Head of FDIC Predicts Fewer Bank Failures : No Big Ones Expected to Go Under During 1989

Federal regulators expect fewer bank failures next year compared to this year, and no large banks are expected to fail during 1989, the chairman of the Federal Deposit Insurance Corp. said Tuesday.

“Next year we think bank failures will be down. We expect they will be down from well over 200 this year to somewhere between 150 and 175. We don’t see any large banks having problems next year. That could change, but that’s what we see now,” said FDIC Chairman L. William Seidman.

He was in Houston for a conference of the American Productivity Management Assn. More than 200 management professionals met for the two-day conference to discuss how to improve the competitiveness of American business.

In a discussion on economic policies, Seidman represented Republican presidential candidate George Bush while Democratic presidential candidate Michael S. Dukakis was represented by Bryon Battle, Massachusetts undersecretary for economic development.

Upon questioning, Seidman said bank failures are a difficult topic for political campaigns to address.

“I don’t see much advantage in trying to deal with that problem on a partisan basis. There’s plenty of blame to go around . . . and I think it’s one of those things that nobody can see much advantage in,” Seidman said.

Productivity Goal

Overall, the Reagan Administration has created a strong economy that is difficult to criticize, Seidman said.

He said the challenge facing the next administration is to improve productivity while also protecting the environment.

But Battle said the next administration has some serious economic problems to resolve.

“Despite the prosperity of the Reagan-Bush years, I think there are some serious warning signals,” Battle said. He outlined those problems as the trade balance, the deficit and a decline in real wages.

In an unrelated development, the president of the American Bankers Assn. predicted Tuesday that Congress will move to consolidate the ailing thrift industry and commercial banks by merging the federal funds that insure customer deposits.

“Where we’re ultimately, probably going to move . . . is toward a merger of the industries,” ABA President Thomas P. Rideout told a news conference in San Francisco.

He acknowledged that “in the public’s mind, there is very little difference” between banks and savings and loans.

“At some point, you’re probably going to have a merger of the industries,” he said.

Not Pushing Merger

Rideout declined to say when such a merger--which would begin with the consolidation of the thrift industry’s Federal Savings and Loan Insurance Corp. and the banks’ Federal Deposit Insurance Corp.--would take place.

Although he believes that a merger of the banking and thrift industries is on the horizon, Rideout emphasized that he is not advocating a merger of the insurance funds at this time.

“A merger of the funds would be in effect unfair, because we didn’t have anything to do with their problems,” he said.