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2008-11-27  BUSINESS POST | FDIC opens up bidding on troubled institutions
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November 30, 2008
Wanna buy a bank cheap? Now you don't even need a bank charter to become a qualified bidder for deposits and assets of failing banks.
The FDIC announced last week that it is establishing a modified bidder qualification process to expand the pool of qualified bidders for the deposits and assets of failing depository institutions. The process will allow interested parties that do not currently have a bank charter to participate in the bid process through which failing depository institutions are resolved.
Not just anybody can become qualified, however. This expansion merely adds groups already in the approval process for a bank charter.
The FDIC must ensure that failing institutions are resolved in a manner that cost the least to the Deposit Insurance Fund and minimal disruption to the financial system. To achieve this result, the FDIC markets the deposits and assets of a failing institution to known, qualified, and interested potential bidders.
With this latest announcement, the FDIC recognized that investors not organized as an FDIC insured depository institution or holding company may potentially be interested in bidding to purchase a failing institution.
In light of the time constraints involved with these types of transactions and consistent with the FDIC's Statement of Policy on Applications for Deposit Insurance, the FDIC may apply modified deposit insurance application processes. The FDIC will consider abbreviated information submissions and applications, and may issue conditional approval for Deposit Insurance, to qualify interested parties for the FDIC's failing institution bidders list.
Investors that are interested in acquiring the deposits of failing institutions must have conditional approval for a charter from the responsible agency and meet the bid criteria established by the FDIC. In certain cases it would also be necessary to obtain conditional approval to establish a bank or thrift holding company. Federal and state agencies are coordinating on specific information needs and timing requirements and ultimately the granting of a charter and Deposit Insurance.
The basic areas of consideration would include a business plan compliant with the Community Reinvestment Act, readily available capital, and an identified management team subject to financial and biographical review.
Interested parties should contact Associate Director Lisa Arquette or Counsel Catherine Topping in the FDIC's Washington Office. Messages can be left at (202) 898-8515 or sent electronically to ExpBidProcess@FDIC.gov.
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