Tuesday, October 27, 2009

FDIC to launch the mother of all bank securitisations?

It could be on its way from the Federal Deposit Insurance Corp — the body responsible for insuring US bank deposits.

Avid readers of FT Alphaville will know that FDIC, headed by Sheila Blair, took over its 100th failed bank this week.

The plethora of bank failures since the start of the financial crisis means the organisation now has control of billions of failed bank assets.

What to do with them all?

Apparently, securitisation is an option. From Structured Finance News:

The Federal Deposit Insurance Corporation (FDIC) has seen a growing volume of assets acquired from failed banks in its role as receiver of these institutions.

Michael Krimminger, special advisor for policy, office of chairman at FDIC and speaking at Information Management Network’s 15th annual ABS East conference in Miami said that FDIC has acquired more that [sic] 100 failed banks and it is likely that they may seek to do a securitization

And that’s the article in its entirety — so far.

What sort of securitisation might the FDIC be thinking of?

Your guess is as good as ours, but the alphabet soup that could emerge — FDIC CDO/ABS/CLO etc. — doesn’t exactly fill us with confidence.

1 comment:

Rob Paris said...

The 106 bank failures for 2009 are the most failures since 1992. Banks are failing fastest in those states with highest unemployment.

This website has graphs showing the bank failures by state and bank failures by month.