Sweetheart deal video draws FDIC response

Kansas City Star ^ | 2/12/2010

[JimWayne]

Just in time for Valentine’s Day, the Federal Deposit Insurance Corp. has responded critically to a video that berates the sale of IndyMac Bank’s failed remains as a sweetheart deal.

In the video “The Indymac Slap in our Face,” the website Thinkbigworksmall explains how the FDIC deal gave IndyMac’s buyers strong profit incentives to force foreclosures and short sales rather than to modify troubled mortgages. It’s a convincing tale and easy to follow.

[JimWayne]

The video can be viewed at http://www.thinkbigworksmall.com/mypage/player/tbws/23088/1531805. FDIC's response is evasive and does not talk of what percent of assets of Indymac is covered and they instead focus on the bank that took over Indymac. FDIC's response is here.

[Auntie Mame]

Here’s the FDIC’s response:

FDIC Provides Additional Information on its Loss Share Agreement With OneWest Bank

February 12, 2010

FDIC Director of Public Affairs Andrew Gray said, “It is unfortunate but necessary to respond to blatantly false claims in a web video that is being circulated about the loss-sharing agreement between the FDIC and OneWest Bank. Here are the facts: OneWest has not been paid one penny by the FDIC in loss-share claims. The loss-share agreement is limited to 7% of the total assets that OneWest services, and OneWest must first take more than $2.5 billion in losses before it can make a loss-share claim on owned assets. In order to be paid through loss share, OneWest must have adhered to the Home Affordable Modification Program (HAMP).

The producers of this video perpetuate other falsehoods. The FDIC has not requested to borrow money from the Treasury Department. Indeed, we continue to be funded by the banking industry through assessments, not by taxpayers as claimed in the video.

This video has no credibility. Regardless of the personal or professional motivations behind its production, there is always a responsibility to be factually correct and transparent. The FDIC made available a fact sheet on the day that the sale of IndyMac was announced that details the terms of the contract. It’s too bad that the creators of this video opted to premise it on falsehoods.”

Here’s their Supplemental Fact Sheet

Supplemental Facts about the Sale of Indymac F.S.B. to OneWest Bank

* IndyMac was competitively bid. After analysis, the acquisition by OneWest represented the least cost transaction to the Deposit Insurance Fund.
* OneWest not only acquired assets, but also assumed the liabilities of the insured deposits, Federal Home Loan Bank Advances, and amounts owed the FDIC
* OneWest has assumed a first loss position on a portfolio of qualifying loans where they take the first 20% of losses before any loss share payments are made. This is a first loss position of over $2.5 billion.
* The FDIC has yet to make a single loss share payment to OneWest.
* In its agreement with FDIC, OneWest is required to adhere to a loan modification protocol for single family loans that meets the approval of the FDIC. If the FDIC determines that OneWest is in violation of this agreement, then the FDIC can repudiate the loss share claims on the covered loans.
* FDIC has authorized OneWest to service single family loans under the Home Affordable Modification Program. It applies to all owner-occupied homes and requires OneWest to:
o follow HAMP procedures to develop affordable loan modification terms for the borrower
o determine whether the recovery on a modified loan is higher than the recovery from a short sale or foreclosure
o modify the loan using HAMP guidelines if the recovery of a modification is higher than the recovery of a short sale or foreclosure
o loss share coverage cannot be factored into any recovery calculation for loan modification, short sale or foreclosure.
* The FDIC monitors OneWest’s compliance with their adherence to the FDIC Mortgage Loan Modification Program and OneWest’s commitments under the asset sale agreement.
* Only 7% of loans OneWest services are owned by OneWest and covered under loss share. Other institutions own the remaining 93% of loans OneWest services. These loans are required to be serviced in accordance with the owner institutions’ agreements with OneWest.

[JimWayne]

It does not address the issues raised in the video. What does 7% mean? 7% of OneWest’s assets could mean 100% of Indymac’s assets. Besides, 7% is a lot. Why should they be covered if they want to claim that they took the liabilities. The point of the video was that they paid a degraded value for purchasing the loan but will be covered under the original value making a neat profit. That would be a bank robbery with the entire bank being robbed and merged with OneWest. The same thing happened to WaMu. They were robbed and the spoils were given to JP Morgan.

[nkycincinnatikid]

Sounds as though one west needs to take a paper loss of 500 million before the taxpayers dollars start rolling in. Thanks FDIC for the clarification. WE ALL KNOW THAT IF ONE WEST COULD ACTUALLY LOSTE ON THIS DEAL WE TAXPAYERS WOULD HAVE TO COVER THE LOSSES.

[CPT Clay]

Bump

[seton89]

How Sheila Bair (head of the FDIC) redacts documents requested under FoIA:

http://www.bizjournals.com/seattle/blog/2009/12/the_fight_for_wamu_documents.html

[Auntie Mame]

It does not address the issues raised in the video.

Yes. This is also interesting:

The FDIC made available a fact sheet on the day that the sale of IndyMac was announced that details the terms of the contract.

So, FDIC, where is this "fact sheet?"

[Auntie Mame]

LOL! EVERYTHING blacked out. That’s just plain insulting.

[seton89]

Mame, you just don’t understand-

The White House press release said: “Today’s announcement will help to make government more open, transparent, and accountable to bridge the gap between the American people and their government.”

[KCMC]

This formula is soooo complicated you just know that someone is making a boatload of money because a normal person cant follow.

The Federal Government - our 4th class of people Upper, middle, lower and now GOVERNMENTAL!!!!