(Hat tip to John for sending me this from the NY Post)
THE Federal Deposit Insurance Corp. may not have fully washed its hands of IndyMac Bank.
Despite the agreement to sell of the once-troubled bank last week to a group of private-equity investors for $1.6 billion, the FDIC may be facing up to $10 billion in previously-unknown liabilities linked to mortgages IndyMac has sold to Fannie Mae, The Post has learned.
Such a haircut to the FDIC’s $34.6 billion insurance fund would leave Sheila Bair’s agency less able to deal with the number of bank failures expected this year.(emphasis added)
Fannie Mae and the FDIC have been battling over the questionable mortgages for months. Fannie wanted IndyMac, while it was being run by the FDIC, to repurchase the loans because they violated their so-called representation and warranty agreements in that they had early payment defaults or were made under fraudulent conditions.[...]
[...]Bert Ely, managing director of Ely & Co., said the eleventh-hour move by Fannie to push back mortgage loan liabilities to the FDIC has to increase pressure on the agency’s fund “simply because of the magnitude” of the dollars involved.
Andrew Grey, an FDIC spokesman, refused comment on how it got to the $8.5 million-to-$9.4 billion cost for Indy’s failure except to say, “That figure represents all cost we expect to take on.”
Ely says that number is too low and the true cost of IndyMac’s failure is yet to be known. “It will take at least three years-to-five years to figure out what this really cost the taxpayer,” he said.
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