Academic journal article ABA Banking Journal
FDIC Approves Deposit "Transfer" for Two Thrifts
Remember the proposed "Jesse James" banks of more than a year ago? Two are on the verge of busting loose, with implications for the debate over the Financing Corp. repayment and related efforts.
The controversial banks, also called "born-again" thrifts, were proposed as a way that savings and loans could evade the higher premiums assessed on Savings Association Insurance Fund member institutions, versus the rate charged for Bank Insurance Fund members.
The general idea: Under a common parent's umbrella, a thrift could found a banking affiliate that would serve as a place for the thrift's deposit customers to transfer their business, bringing down the overall cost of deposit insurance as a consequence because of the lower rates available to BIF members.
Applications for such deals have been opposed by banking interests, particularly the ABA in several cases. (A fuller account of the thinking behind this thrift gambit can be read in the May 1995 ABA BJ, p. 7.) Opponents have argued that approval of such transactions would violate a congressional moratorium on thrifts converting to bank charters.
However, in late June FDIC's board approved Bank Insurance Fund insurance coverage for two "born agains." Insurance was approved for MidAm Bank, SB, a state nonmember savings bank to be located in Clarendon Hills, Ill. …