Comments on: When small-time banking pays off big-time http://blogs.reuters.com/breakingviews/2010/11/10/when-small-time-banking-pays-off-big-time/ Mon, 26 Sep 2016 03:26:00 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: JRD6348237 http://blogs.reuters.com/breakingviews/2010/11/10/when-small-time-banking-pays-off-big-time/comment-page-1/#comment-4806 Thu, 11 Nov 2010 21:40:36 +0000 http://blogs.reuters.com/columns/?p=4584#comment-4806 The unfortunately mishandled and aggressive foreclosures of residences is widely covered. I would very much like to see media coverage of the foreclosures on small businesses as aggravated by the FDIC’s shared-loss agreements with acquiring banks. The FDIC’s program incentivizes the bank to ‘close the file’ at any cost, rather than make an effort to preserve capital and jobs in a commercially reasonable settlement.

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By: JRD6348237 http://blogs.reuters.com/breakingviews/2010/11/10/when-small-time-banking-pays-off-big-time/comment-page-1/#comment-4805 Thu, 11 Nov 2010 21:33:43 +0000 http://blogs.reuters.com/columns/?p=4584#comment-4805 This disgorgement of riches by the FDIC is not an uncommon occurrence, by any means. The FDIC shared-loss agreements with the acquiring banks is an enormous ‘can’t lose’ deal for the lucky bank. The agreement is structured so that the acquiring bank can almost always foreclose on every asset in the pool at less risk than if they attempted to negotiate a settlement with the borrower. The bank is highly motivated to “close the file” rather than attempt to negotiate a commercially reasonable settlement.

The shared loss agreements create an obscene river of cash from the taxpayer to the bankers, at the expense of the businesses and their employees who are forced out into the hoards of unemployed.

I should add that I have no knowledge of residential mortgages so affected, but a good understanding of what the FDIC shared-loss agreements are doing to small businesses.

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