Maine Insurance

The government has now chosen the Fleet / Norstar Financial Group Inc, a Rhode Island bank, with Kohlberg, Kravis, Roberts & Company, large companies Buyout care, the failed coup purchase of the Bank of New England and two affiliated banks, collapsed in January.

William L. Seidman, the nation’s Senior Banking Regulator, said Fleet / Norstar ‘offer was selected because it represents “the lowest cost on the program, which insures bank deposits. Officer has acknowledged that, as part of the transaction, Fleet, which has a good capital base compared to a bank north-east, have money to meet Federal Regulations on their financial health. The effort of $ 5 billion

Mr. Seidman, the chairman of the Federal Deposit Insurance Corporation, said the first bailout would require an effort of almost 5 billion dollars by the Bank and finance the cost would be much to end the worsening of insured funds and deposits more than $ 2, 5 billion.

Some of expenditure must be original borrowed by the Treasury, Mr. Seidman said, because the bank funds short so low. It had $ 8.4 billion at the end of 1990, after deduction for Bank of New England losses.

The acquisition of Bank of New England, the third largest rescue of government in history, was a cost of about $ 2.3 billion at the end. The 1988 collapse of the Republic Bank Corporation of Dallas, it is anticipated that costs $ 2.9 billion in 1989 and Mcorp failure of Dallas, was, according to projections amount to $ 2.7 billion . Branches in several States

The fleet, which is based in Providence, several banks in the Northeast United States, including New York, Connecticut, New Hampshire and Maine. He had no credit in Massachusetts, where the Bank of New England underlying. Besides the flagship of the Bank of Boston, Bank of New England Connecticut Bank and Trust Company of Hartford, Maine and the National Bank of Portland.

The tender for the Bank of New England was very hotly disputed because the bank represent a potential profit of banks in the area once its loan portfolio was gestrippt its worst loans. In addition, the Bank has the destiny of a focal point in Washington, as it was demonstrated that the industry may finally have the money of taxpayers, but also a success.

On Capitol Hill, the collapse of rescue and the Bank of New England, once the second region of the Society Bank, after the Bank of Boston Corporation, the sensitivity of legislators on the deteriorating state of the Bank and Insurance Fund has questions about the adequacy of government surveillance of banks. In the Financial Community, he also requested further concerns about the stability of the banking system.

A controversial proposal Bush Administration plan to strengthen the industry would allow the industry after its own banks. During Kohlberg, Kravis will not expect, with the use of the Bank of New England, that controls these companies, like RJR Nabisco recently invited representatives of John D. Dingell, Democrat of Michigan and chairman of the Energy and Commerce Committee, to insist that the regulatory authorities for rejecting the Fleet / Norstar command, with whom it a partner.

Kohlberg, Kravis is also the most visible part of the powerful New York were concerned that identification with the company’s 1980 buyout binge. Much of his money comes from pension funds and their acquisitions, and Safeway Stores Beatrice companies. Henry Kravis, its prominent partners, is a highly visible financial and philanthropist in Manhattan.

Fleet easily as auctions of the Bank of Boston and Bank of America, San Francisco-Bank of the Nation is the second. Citicorp is the largest country of the Bank society. Although admired by Bankers

Fleet, which merged with Norstar Bancorp of Albany in 1988, was widely admired by bankers and analysts during 1980 because of its diversification strategy in many areas of banking itself is not entered, as maintenance in mortgages, factoring, credit supplier of goods and Consumer Finance. Terrence J. Murray, 50, Fleet, ’s Chairman, President and Chief Executive, has led the company’s expansion, Norstar time of the merger and a bank, managed the costs and benefits.

At the end of the year, Fleet / Norstar were approximately $ 33 billion in assets, ranking as the nation’s top 25 banks.

In 1990, however, they stumbled and reported a loss of $ 48.5 million. The loss reflects the weakness of the North Eastern economy, the problems of their borrowers.

Some analysts said the selection of the fleet was a vote of confidence by the Bank, national regulatory authorities for final economic value of New England. But other experts, the Bank of Boston’s bid has probably not been chosen, because the concerns that the Bank’s ability to tap the capital necessary to ensure the Bank of New England. Mr. Seidman said all bidders were qualified. Review by Congress

The transaction has now almost necessarily be considered by members of Congress, in a number of hearings have already been studying the Bank of New England failure, recharging station for regulators that moves slowly around its head of collapse.

“The perspective is applicable, which is no more, but gets socked,” said Representative Jim Leach, Republican of Iowa and a member of the House Banking Committee. “The real problem is how it will be at the expense of taxpayers.”

Senator Edward M. Kennedy, Democrat of Massachusetts, said today: “I am pleased that at least one bank in our region has become. Massachusetts and New England to free themselves from the grip of a credit Crunch painful, and I call the new owner to move as quickly as possible to prolong strong loans to companies and countries, our depressed economy.