Greenwhich Bank rescue to cost other banks
Last week's rescue-by-merger of the troubled Greenwich Savings Bank in New York is going to cost other banks and savings institutions $280 million in higher premiums for deposit insurance, according to the Wall Street Journal.
The Federal Deposit Insurance Corporation (FDIC) arranged the merger of Greenwich with the Metropolitan Savings Bank by agreeing to cover losses. The move cost the FDIC $465 million, but hopes to regain 60 percent of it, or $280 million, from FDIC premiums paid by more than 14,000 savings institutions.
The bright spot is that insurance bills won't be increased, but the FDIC will keep $280 worth of premium rebates that would have gone out to member institutions next summer.