WASHINGTON - Now that the Federal Deposit Insurance Corp. has finally unloaded Crossland Federal Savings Bank, the agency faces some tough questions about how it chose to deal with the failed thrift.

Banking law requires the FDIC to sell or liquidate in the cheapest way possible. At issue will be how the FDIC concluded that last week's unusual sale met that requirement.

The agency can expect to be second-guessed with the following questions:

Was it right to nationalize Crossland when the Brooklyn thrift failed in January 1992, or should the agency have sold it off right away?

Was the agency right to have sold the $5.3 billion-asset thrift to institutional investors last week, or should it have sold Crossland to rival Anchor Savings Bank?

More specifically is the FDIC being too optimistic when it is estimates it will have to pay out only a net $28 million under its loss-sharing deal with investors?

Lots of Gray Areas

These are tough questions mainly because - as in all big failed bank deals - the calculations are complicated. and only FDIC has all the numbers. Black-and-white answers are not easy to find in bank resolutions.

House Banking Committee Chairman Henry B. Gonzalez, D-Tex., intends to send a formal investigation request to the General Accounting Office today or Tuesday, his staff said Friday.

The Crossland saga began on Jan. 24, 1992, when the thrift failed and the FDIC decided to run it on its own rather than sell it off or shut it down. This May, the FDIC said it wanted to convert Crossland to a stock institution in a public offering to institutional investors - something the agency has never done.

Rival Bids

But then Anchor, and others, emerged as bidders, so the FDIC decided to let the two sides bid against each other.

With offers in from investors and Anchor, the FDIC decided late Thursday night to go with the public offering, issuing 12 million shares in Crossland to about 50 investors for $23.50 a share. That raises $282 million.

The FDIC will also receive the proceeds from the sale of $50 million in subordinated debt by Crossland. That bring's the total to $332 million.

According to a source working for Anchor, its bid came in about $10 million below the securities sale. The FDIC refused to disclose Anchor's bid or, for that matter, a list of the investors.

Harrison Young, who as the agency's resolution director engineered the securities sale, was confident the agency made the right choice.

|A Great Deal'

"This is a great deal for the FDIC. The public offering won pretty clearly," he said Friday. "But it was not by an enormous margin."

Mr. Young calculates the FDIC's $889 million tab this way: The FDIC put in $1.2 billion into Crossland. It is making back $332 million in cash plus on million warrants, which were valued at $8 a piece or $8 million. That brings the cost down to $860. But FDIC added back in $11 million being paid to its investment bankers and another $28.8 million it expects to pay under 14 covering net losses on assets.

Crossland is the agency's eighth-most-expensive bank failure ever.

The big outstanding question is whether the FDIC is underestimating how much it will have to pay out under its five-year toss-sharing agreement with the investors.

Crossland's $2.7 billion in troubled assets are covered by the loss-sharing deal. Under the deal, the FDIC will pay 80% of the loss on those assets after a $179 million reserve is eaten up. The agency is figuring its total cost will be $28.8 million, a meager amount of such a large portfolio.

"I think the net charge-offs are going to be a lot more than $179 million," said Bert Ely, a banking consultant who has tracked the deal. "That means the FDIC is going to be writing checks."

Clearly, the loss sharing was the linchpin for investors.

"Without that, we would have no interest," said Ray Garea, who bought into the deal on behalf of Mutual Series Fund Inc., Short Hills, N.J.

Former FDIC Chairman L. William Seidman agreed that the investors are "fairly well guaranteed on the downside.

It's very hard to value [the deal], because they've guaranteed so much in the way of assets," Mr. Seidman said. "The whole bet is they [the investors] can sell it to someone else for more."

The FDIC figures net charge-offs will exceed the $179 million threshold amount by $36 million. The FDIC will pay 80% of that or $28.8 million.

Mr. Young said many of the assets have already been written @down substantially. But he added: "I wouldn't argue with anybody who would say...the number might be higher. It might be lower. There's no certainty."

Loss sharing "takes a deal that I was sort of unexcited about and made it attractive," said Jim Schmidt, manager of the John Hancock Freedom Regional Bank Fund in Boston. But he added: "Odds are they won't come into play, but if it falls apart, it's a backstop." Mr. Schmidt estimated he could double his investment in three years.

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