More on the FDIC and Bank Closures

From the Times:

As a bank teeters, the F.D.I.C. swoops in virtually overnight and
shifts as many good loans and deposits as possible to a healthy bank.
The F.D.I.C. persuades the healthy bank to accept some of the bad loans
by agreeing to take a share of certain future losses.

What is
left is a miserable stew of failed real estate projects, vacant land,
boarded-up houses and loans to defunct or bankrupt businesses, among
other stories of misery from these recessionary times. About 4 percent
of the assets from bank closures last year were bad, totaling some $15
billion in loans and property that once belonged to institutions like
the Douglass National Bank of Kansas City, Mo., and Sanderson State
Bank of Sanderson, Tex.

This is the stuff that no healthy bank
wanted to buy, losing propositions, or in the diplomatically
bureaucratic language of government, “assets in liquidation.”

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