Union officials representing former National Bank of Washington employees said they will challenge the right of federal regulators to terminate their contract with NBW prior to selling the institution to Riggs National Bank, a move that has stripped employees of their health benefits, vacation, severance pay and, in many cases, their jobs.
NBW's 900 employees were fired on Friday after federal regulators declared the bank insolvent. Some were offered temporary positions by Riggs.
Alan Whitney, spokesman for the Federal Deposit Insurance Corp., said the government had the authority to dissolve the labor contract between NBW and the Office and Professional International Employees Union under terms of last year's thrift rescue bill.
However, representatives from the union said yesterday that the legislation conflicts with other protections afforded workers in federal labor law.
"We do not believe the FDIC had the right to repudiate this contract," said David Levinson, an attorney for the union. "In the past, the FDIC has not dealt with bank closings involving union employees. They may normally have the right to fire everyone, but it's an entirely different circumstance here."
Although FDIC officials met with Levinson and other union representatives yesterday to discuss the contract, Whitney said he did not believe that the agency's actions were questionable.
"We have the statutory right to terminate contracts in failed bank situations," Whitney said. "It doesn't differ between union contracts and other types of contracts."
Levinson said he would file claims with the FDIC for the contract benefits, which included severance and vacation pay, 60 days' paid health insurance coverage and 60 days' pay in lieu of advance notice of the sale to Riggs.
Employees also were organizing yesterday to protest "the insincerity and abrupt nature" of their severance. "We have no one to turn to, no one is sticking up for us," said one employee, who asked not to be identified. Former NBW workers, who are now working temporarily for Riggs, said they would stage a walk-out later in the week at various branches.
Whitney, the FDIC spokesman, contested reports that the FDIC was slow to react to the failure of NBW. "I wouldn't say that we were unprepared for this closing whatsoever," Whitney said. "The FDIC does have the ability to meet a very tight deadline in what we believe is a very orderly fashion. We have handled close to 600 bank failures in the past three years. We have this down to a science."
Meanwhile, Riggs received bomb threats yesterday afternoon at three of its newly acquired National Bank of Washington branches, forcing the evacuation of employees and customers for about an hour. District police said they found no bombs at any of the locations.
Staff writer Sharon Epperson contributed to this report.