Federal Reserve Bank of St Louis November 1975

caused a great deal of concern regarding both the soundness of banks and the effectiveness of current regulatory practices in this countryJ The largest bank failure in U.S. history occurred last year with the collapse of the Franklin National Bank of New York (total assets of $3.6 billion). One of the immediate causes for the failure of Franklin National was large loan losses in foreign exchange transactions. However, Franklin National also had difficulty generating earnings ratios as high as banks of comparable size which were accepting the same risks.2 Fourteen other banks have failed or were forced into mergers since last fall, the largest being Security National Bank of Long Island (total assets of $1.8 billion), which had large losses in real estate loans. Information on those failmores and forced mergers is presented in Table I.