Regulators Close Seven, Four in Nebraska : Bank Failures Set 50-Year Record
Setting a 50-year record for the number of bank failures in one day, seven financially troubled banks, including four in Nebraska, were shut down by government regulators Friday.
The failures brought the 1985 nationwide total to 43. According to a spokesman for the Federal Insurance Deposit Corp., the largest number of failures in a day since the FDIC was created in 1934 had been six in 1983.
In addition to the Nebraska institutions, banks were closed in Oregon, Arkansas and Minnesota. Alan Whitney, the FDIC’s chief spokesman, said that four of the seven collapses were unrelated but that three of the four Nebraska banks shared common ownership.
“It’s just that a set of circumstances came together to result in an exceptionally high number of failures,” Whitney said. “It does not mean there is any systemic problem in our banking system.”
Whitney added that the FDIC’s $18 billion insurance fund would not be adversely affected by Friday’s failures.
“These are small institutions except for the one in Oregon,” Whitney said, referring to the Bank of Oregon, which had $108 million in assets and $101.1 million in deposits. “The only impact is that a lot of FDIC people are going to be working over the weekend.”
Whitney noted that government regulators anticipated that the number of bank failures this year would exceed last year’s post-Depression record of 79. “We have the resources to handle as many as a failure a day,” he said.
Typically, when a bank fails the FDIC, which insures deposits up to $100,000 in most of the nation’s 15,000 banks, quickly arranges for a financially stable bank to take it over so that it may reopen with a minimum of disruption to depositors.
Among the banks closed Friday, Bank of Taylor in Lincoln, Neb., will reopen Monday as a branch of Union Bank and Trust Co. of Lincoln; the Bank of Oregon was acquired by Alaska Bancorporation of Anchorage; First Trust Bank of Lakefield, Minn. had its $20.6 million in insured deposits transferred to Minnesota-based Fulda State Bank, and Arkansas-based Bank of Lockesburg was acquired by a new bank of the same name.