P. M. BRIEFING : Bank Borrows to Pay Depositors
The struggling Bank of New England borrowed more than $400 million from the Federal Reserve in the last week to pay depositors who are withdrawing their money, published reports said today.
Arthur Meehan, a bank executive vice president, told the Boston Globe and Boston Herald that his bank had borrowed from the Federal Reserve’s “discount window” but did not specify the amount.
The Globe estimated the total at $475 million.
One of the region’s largest banks, Bank of New England has been hurt by bad loans in a weak real estate market and last week posted a $1.2-billion loss for the fourth quarter of 1989.
After the announcement, hundreds of depositors, including several cities and towns across the region, withdrew millions of dollars from their accounts.
The city of Boston withdrew $34 million earlier this week.
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