Government regulators are ready to begin the biggest round of bank and savings and loan seizures in history, rescuing nearly 600 institutions that could fail next year, The Washington Post reported Sunday.
Officials are devising strategies using new regulatory powers and $95 billion provided by banking legislation now awaiting President Bush's signature, the paper reported.The Post said as part of the new strategy, regulators plan to step in more quickly when signs develop that a bank or S&L is in trouble and to seek mergers with healthy institutions rather than shutting them down.
The Post said as many as 400 banks and S&Ls are likely to fail next year, with the most costly cases expected in the Washington, D.C., area, New England and California.
Savings and loan regulators said as many as 170 thrifts could close, the Post reported.
By rescuing banks before they go broke, "You can actually make the case that you are crunching credit less," William Taylor, new chairman of the FDIC told the Post. "People have got to start being interested" in costs of the cleanup.
"We're trying to find the most appropriate form of resolution for the next wave," Timothy Ryan, director of the Office of Thrift Supervision, told the Post.
"We don't want to close down anything we can save," the Post quoted Albert Casey, new head of the Resolution Trust Corp.
Robert Clarke, comptroller of the currency, said, "We all agree it is much more desirable to keep the assets (of failed banks) in the private sector to keep them being managed by bankers rather than liquidators."
The FDIC predicts failure by at least 200 banks with $86 billion in assets for 1992. The agency said the toll could reach 240 banks and $116 billion in assets if the economy remains weak or real estate markets decline further in Washington, New York, New Jersey, New England and Southern California.
In a key shift, buyers of failed banks or S&Ls will no longer be allowed to take only the valuable deposits and branches, leaving everything else to the government.