FDIC Securitization Could Be Model For NCUA Plan On Corporates’ Legacy Assets

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WASHINGTON – The FDIC said Friday it sold securities backed by $471.3 million of performing single-family mortgages originated by 16 failed banks, in a program NCUA is watching closely as it plans a disposition of some $50 billion of toxic assets held by corporate credit unions.

The FDIC pilot program, coming amid a growing number of bank failures, marks the first time the agency has securitized assets during the current financial crisis.

The pilot program consists of three tranches of securities. Approximately $400 million senior certificates, which were sold today, represent 85% of the capital structure and are guaranteed by the FDIC. The fixed-rate, senior note is sold at a coupon of 2.184% and is expected to have an average life of 3.66 years.

Meantime, the banking regulator shut another five banks Friday, making a total of 108 for the year.

Friday’s failures were: $768 million LibertyBank, Eugene, Ore.; $529 million The Cowlitz Bank, Longview, Wash.; $373 million Coastal Community Bank, Panama City, Fla.; $66 million Bayside Savings Bank, Port St. Joe, Fla.; and, $167 million Northwest Bank and Trust, Acworth, Ga.

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