Some 20 years ago, the Federal Deposit Insurance Corp., muchlike today,

was saddled with a glut of assets from hundreds of failed banks.But lessons learned from those days have led the agency to take aslightly different approach to asset disposition to get more out ofthe deal. "Rather than doing outright whole-loan sales, we sellinto a partnership-type structure, whereby we sell a stake to aninvestor and share in the upside with real estate professionalsthat manage the assets through to resolution," says Timothy Kruse,senior capital markets specialist at the FDIC.

Retaining an interest in these public-private transactionsallows the agency to bank on the future cash flow generated by theworkout of the assets. Kruse points out, "The FDIC's seniormanagement determined early in the current banking crisis that realestate secured assets it did not convey to an acquiring bank wouldgo through some sort of structured transaction."

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