WASHINGTON – The FDIC announced Friday night it was closing three more banks, including once high-flying Downey Savings and Loan, one of the biggest bank failures ever with $13 billion in assets.
Under the FDIC resolution plan Downey and another California failure, $4 billion PF Bank and Trust, will be sold to US Bank, giving the Minneapolis banking giant 200 new branches in California.
In a new twist, the FDIC plan will also give holders of about $1.9 billion in Downey mortgage loans who have fallen behind on their payments would now be eligible for reduced monthly payments to help them avoid foreclosure. The unprecedented move in connection with a bank failure expands the agency's controversial loan-modification program, which is opposed by other parts of the Bush administration.
The third failed bank, Community Bank of Loganville, Ga., was immediately sold to the Bank of Essex in Tappahannock, Va.
Regulators have closed 22 banks this year, including 12 in the past three months and five in November.
