Fund That Insures Banks Is Healthy, U.S. Officials Assure

WASHINGTON —  The federal fund that insures commercial bank deposits is not in any danger of collapsing as the savings and loan insurance fund did, government banking officials said Tuesday.

But two private analysts said more than two dozen banks were operating with liabilities greater than their assets and should be closed.

The regulators, testifying before the House banking subcommittee on financial institutions, rejected that assertion and said their policy is to close insolvent banks.

“The bank insurance fund is solvent and can meet the obligations as we foresee them today,” Federal Deposit Insurance Corp. Chairman L. William Seidman said.

Congress adopted legislation in August to bail out the Federal Savings and Loan Insurance Corp., which will cost taxpayers more than $200 billion over 30 years.

Seidman testified that the FDIC fund had a net worth of $14.1 billion after losses of $6.3 billion last year.

While economic conditions could change, he and the other officials said they were cautiously optimistic about the outlook for banks.

But a proposal by Comptroller of the Currency Robert Clarke was criticized by members of the panel who said it would weaken capital rules for banks and endanger the fund.

Clarke has proposed that in addition to new international risk-based capital rules, U.S. banks have minimum capital of 3% of their liabilities.