[quote=SK in CV]The RTC was actually better than most commercial lenders, and the steals people got from the RTC are legendary.
[/quote]
Speaking of the RTC and steals… I’ve got a buddy who works for a firm that just bought $1.7 billion (unpaid principal balance) from the FDIC for $460 million. Now these loans are all pretty crappy, hence the 73% discount. But here’s what’s going to happen at the micro level. Let’s say there’s a $10 million credit to ABC Company. The bank that underwrote the original loan has failed (which is how the FDIC ended up with the loan), so no one’s beating down ABC’s door anymore. So, my buddy’s company will go to ABC and say, “We now own this loan. We don’t want to liquidate your company. $10 million was obviously too much for you to service. But if you can service $5 million and find a bank willing to lend it to you, we’ll let you out of the obligation for $5 million.” ABC will likely find a bank willing to re-underwrite the credit at $5 million (my two banks are doing a little bit of this), so my buddy’s firm will end up with $5 million on a credit for which they paid about $2.5 million, or almost 100% return. And the FDIC eats the other $5 million.
So, while the RTC was not resurrected this time around… it sure feels like the good ‘ole days! File under: History doesn’t repeat, but it rhymes.
