FDIC Confirms Plans to Wrap Failed Bank Assets into RMBS
A Federal Deposit Insurance Corp. (FDIC) source confirmed to HousingWire that it plans to issue residential mortgage-backed securities (RMBS) collateralized by failed bank loans. Bloomberg broke the story earlier today, quoting spokesperson David Barr, who said the FDIC plans to back roughly 85% of the mortgage bonds and could sell all but the junior notes initially. The structure would mimic structured note offerings in March and April -- the timely payment of which was guaranteed by the FDIC and backed by the full faith and credit of the United States. A new RMBS deal backed by failed bank assets would build on the momentum of that three-part platform. The move comes as no surprise, as the FDIC was considering securitization of failed bank assets as early as six months ago. "These deals will provide a model for future private market issuances, could help kick-start nonconforming loan securitizations and secondary markets, tighten pricing for securities and strengthen the interests of real money investors," said Securities Industry and Financial Markets Association (SIFMA) president and CEO Tim Ryan, as reports on an FDIC securitization circulated in January. Write to Diana Golobay.