P.M. BRIEFING : U.S. Aided 1 of 2 Failing Banks
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NEW YORK — Government deposits were used to help the failing Bank of New England, while deposit cuts at a troubled Harlem-based bank may have contributed to its failure, according to a published report today.
In March, the Treasury Department stopped its practice of keeping as much as $300 million of income-tax withholding payments at Freedom National Bank, the New York Times reported. Meanwhile, Treasury officials agreed to help shore up the Boston-based Bank of New England by depositing large amounts of the tax-withholding funds, known in financial circles as “tax and loan” accounts, the Times said. Both banks have since failed.
Freedom National was the nation’s fourth-largest black-owned bank, but its assets were only a fraction of those of the Bank of New England.
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