// you’re reading...

Deposit Insurance

FDIC auctions apt to hurt some banks

By ⋅ March 10, 2010 ⋅ Post a comment

(BOSTON) - An FDIC plan to auction more than $1 billion in assets seized from failed banks next month, including a loan to build a W Hotel in Atlanta, may trigger write-downs that weaken lenders nationwide.

Almost half of the loans were originated by Silverton Bank NA, whose collapse in May was the biggest in Georgia history. Community banks that joined Silverton in providing $80 million for the hotel-condo complex, as well as backing for 39 other projects, could be forced to write down their stakes to reflect sale prices.

Of the $41 billion in assets seized from failed banks and held by the Federal Deposit Insurance Corp. as of the end of January, $15.6 billion are real estate loans and about 4 percent of those involve participations by other lenders, spokesman Andrew Gray said.

“These banks can’t believe that the regulator they pay to protect them is going to sell these loans to someone who can flip them and cause them serious losses,’’ said Robert Reynolds, a lawyer in Tuscaloosa, Ala., who represents 25 lenders that took part in financing the W Hotel.

Read full story

Print This Post

Discussion

No comments for “FDIC auctions apt to hurt some banks”

Post a comment