Here Comes the Cavalry

The U.S. and a tough new boss rescue an imperiled Texas bank

The mood seemed remarkably upbeat for the headquarters of a company that has been hemorrhaging money for two years. Workers danced in the hallways. A manager who had submitted his resignation five days earlier changed his mind. All in all, an air of elation last week permeated the Houston offices of First City, Texas' fourth largest banking firm. And with good reason: word had just come from Washington that the Federal Deposit Insurance Corporation had agreed to save the failing institution by pumping in $970 million worth of assistance. The cavalry-like rescue was the second largest in banking history, eclipsed only...