Asset resolution and management - primarily of commercial real estate - will be a "stinky business" for the private sector in the recent future, observes former Federal Deposit Insurance Corp. Chairman L. William Seidman.

Reinforcing his reputation for pungent observations, Seidman also said Nov. 15 that asset disposition by the Resolution Trust Corp. and FDIC will slow down because managers of those assets, whether government officials or private sector firms operating under government contract, realize that sale of assets will result in loss of their job.

"If they sell assets, they have nothing to manage. ~The asset is your livelihood'. these people will say. You will see more reasons for delay [in selling assets] than you have ever seen..

Seidman made his comments at a Banking Law Institute seminar titled, "The Merger of the RTC Into the FDIC," in Washington Nov. 16. He also noted that private sector asset managers "are just hanging on," and that they are troubled by high overhead. Seidman, who has started a company. ComMac, which seeks to help the private sector securitize and sell shares in bad bank assets, said that he is "besieged by asset managers who have nothing to do." He noted that new capital requirements for insurance companies offer incentives to buy securitized assets.

Seidman also advised companies and regulators involved in resolving assets of failed banking institutions "to buy whole inventories and sit with it for two or three years. Values of underwater assets are changing in the holders' favor." He also concretized his reputation by saying that the decision of FDIC and RTC while under his control of dismissing managers when taking over insolvent thrifts "was a disaster.

"We could have left S&L managers in place instead of making you people [private sector asset managers) rich." Seidman said. "We learned to keep assets in the institution, but very late in the game."

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