Fed examining foreign banks' links to BCCI

August 21, 1991|By American Banker

WASHINGTON -- The Federal Reserve, stung by the BCCI scandal, is quietly probing whether foreign banks operating in the United States had improper links with the Luxembourg bank, according to people familiar with the effort.

The sources interpreted the effort as a Fed attempt to avoid being blindsided again by the unfolding scandal.

About two weeks ago, Fed bank supervisors began asking directors and top executives to detail the extent of their banks' dealings with the Bank of Credit and Commerce International, the sources said. It's not clear how many banks are being scrutinized.

William Taylor, Fed director of bank supervision, and J. Virgil Mattingly, the agency's general counsel, could not be reached for comment. A spokesman, however, said, "We are not at this time doing reviews of foreign banks operating in the U.S. that may have ties with BCCI."

One source said Fed examiners went into a bank he works for to study its interbank deposits, loan participations and other credits. The bank, he said, has done business with BCCI.

The Fed has charged that BCCI illegally gained control of 60 percent of First American Bankshares Inc., the Washington area's largest bank holding company, with $10.6 billion in assets. The Fed is seeking $200 million in civil penalties from BCCI.

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