A bank that failed in the very same year as BCCI - and was wound down in an orderly, depositor-protected process instead of an abrupt shutdown.
Bank of New England Corporation was, by the late 1980s, one of the largest bank holding companies in the United States, built on aggressive commercial and real-estate lending across New England. When the regional property market collapsed at the end of the decade, the bank's loan losses mounted quickly. By late 1990, mounting losses and a loss of depositor confidence triggered a serious run, and on 6 January 1991 - just six months before BCCI's own closure - federal regulators declared Bank of New England insolvent.
How the failure was actually handled
Rather than an abrupt, unannounced shutdown, the United States Federal Deposit Insurance Corporation (FDIC) stepped in using a structured resolution: it seized the bank's operating subsidiaries and transferred them into newly chartered "bridge banks," which reopened for business the very next morning under FDIC control. Every insured depositor was made whole, and - significantly - the FDIC took the additional step of guaranteeing all deposits, insured and uninsured alike, to prevent the failure from triggering a wider panic across the regional banking system.
The bridge banks operated under FDIC oversight while the failed institution's assets were gradually sold off, with the viable retail and commercial banking business ultimately passing to Fleet/Norstar Financial Group. Customers kept their accounts, branches largely stayed open, and staff continued working through an institution that, on paper, no longer belonged to its original owners.
The Relevance to BCCI
The timing here is what makes this case so hard to set aside. Bank of New England failed in the same year, within months, of BCCI's closure - and yet the regulatory response could hardly have been more different.
Where BCCI's branches were shut abruptly, worldwide, with no advance warning to depositors or staff, Bank of New England's customers woke up the next morning to branches that were open, deposits that were protected in full, and a bank that continued functioning under new stewardship while its problems were resolved in an orderly way behind the scenes.
The scale and jurisdictional complexity of the two cases were different - Bank of New England operated within a single, unified US regulatory and deposit-insurance framework, while BCCI spanned some seventy countries. But the underlying regulatory choice - protect depositors and preserve the functioning parts of the business while working through the failure, rather than switching everything off at once - was available in 1991. It was used, that same year, just not for BCCI.
