The government yesterday closed Miami's Biscayne Federal Savings and Loan Association and transferred its $2 billion in assets as well as its deposits to a new institution set up under the direction of the Federal Savings and Loan Insurance Corp.
A spokesman for the Federal Home Loan Bank Board, which closed Biscayne Federal, said the new institution will operate until the government can find another savings and loan association or bank that will buy the assets and liabilities.
The bank board said that it will accept bids for the new Biscayne institution on April 14.
Usually the bank board tries to find a merger partner immediately for a troubled savings and loan association; the last time the government ran a savings and loan on an interim basis it took six months to find a partner.
Approximately 1,500 shareholders in the insolvent Biscayne Federal were left holding about 1.9 million shares of stock that now is worthless. About three hours before the institution was closed at 3 p.m., the bank board suspended trading in its stock. About 6,200 shares of Biscayne stock traded Tuesday, closing at $6.75 a share, down 25 cents.
In a press release, the failed institution called the government's move "hasty and ill-conceived" and said that, during the last 15 months, regulators resisted every attempt by Biscayne officials to inject more capital into the institution.
The statement said the institution was turning the corner because lower interest rates had returned it to profitability. The statement said the institution has filed for a temporary injunction in Miami federal court to overturn the closure decision.
The Associated Press reported late last night that U.S. District Judge Eugene Spellman has scheduled a hearing on the issue for this afternoon.
Federal officials said "general economic conditions" led to the downfall of Biscayne, which ate through its reserves during the last few years of sky-high interest rates and recession. Like most savings and loans, it had to pay more for its deposits than it earned on its assets, which were mainly mortgage loans made years earlier when interest rates were lower.