BANKING: A Shocking Drama

Banking activities rarely make gripping theater, but current events at New York's Franklin National Bank are a striking exception. All last week the bank staged a drama of conflict among officers, mystery about how it happened to suffer heavy losses in foreign-currency trading, and suspense about just how big the losses were. Though the bank's depositors seemed safe, the performance was a shocker.

It began thunderously. Franklin New York Corp., the holding company for the nation's 20th largest commercial bank (assets: nearly $5 billion), announced that it would skip its quarterly dividend because earnings in the first quarter had plunged...