As the FDIC continues to come into control of an increasingly largevolume of loans through bank takeovers it must draw on the resourcesof the private sector to maximize value on those loans, says ThomasGalli, shareholder at Greenberg Traurig LLP, who headed a panel atWashington, DC's recently-held RealShare conference, consisting of Rich Brown, the FDIC's chief economist, and Tim Kruse, senior capitalmarkets specialist at the FDIC. "As a significant bid/ask spreadcontinues to exist on pricing for loan portfolios in the privatesector, the FDIC appears to be the only practical opportunity in thecurrent market for the private sector to acquire loan portfolios," hetells GlobeSt.com.

The volume of loan portfolios the FDIC will bring to market in 2010through its structured transaction program will be significantlygreater than what it brought to market in 2009, Galli says. That means opportunities for investors in this space will be extraordinary over the next two years.

For example, large brand private equity and institutional investorsare looking harder at opportunities available in the FDIC's Structured Transactions program, Galli says. "Those bidding have found appropriate partners with infrastructure to perform asset management on portfolios of modest to average loan size and/or geographically disbursed assets securing loans," he says.

Many deals for FDIC's structured transactions done thus farhave had unique elements--largely due to varying asset classessecuring loans and characteristics of loans in aportfolio; permanent loans versus construction or development loans and the ratio of performing to non-performing loans, according to presentations made by Brown and Kruse at RealShare. It's been a learning curve for the FDIC as well, Galli adds.

"The FDIC has been remarkably adaptable in its asset deposition programs over short time periods and through massive volumes of asset sales," Galli says. "Senior leadership in the FDIC's Division of Resolutions and Receiverships were largely with the RTC during the early 1990s and have an incredible wealth of knowledge from programs and policies adopted by the RTC to address the last banking crisis," he continues. "They use that knowledge along with current market sophisticated modeling and deal structures to create transaction solutions in an effort to minimize adverse impacts on the banking industry, our economy and ultimately the taxpayer."

Instant Insights /

FDIC is the Top Choice for Loan Portfolios

Related Stories

Recommended For You