FDIC reintroduces loss-sharing technique

01/2/2009 | Wall Street Journal, The

In a further attempt to deal with the ongoing credit crunch, the Federal Deposit Insurance Corp. plans to reintroduce loss sharing as an incentive for healthy banks to acquire the assets of failed institutions with the government assuming most of any future losses. The technique, which was used during the savings-and-loan crisis, is "a good deal for everybody: the FDIC, the acquiring bank and the borrowers. It keeps the assets where they were," said Herb Held of the FDIC's division of resolutions and receiverships.

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