Bank of New England: The Aftermath
The shape of things to come
For the past year, Bank of New England hibernated while it struggled to overcome its huge mountain of bad real estate loans. Now, pumped up with $750 million from the Federal Deposit Insurance Corp. (FDIC), the New Bank of New England is alive and ready to do business - and with several decided advantages over the competition.
If this deal follows similar ones the FDIC made in the Southwest, New Bank of New England will be sold as a "clean" bank with the federal government getting stuck with its bad assets: delinquent loans, nonperforming loans and foreclosed property.
The new bank will start with a clean slate - it will have a strong deposit base without bad assets. It won't have to worry about shrinking its asset size to meet regulatory capital requirements, or spending its resources working out problem loans, unlike its rivals.
"Someone once …