NEW YORK — As they did two decades ago, U.S. federal regulators are holding a mountain of assets seized from failed banks. This time, however, they are relying more on the private sector to hold and sell more of the $600 billion in dud loans, foreclosed buildings and other assets.
Rather than try to sell most of the assets itself, as the government did in the early 1990s after the savings-and-loan crisis, the Federal Deposit Insurance Corp. is passing most of them on to the private institutions it signs up to take over failed banks.
For those assets it must sell when it can’t find a buyer for a failed bank, the FDIC is hiring auctioneers, recruiting investors directly and even creating its own asset-backed bonds to try to wring out the best prices it can.
James Wigand, deputy director of the FDIC division in charge of the asset sales, said many FDIC staff members, including himself, are veterans of the previous crisis and “remember what worked well and what didn’t.”
The difference is stark. The Resolution Trust Corp., a body created to liquidate failed banks’ assets, took it upon itself to sell 89 percent of the $453 billion in assets it found at 747 failed banks in the late 1980s and early 1990s. Now the FDIC is selling only about 11 percent of the $606 billion acquired from 246 failed banks. The total exceeds the assets of all but the six largest U.S. bank holding companies.
The FDIC is requiring healthy banks to shoulder the rest as a condition of getting a collapsed competitors’ customers, deposits and branches.
