Client Alert
FDIC Expands Bidder List for Troubled Institutions
December 4, 2008
Because of the rapidly changing conditions in the financial markets, we have established this special series of Client Alerts to advise you of the newest economic and legal developments and their wide-ranging business implications.
On November 26, 2008, the FDIC announced that it will establish a modified bidder qualification process to expand the pool of qualified bidders for the deposits and assets of failing depository institutions. A copy of the press release may be found here. The modified bidding should allow interested parties that do not have a bank charter to participate in any bid process by which failing depository institutions are resolved.
The FDIC is responsible for ensuring that failing institutions are resolved in a manner that will result in the least cost to the Deposit Insurance Fund and minimal disruption to the financial system. In order to ensure that failing institutions are resolved in a manner resulting in the least cost to the Deposit Insurance Fund, the FDIC markets the deposits and assets of a failing institution to known, qualified, and interested potential bidders. The FDIC recognizes that investors not organized as an FDIC insured depository institution or holding company may potentially be interested in bidding to purchase a failing institution.
The FDIC has indicated that it will consider abbreviated information submissions and applications, and may issue conditional approval for Deposit Insurance, in order to qualify interested parties for the FDIC’s failing institution bidders list. Investors that are interested in acquiring the deposits of failing institutions must have conditional approval for a charter from the responsible agency and meet the bid criteria established by the FDIC. In certain cases it would also be necessary to obtain conditional approval to establish a bank or thrift holding company. Please see our client alert concerning “shelf charters” here. Federal and State agencies are coordinating on specific information needs and timing requirements and ultimately the granting of a charter and Deposit Insurance.
We will continue to monitor the situation regarding the expanded bidder list as the FDIC updates its requirements.
As always, if you have any questions about this or another banking matter, please contact a member of the Financial Institutions Team at Womble Carlyle Sandridge & Rice, PLLC. Readers are urged to consult with their regular contacts at Womble Carlyle or Steve Dunlevie at 404-888-7401 or Betty Temple at 864-255-5415.
Womble Carlyle client alerts are intended to provide general information about significant legal developments and should not be construed as legal advice on any specific facts and circumstances, nor should they be construed as advertisements for legal services.
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