Alabama Insurance

Looking for an objective longer on the health of the Federal Republic funds, bank deposits assured the Chief of General Accounting Office, said today that during the Fund was technically impossible to insolvency, but before payments in the years to come, in which a real standard ”” accounting is being depleted of its balance.

No”because she was born on the territory of the Great Depression, the federal system of security deposits for commercial banks, where such a deadline for placing at risk, as it works today,’’said Mr. Bowsher in a speech before the Senate Banking Committee.

He added dass”nach Generally Accepted Accounting Principles”hatte a compensation fund during the last year. But”if we had a more realistic standard that everybody here was the measure of things, we’re not quite sure .”” He said several billion would be reserved as Dollar”wahrscheinlich debts to the Fund during the past year.

William L. Seidman, chairman of the Federal Deposit Insurance Corporation, which holds the nation on deposits from banks, the figures presented by Mr. Bowsher was in general, with whom he had last month when he said that the Fund could lose a lot of 2 billion dollars this year. In an interview after the consultation, “said The figures Seidman GAO has cast a glance at vermutenden without taking account of income fund would be on the sale of assets in other institutions and higher premiums.

”I have said before and I say again, the Fund is able to fulfil its commitment,”he added. The Agency, the Bank Insurance Fund accounts insured up to $ 100000

Analyses generally accepted, said Mr Seidman. Seidman”peinture is a grim picture of the situation and the GAO says it is a little dark,’’said Robert E. Litan of the Brookings Institution. Do I il”de slight differences, but they are actually the same.”

Mr. Bowsher’s testimony raised the strong possibility that without government measures for the money quickly, premiums increase or decrease the protection of insurance, banking sector problems could have a repetition of the fate of savings and Loan Industry. A specific fund insurance savings deposits in institutions has already been exhausted, a force of government relief by the most conservative of estimates, it is expected that costs taxpayers at least $ 130 billion over the next 30 years, including interest not.

Geplagt debt danger

Banks have more and more of their income from interest on loans, but the decline in real estate markets across the country and demand now in danger of plague institutions. During recent months, the banks cover losses has grown steadily and reached 11.2 per cent at end-June from 10.1 percent last year.

The General Accounting Office today also criticized an alarm on the high level of bank loans in the past two years to hoch””Leveraged transactions, such as acquisitions and leveraged buyouts, which are often financed by debt high risk. In their study, the Bureau said that seven of the nation’s 10 largest banks had a significant number of these loans and that these institutions could see his fortune for the most part the decline in case of bankruptcy of a large lever companies with bank loans.

Last month, Mr. Seidman said he expected the continued decline in real estate markets and around record number of losses the bank would be the third successive annual loss of the Bank Insurance Fund.

The proposed increase in premiums

In a reaction to the slide which F.D.I.C. a proposed increase in premiums to pay, as banks under insurance of $ 1.1 billion, or 30 percent, next year. A final vote by the Agency, the five-committee is planned for later this month. The increase would pay the banks, 19.5 cents an insurance premums for each $ 100 of insured deposits, rather than the 15 cents expected in effect in January. It is currently 12 cents for every $ 100 of insured deposits.

While the proposed increase is the maximum allowed under the savings and loan bailout legislation passed last year, she said Bowsher still too small a margin of safety for the survival of funds. ”We are convinced that this is not enough, the Bank is considering the situation,”he said, adding that the GAO are not yet defined what constitutes an amount sufficient to ensure the safety of funds n is not excessive taxation Banks.

”I ask the word crisis, but we are in a phase where the action is necessary in due course,’’said Bowsher.

Consonant alarm senators

Members of the Senate committee GAO expressed alarm on the findings, several Congress propose, either immediately or place in October, returning after the November elections beginning to the solution of the problem. ”It seems to me that you say here, if the sky does not fall, it is implacable,”Senator Richard C. Shelby, Democrat of Alabama, said Bowsher.