FDII NEWS RELEASE
m>ERAl. Dff'OSIT INSURANCE CORPORATION
FOR IMMEDIATE RELEASE
FDIC CHIEF SAYS INSURANCE FUND IS
SUFFICIENT TO HANDLE BANK FAILURES
PR-126-88 (6-24-88)
Although its insurance fund could experience a decline of as much as 10
percent this year -- the first in its history -- the Federal Deposit Insurance
Corporation will continue to have sufficient resources to perform its mission,
FDIC Chairman L. William Seidman said today.
In a speech to the annual meeting of the Oregon Bankers Association, Mr.
Seidman discounted claims that the FDIC faces unmanageable problems, including
one suggestion that losses in Texas alone could deplete the insurance fund.
"We expect to handle three more 1arge Texas banks this year, 11 he said,
referring to First Republic, Texas American Bancshares and National Bancshares
Corporation. "Once these transactions are consummated, the main financial
cost should be behind us and the insurance fund should begin to grow again in
1989 • II
Chairman Seidman noted that the insurance fund was $18.3 billion at the
beginning of the year, despite a record number of bank failures and assistance
transactions in 1987. He pointed out that the fund grew 1as t year by $50
mi 11 ion, even though the FDIC accounted for major assistance transactions
involving BancTEXAS Group Inc. and First City Bancorporation of Texas.
Chairman Seidman said: "The main banking problems in the U.S. have been,
and continue to be, concentrated in those sections of the country suffering
severe economic problems. Almost 90 percent of the failed banks, as well as
80 percent of the banks with losses, last year were located west of the
Mississippi. Roughly 85 percent of last year's bank failures were caused at
least in part by troubles in the farm and energy economies. 11
- more -
FEDERAL DEPOSIT INSURANCE CORPORATION, 550 Seventeenth St., N.W., Washington, D.C. 20429 • 202-898-6996
m>ERAl. Dff'OSIT INSURANCE CORPORATION
FOR IMMEDIATE RELEASE
FDIC CHIEF SAYS INSURANCE FUND IS
SUFFICIENT TO HANDLE BANK FAILURES
PR-126-88 (6-24-88)
Although its insurance fund could experience a decline of as much as 10
percent this year -- the first in its history -- the Federal Deposit Insurance
Corporation will continue to have sufficient resources to perform its mission,
FDIC Chairman L. William Seidman said today.
In a speech to the annual meeting of the Oregon Bankers Association, Mr.
Seidman discounted claims that the FDIC faces unmanageable problems, including
one suggestion that losses in Texas alone could deplete the insurance fund.
"We expect to handle three more 1arge Texas banks this year, 11 he said,
referring to First Republic, Texas American Bancshares and National Bancshares
Corporation. "Once these transactions are consummated, the main financial
cost should be behind us and the insurance fund should begin to grow again in
1989 • II
Chairman Seidman noted that the insurance fund was $18.3 billion at the
beginning of the year, despite a record number of bank failures and assistance
transactions in 1987. He pointed out that the fund grew 1as t year by $50
mi 11 ion, even though the FDIC accounted for major assistance transactions
involving BancTEXAS Group Inc. and First City Bancorporation of Texas.
Chairman Seidman said: "The main banking problems in the U.S. have been,
and continue to be, concentrated in those sections of the country suffering
severe economic problems. Almost 90 percent of the failed banks, as well as
80 percent of the banks with losses, last year were located west of the
Mississippi. Roughly 85 percent of last year's bank failures were caused at
least in part by troubles in the farm and energy economies. 11
- more -
FEDERAL DEPOSIT INSURANCE CORPORATION, 550 Seventeenth St., N.W., Washington, D.C. 20429 • 202-898-6996
- 2 -
Chairman Seidman pointed out that, since the beginning of 1986, about 50
percent of the banking deposits in Alaska, Oklahoma and Texas have required,
or are expected to require, financial support, either from the FDIC or through
private sector mergers. 11 Hi despread weaknesses in these states wi 11 continue
to be a si gni fi cant burden for the FDIC, at 1east for the short run, 11 Mr.
Seidman said, 11 but the FDIC fund is sufficient to deal with the problems we
can foresee at this time. 11
###
Chairman Seidman pointed out that, since the beginning of 1986, about 50
percent of the banking deposits in Alaska, Oklahoma and Texas have required,
or are expected to require, financial support, either from the FDIC or through
private sector mergers. 11 Hi despread weaknesses in these states wi 11 continue
to be a si gni fi cant burden for the FDIC, at 1east for the short run, 11 Mr.
Seidman said, 11 but the FDIC fund is sufficient to deal with the problems we
can foresee at this time. 11
###