• U.S.

BANKING: The Biggest Bailout

1 minute read

Goldome: the name was as good as gold through most of the ’80s, as the savings bank based in Buffalo rapidly amassed a menu of failing savings banks around the state, with the blessings of business-first federal regulators. But as the go-go years went-went, Goldome turned to dross. The bank inched back toward profitability during 1989, only to face stricter capital requirements from a savvier set of feds in the wake of the S&L crisis. The new rules of the game finally proved Goldome’s undoing last week.

As word went around Buffalo that government representatives were booking local hotel rooms while Goldome honchos were emptying their offices, Washington made it official: the Federal Deposit Insurance Corporation was seizing Goldome in the biggest bailout of a savings bank in U.S. history. The spoils will go to Buffalo’s First Empire State and Albany’s KeyCorp, which sought the smallest amount of federal aid; the two offered a plan that could cut costs by canning workers. But Goldome’s rescue may still cost U.S. taxpayers up to $1 billion.

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