank, said it was "in discussions with the FDIC regarding the possible acquisition of the deposits and certain assets."
Bank of New England formally filed for bankruptcy yesterday. The company's three major banks -- now called New Bank of New England, New Connecticut Bank and Trust Co. and New Maine National Bank -- are the ones that interest BankAmerica.
BankAmerica said that an acquisition agreement would require "substantial" financial assistance from the federal government -- which is expected to provide $2.3 billion to pay for the bailout -- as well as approval of the BankAmerica Corp. board of directors.
Most analysts agree that the FDIC will have to offer extremely favorable terms to any buyer to compensate for a New England economy that is deteriorating.
* The Bush administration is considering a plan to dilute the Federal Reserve Board's regulatory power over commercial banks, even though the Fed is widely considered the best regulatory agency of financial institutions in Washington.
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.