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WASHINGTON, DC-Sheila Bair, chairman of the Federal Deposit Insurance Corp., told the Senate Subcommittee on Financial Institutions Wednesday that federal banking agencies are finalizing a guidance on commercial real estate loan workouts. Her comment was in response to questioning about unevenly applied workout policies on the part of FDIC.

Some of those reports are exaggerated, Blair responded. “I have heard reports that examiners are requiring banks to write down sound, performing loans. I can assure you that that is not the policy of the FDIC. We support banks’ efforts to lend to credit-worthy borrowers and to work constructively with existing borrowers to restructure loans where appropriate.”

A more formalized FDIC workout guidance will be welcome as the industry braces itself for another wave of bank and thrift failures. So far this year, 98 have been recorded, according to Blair. She declined to provide internal projections for failures in 2010, other than to say the number will be closer to 2009′s than the 25 failures registered in 2008.

The larger point is that the FDIC is bracing for the volume, Blair said. It “has employed additional resolution strategies that proved successful in the 1990s, loss-sharing agreements and structured transactions. These arrangements allow the FDIC to quickly return assets to the private sector, obtain better pricing, and minimize disruption to borrowers and communities from a bank failure. They save money for the Deposit Insurance Fund and streamline our resolution workload.”

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