The Federal Deposit Insurance Corp. has decided to liquidate rather than sell a failed Colorado bank's $250 million credit card portfolio.

The decision will add millions to the cost of resolving Boulder's BestBank, which failed last July. The credit card accounts were by far the largest asset of the $314 million-asset institution.

The FDIC first predicted that BestBank's collapse would cost $28 million, then increased the estimate to $172 million at yearend. But this was based on an assumption that the card portfolio would be sold.

The agency tried to sell the 437,000 card accounts in November, inviting bids from 114 companies. Only six submitted offers. Of these, four did not conform to FDIC requirements. The top bidder retracted its offer, so the FDIC awarded the contract to the remaining bidder on Dec. 24. But RRI Credit Corp., the winning bidder, was unable to seal the deal, missing three closing dates. The FDIC declined to say how much RRI had bid, and company officials could not be reached.

"We were unable to sell the portfolio and are canceling the cards," said FDIC spokesman David Barr.

At Feb. 28, the portfolio had a total unpaid balance of $252 million, or about $575 per cardholder. The FDIC's goal: collect 50 cents on every dollar owed.

The FDIC faced several obstacles in finding bidders. The cards had been marketed mostly to high-risk people with bad credit histories or none at all. To get the card, which had a $600 credit limit, a customer had to agree to a $498 charge for joining a travel club, a $45 annual fee, and a $20 application fee. The customer was in heavy debt before even using the card.

The portfolio was also tainted by FDIC allegations that the cards' servicer, Fort Lauderdale, Fla.-based Century Financial Group, had manipulated hundreds of thousands of card accounts to make them appear current.

Adding to the FDIC's costs, a Century Financial affiliate was paid about $18 million to service the portfolio while the agency sought a buyer.

The agency's Inspector General recently issued a report criticizing its supervision of BestBank before its failure. The agency is suing former BestBank and Century Financial executives.

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