Word: indymac
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...many of these deals done, the FDIC has had to swallow the banks' riskiest assets. The FDIC now owns $15 billion in bank loans and other troubled debts, up from about $300 million at the end of 2006. In its most recent deal to sell California-based IndyMac to a group of private-equity investors, the FDIC agreed to shoulder as much as 75% of the bank's $16 billion lending portfolio in order to close the deal...
...Observers say that higher-than-average FDIC losses are a function of the market, not the FDIC's dealmaking prowess. Sources close to the IndyMac sale said there were only a handful of submitted bids, not all of which were to buy the whole bank. And while the FDIC has had to take on some troubled assets, the agency has retained just 4% of the assets of the banks that have failed. That's far less than what it has had to retain in the past. In the S&L crisis, the FDIC was on average swallowing nearly...
...street, but if we're too much under the market, at some point they'll leave," says Steve Andrews, president and CEO of the Bank of Alameda. The San Francisco Bay Area bank has been forced to keep rates artificially high, Andrews says, as one flailing competitor after another - IndyMac, Washington Mutual, Downey Savings & Loan - has pushed up rates in an attempt to attract deposits and stave off insolvency. "It's frustrating riding into work and hearing about [deposit rates] at 4%," says Andrews. "That's prime rate - there is no margin...
...eligible to have their monthly payment reduced to 38% of gross income, as long as they're not in bankruptcy and can illustrate a hardship or change in financial circumstances. This model, based heavily on a streamlined loan modification program the FDIC is implementing at the failed lender IndyMac, is a strong endorsement of the idea that doing a lengthy analysis of homeowners' finances is taking too long to make a dent in the nation's housing woes...
...banks willing to adjust mortgages in a loss-sharing agreement. The FDIC would guarantee any losses on loans readjusted for homeowners who can show a 38% debt-to-income ratio, similar to what the FDIC worked out for the 60,000-odd bad loans it ate when it closed IndyMac bank...