FDIC Postpones Pilot Asset Sale

Posted by Orb Staff on June 04, 2009 No Comments
Categories : Residential Mortgage

deral Deposit Insurance Corp. (FDIC) is postponing the pilot program [link=http://www.mortgageorb.com/e107_plugins/content/content.php?content.3418][u]announced in April[/u][/link], which was supposed to be a precursor to the agency's Legacy Loans Program (LLP). Despite reports that the program will not get off the ground, the FDIC formally stated that the LLP will move forward, but that the previously planned pilot sale of assets by open banks will be delayed. ‘Banks have been able to raise capital without having to sell bad assets through the LLP, which reflects renewed investor confidence in our banking system," said FDIC Chair Sheila Bair in a press statement. "As a consequence, banks and their supervisors will take additional time to assess the magnitude and timing of troubled assets sales as part of our larger efforts to strengthen the banking sector.’ As a next step, the FDIC says it will test the funding mechanism contemplated by the LLP in a sale of receivership assets this summer. This funding mechanism draws upon concepts successfully employed by the Resolution Trust Corp. in the 1990s. The FDIC expects to solicit bids for this sale of receivership assets in July. ‘The FDIC will continue its work on the LLP and will be prepared to offer it in the future as an important tool to cleanse bank balance sheets and bolster their ability to support the credit needs of the economy," Bair added. SOURC

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