New England's Shaky Banks: Out In The Cold?

When regulators selected a buyer for Bank of New England's failed units, bankers from Maine to Connecticut were exultant. A solution to the region's worst banking fiasco, they believed, would ease the crisis across New England. But most important, they reasoned, the selection of Fleet/Norstar Financial Group Inc. and Kohlberg Kravis Roberts & Co. would encourage other investors to pour much-needed capital into the area's troubled banks. In picking a bidder financed by a nonbank investment firm, regulators likely shared that expectation.

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