Industry Ponders, Waits As FDIC Eyes Plan to Securitize Seized Assets

The FDIC, quite obviously, is borrowing a page from the RTC era, says Olasov. “The CMBS market grew out of what had been these non-performing commercial loan securitizations by the RTC.

“The securitizations of non-performing loans from failed thrifts proved to be very successful—ultimately the bonds not offered to the marketplace at the time were offered up in later years, when the market was more receptive. The government made quite a bit of money from the later sales of those certificates.”

It is not that simple, however, to re-apply the old lessons. Much is dependent on two factors, Olasov says: “the rate of failed institutions and the cost of resolving those institutions relative to the cost of securitization. That is an analysis that the FDIC has to make.”

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