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FDIC Statement on the Status of the Legacy Loans Program
FOR IMMEDIATE RELEASE
June 3, 2009 Media Contact:
Andrew Gray (202-898-7192)
The FDIC today formally announced that development of the Legacy Loans Program (LLP) will continue, but that a previously planned pilot sale of assets by open banks will be postponed. In making the announcement, Chairman Bair stated, "Banks have been able to raise capital without having to sell bad assets through the LLP, which reflects renewed investor confidence in our banking system. As a consequence, banks and their supervisors will take additional time to assess the magnitude and timing of troubled assets sales as part of our larger efforts to strengthen the banking sector."
As a next step, the FDIC will test the funding mechanism contemplated by the LLP in a sale of receivership assets this summer. This funding mechanism draws upon concepts successfully employed by the Resolution Trust Corporation in the 1990s, which routinely assisted in the financing of asset sales through responsible use of leverage. The FDIC expects to solicit bids for this sale of receivership assets in July.
Chairman Bair added, "The FDIC will continue its work on the LLP and will be prepared to offer it in the future as an important tool to cleanse bank balance sheets and bolster their ability to support the credit needs of the economy."
Wednesday, June 3, 2009
Posted by Tyler Durden at 4:09 PM
A press release just released by the FDIC announces that the Legacy Loan program is all but done. So much for the PPIP. Sheila Bair better hope that JPM and whoever can sustain the market around 940 in perpetuity, cause the second we see the waterfall banks will be first back on the bailout porch. But that's the government for you: 2 months ago they couldn't get enough acronyms in the market, now they are trying to shake them all off. Presumably, there is a reason why it is all called a confidence game.