UPDATE 1-Big US bank nationalization would be surprise-FDIC

Thu Jan 15, 2009 6:21pm GMT

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(Adds Bair comments, context)

NEW YORK Jan 15 (Reuters) - Federal Deposit Insurance Corp chair Sheila Bair said on Thursday it would be a big surprise to the U.S. bank regulator if a large U.S. bank were to be nationalized.

She spoke as shares of Bank of America Corp (BAC.N) and Citigroup Inc (C.N) plummeted on worries the banks may need more government help to handle soaring credit losses.

Asked by reporters whether the FDIC anticipated nationalizing any large U.S. banks, Bair said: "I can't comment. I'd be very surprised if that happened."

Bair, speaking to reporters before a luncheon of the RainbowPUSH coalition in New York, also addressed concerns that the rising number of U.S. bank failures could overwhelm the regulator's insurance fund.

"The FDIC will never go broke. We are still running at a surplus, our reserves seem to be quite fit for the projected closure activity that we have," Bair said.

Bair said the FDIC won't rule out that in the future they may need to borrow from the Treasury, but added: "At this time it doesn't look like we will have to do that." (Reporting by Al Yoon, Editing by James Dalgleish)

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