FDIC-Assisted Asset Sales

Mark Kanaly served as faculty during this webinar hosted by Strafford.  Throughout the financial crisis, most FDIC failed-bank resolutions have been loss-share transactions in which the agency guaranteed 80% of potential losses and 95% of the losses over a certain threshold.  As the distressed-asset market starts to improve, however, the FDIC is changing how it disposes of failed banks and their assets.  In a recent transaction, the FDIC agreed to cover only 50% of the losses and signaled the end of the 95% guarantee.  These and other changes in loss-sharing terms increase the risk for buyers and will require more and better asset due diligence.  As the FDIC and investors grow more confident in the market, we can expect to see more dramatic shifts in the FDIC’s strategies for disposing of failed-bank assets.  Mark's panel covered the FDIC's process of acquiring assets of failed banks and how bidders and buyers can avoid potential pitfalls in acquiring assets from the FDIC.