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IBAA SUPPORTS EQUITABLE EARLY INTERVENTION PROGRAM

 IBAA SUPPORTS EQUITABLE EARLY INTERVENTION PROGRAM
 WASHINGTON, March 25 /PRNewswire/ -- The Independent Bankers


Association of American (IBAA) today offered its support for an early intervention program that would be made available to all sizes of insured institutions during an open hearing held by the Thrift Depositor Protection Oversight Board.
 "The current troubles facing the FDIC suggests that maximum regulatory creativity in resolving and managing troubled institutions is more important than ever," said IBAA President Bob Hawkins, testifying before the Oversight Board. "The IBAA believes that prompt regulatory action is critical to an effective supervisory process. We support early intervention provided that stakeholders are not protected at the expense of the insurance funds."
 Hawkins, president of Southern Commercial Bank in St. Louis, told the Oversight Board that institutions should be considered for an early intervention program if they demonstrate acceptable qualities, such as "serving the credit needs of the local community and drawing their funding from local deposits." He emphasized that the selection criteria should "be objective, uniform and consistent."
 Noting that Section 143 in the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) sets forth guiding principles for this program, Hawkins noted that "IBAA believes that the agencies should consider the principles outlined in the statute when considering early resolution but should not exclude deals that fail to exactly meet every principle."
 To generate private investment, Hawkins recommended that the FDIC borrow funds from the Bank Insurance Fund (BIF) members as permitted under Section 105 of FDICIA. "This was recommended by the banking industry last year as a means of recapitalizing BIF," he said.
 Hawkins added that while there is no comparable provision for SAIF members, "we believe such an option should be explored for SAIF." By using loans from BIF members, the FDIC could avoid criticism of using taxpayer money to assist troubled institutions and claim indirect market discipline.
 A "hospitalized" institution will do a much better job of collecting whatever good loans are on the books and, it will also do a much better job of collecting what might be called the businessman risk loans, Hawkins said. If insured institutions can remain in private sector hands, costs will be kept down benefiting everyone. The tremendous disruption to the community that occurs when an institution fails also would be avoided.
 IBAA is the only national trade association that exclusively represents the nation's community banks.
 -0- 3/25/92
 /CONTACT: Diane Casey of the Independent Bankers Association of America, 202-659-8111/ CO: Independent Bankers Association of America ST: District of Columbia IN: FIN SU:


DS-MK -- DC009 -- 1421 03/25/92 10:01 EST
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Date:Mar 25, 1992
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