It looks like the FDIC — which already has one of the sorriest balance sheets around — will continue to be a holding company for some of the worst banking assets around.
The FDIC seemed to be doing a good job of winding down banks, taking some losses, and then flipping them to a lucky bidder. But the appetite for failed banks is waning.
WSJ: Fifth Third Bancorp CEO Kevin Kabat complained at an investor conference recently that the “relative quality…of available FDIC transactions have really not been very attractive from our perspective.”
The Cincinnati bank bought failed Freedom Bank of Brandenton, Fla., in October 2008 and is looking mostly for FDIC-arranged deals in geographic areas where Fifth Third already has branches.
Sluggish interest in doomed banks could push the FDIC’s losses higher at a time when the agency’s fund to shield depositors is in negative territory for just the second time in its history.
Here’s the answer: why not let the public buy them? The FDIC could float an ETF, allowing it to raise cash, while giving the public the chance to play vulture, for once. Investing in it could be marketed as being patriotic.