FDIC Friday…. 8 more banks shut…. most of the deals today are loss sharing (one was a closure) – since the FDIC is broke, they agree to pay the acquiring bank for the bad loans in the future (pushing the problem down the road without spending the cash today)
Some of these deals have exposed that the loan portfolios have lost as much as 50% BEFORE the FDIC got around to closing them…
This one – the bank has $487 million in deposits – the assuming bank is getting $522 million in assets (loans) with the FDIC loan loss guarantee, of which the FDIC expects that cost to be $81.million – meaning the FDIC believes the loans are only worth $441 million (this on top of $106 million in assets that aren’t being acquired by the buyer… It isn’t clear if those assets are worthless, or they are assets the FDIC will be adding to their Securitization of Worthless Loans(tm) program….. so it appears that on the books, the banks had assets of $628.9 million that are worth – at best – $441 million, or a expected loss of 30% – in order to work to the top of the FDIC rescue list
