FDIC Expects to Have Big Losses
                   In Bank-Deposit Insurance Fund

                   By MICHAEL SCHROEDER
                   Staff Reporter of THE WALL STREET JOURNAL

                   WASHINGTON -- The Federal Deposit Insurance Corp. said bank
                   failures this year are expected to create the biggest losses to the
                   bank-deposit insurance fund since the banking crisis in the early 1990s.

                   So far this year, five bank failures will cost the fund an estimated $510
                   million to $810 million. In view of the losses, regulators have urged banks
                   to remain vigilant in their lending standards. But they don't see a need for
                   sweeping changes in how banks are examined.

                   The losses are "a little higher than we've had in the past couple of years,"
                   said David Barr, spokesman for the FDIC. Last year, for instance, three
                   banks failed at an estimated cost of about $179 million.

                   Regulators say the year-to-date loss figures are somewhat distorted by the
                   failure of one large bank, First National Bank of Keystone, in Keystone,
                   W.Va. The loss estimate for the Keystone failure ranges from $500 million
                   to $800 million.

                   When they shuttered the Keystone bank in early September, regulators
                   said they found "evidence of apparent fraud that resulted in the depletion of
                   the bank's capital." The Office of the Comptroller of the Currency said
                   $515 million in loans remained on the bank's books instead of being
                   removed after they had been securitized and sold.

                                        The other four failures in 1999 have been
                                        blamed on various factors: poor lending
                                        practices, poor management and inadequate
                   board supervision.

                   The FDIC said that in 1992, following the bank and savings-and-loan
                   crisis that peaked in the early 1990s, the failure of 122 institutions cost the
                   fund $3.7 billion.

                   The comptroller office has been prodding banks to tighten lending
                   standards. While the latest annual survey of underwriting practices showed
                   fewer loan losses, Comptroller John Hawke said he remained concerned
                   about the "quantity and quality" of credit risk among national banks.

                   Separately, Federal Reserve Chairman Alan Greenspan said in a speech
                   Monday that "significant changes are in the pipeline" for how regulators
                   monitor big financial institutions. In a speech before the American Bankers
                   Association in Phoenix, Mr. Greenspan said the changes are being forced,
                   in part, by the recent wave of mergers and the evolution of large banks,
                   whose troubles would place a huge strain on the world financial system.

                   A new regulatory approach is needed because "megabanks being formed
                   by growth and consolidation are increasingly complex entities that create
                   the potential for unusually large systemic risks in the national and
                   international economy should they fail," Mr. Greenspan said.

                   The specific technical changes discussed by the Fed chairman have largely
                   been part of international discussions in recent months on evolving bank
                   regulation. The Fed has created a special team of examiners for each of the
                   30-largest banking companies. Each team is assigned to monitor the
                   "strategy, controls and risk profile" of its one company, Mr. Greenspan
                   said.