FDIC seizes escrow from Am. Savings - Federal Deposit Insurance Corp.; American Savings Bank

Real Estate Weekly, July 1, 1992 by Lois Weiss

The FDIC has notified American Savings Bank customers with commercial real estate escrow accounts that if their accounts held more than $100,000, they would only recieve 75 cents on each dollar of the remainder.

A spokesperson for the FDIC said they called 72 commercial real estate owners on the evening on June 25 to tell them the news and followed up with a letter sent by an overnight service. These owners are now facing July 1 tax payments with not enough money in the coffers.

Jack Weprin, a partner at Goldberg Weprin & Ustin, said of four buildings he owns, the FDIC is "grabbing" $200,000. Speaking with clients and other people he knows, he had accounted for $1 million the Feds were taking. "This is going to be millions of dollars," he said. "It's stealing - it's insane."

The FDIC spokesperson said the total loss to 8,600 depositors is $119 million. Money from escrow accounts, sources say, is about $2.23 million. The cost to the bank insurance fund to cover American Savings Bank losses, the spokesperson said, would be $400 million.

A New York State Banking Dept. spokesperson, said "Once we close (the bank) we make the FDIC the reciever. It's deplorable."

An FDIC spokesman said, "The bank should have let these people know (when they took out the mortgage) that this was subject to the deposit insurance law. There's nothing we can do about it. It's the law."