Source: www.fdic.gov/news/press-releases/2023/pr23029.html
The Federal Deposit Insurance Corporation (FDIC) as receiver of the former Signature Bank, New York, NY, and Silicon Valley Bank, Santa Clara, CA, will undertake a marketing process to sell the securities portfolios retained from the two receiverships.
The face values of the two portfolios are approximately $27 billion and $87 billion, respectively. The securities are primarily comprised of Agency Mortgage Backed Securities, Collateralized Mortgage Obligations, and Commercial Mortgage Backed Securities.
The FDIC has retained BlackRock Financial Market Advisory to conduct portfolio sales, which will be gradual and orderly, and will aim to minimize the potential for any adverse impact on market functioning by taking into account daily liquidity and trading conditions. Interested parties should contact [extfdicinquiry@blackrock.com](mailto:extfdicinquiry@blackrock.com) to obtain further information about the sale process and the qualifications to participate.
This sale will go towards paying back the Fed who has been loaning the FDIC money via “Other credit extensions”:
fred.stlouisfed.org/series/WLCFOCEL
| Tool | 3/15 | 3/22 | 3/29 |
|---|---|---|---|
| “Other credit extensions” | $142.8 billion | $179.8 billion | $180.1 billion |
“Other credit extensions” includes loans that were extended to depository institutions established by the Federal Deposit Insurance Corporation (FDIC). The Federal Reserve Banks’ loans to these depository institutions are secured by collateral and the FDIC provides repayment guarantees.
From how I understand it:
The FDIC created temporary banks to support the operations of the ones they have taken over.
The FDIC did not have the money to operate these banks.
The Fed is providing that in the form of a loan via “Other credit extensions”.
The FDIC is going to sell the taken over banks assets.
Whatever the difference between the sale of the assets and the ultimate loan number is, will be the amount split up amongst all the remaining banks and applied as a special fee to make the Fed ‘whole’.
It can be argued the consumer will ultimately end up paying for this as banks look to pass this cost on in some way.
TLDRS:
- The Federal Deposit Insurance Corporation (FDIC) as receiver of the former Signature Bank, New York, NY, and Silicon Valley Bank, Santa Clara, CA, will undertake a marketing process to sell the securities portfolios retained from the two receiverships.
- The FDIC has retained BlackRock Financial Market Advisory to conduct portfolio sales, which will be gradual and orderly, and will aim to minimize the potential for any adverse impact on market functioning by taking into account daily liquidity and trading conditions.
- The face values of the two portfolios are approximately $27 billion and $87 billion, respectively. The securities are primarily comprised of Agency Mortgage Backed Securities, Collateralized Mortgage Obligations, and Commercial Mortgage Backed Securities.
- Whatever the difference between the sale of the assets and the ultimate loan number is, will be the amount split up amongst all the remaining banks and applied as a special fee.
- It can be argued the consumer will ultimately end up paying for this as banks look to pass this cost on in some way.