FDIC Seeking Comment on 'Legacy' Auction Program

The Federal Deposit Insurance Corp. on Thursday released for comment its plan to auction and sell toxic assets, asking questions on everything from which assets should be eligible to how fees for government-guaranteed debt should be assessed.The agency also held a conference call with businesses interested in the auction process, and according to one participant, listeners were told that anyone buying "whole loan" mortgages would be required to work them out according to parameters established under the FDIC's loan modification program. This participant, requesting anonymity, said there are "concerns about mark-to-market accounting. Right now there is a big gap between 'bid' and 'ask' prices," he said. The proposal, which is open for comment until April 10, appears aimed at trying to ensure that banks and investors have sufficient incentives to participate. "How can the FDIC best encourage a broad and diverse range of investment participation?" the agency's plan said. "How can the FDIC best structure the valuation and bidding process to motivate sellers to bring assets to the" public-private investment funds? The message was much the same during the FDIC's conference call. According to The American Banker approximately 2,700 participants listened in on the call, which included top FDIC officials, including chairman Sheila Bair, chief operating officer John Bovenzi and others.