FDIC Plan to Securitize Bank Assets to Sweeten Securitization Market
A move by regulators to securitize failed bank assets indicates "an attempt to restart the stalled securitization markets," according to the Securities Industry and Financial Markets Association (SIFMA). A Federal Deposit Insurance Corp. (FDIC) source confirmed to HousingWire the FDIC is considering securitization of assets seized from failed banks. “The FDIC’s move to package and sell loans through securitization is a positive step for the securitization markets and our economy," said SIFMA president and CEO Tim Ryan in a statement this week. "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." Ryan added: "We look forward to continuing to work with the FDIC to ensure vibrant and stable securitization markets that help expand credit and lending to businesses and families during America’s economic recovery.” Details are still being fleshed out as this story published, but an FDIC spokesperson said any discussions to securitize bank assets are “really still in the early stages of development.” There is a large supply of failed bank assets on-hand, with the latest round of five failures on Friday leaving the FDIC with at least $20.1m in total assets for later disposition. The FDIC is said to be diversifying its options for offloading failed banks when no buyer can be found. SIFMA recently split its administrative functions from the securitization advocacy group, the American Securitization Forum (ASF). Within hours of the split, Tim Ryan of SIFMA penned a letter to members announcing the formation of the trade body's own securitization advocacy group. The SIFMA board felt the need to maintain a advocacy platform specifically for securitization “in a time when restarting the securitization market is a priority and we are engaged in wide ranging legislative and regulatory efforts,” Ryan said. Write to Diana Golobay.