Failed Banks May Get Pension-Fund Backing as FDIC Seeks Cash

[kpete]

Source: Bloomberg

Failed Banks May Get Pension-Fund Backing as FDIC Seeks Cash
March 08, 2010, 1:00 PM EST


By Dakin Campbell

March 8 (Bloomberg) -- The Federal Deposit Insurance Corp. is trying to encourage public retirement funds that control more than $2 trillion to buy all or part of failed lenders, taking a more direct role in propping up the banking system, said people briefed on the matter.

Direct investments may allow funds such as those in Oregon, New Jersey and California to cut fees for private-equity managers, and the agency to get better prices for distressed assets, the people said. They declined to be identified because talks with regulators are confidential.

Oregon’s retirement fund may contribute $100 million as regulators seek “the support of state pension funds to solve the crisis surrounding ongoing bank failures,” Jay Fewel, a senior investment officer at the Oregon State Treasury, said in a presentation at the fund’s Feb. 24 meeting. New Jersey’s fund may also participate, said Orin Kramer, chairman of New Jersey’s State Investment Council.

The FDIC shuttered 140 lenders last year and expects the tally may be higher in 2010. Regulators have avoided signing up private-equity firms as rescuers on concern that they might take too much risk. Pension funds, whose 100 largest members manage $2.4 trillion, could provide capital to acquire deposits and outstanding loans from collapsed banks, according to the people.

Read more: http://www.businessweek.com/news/2010-03-08/failed-banks-may-get-pension-fund-backing-as-fdic-seeks-cash.html

[DJ13]

1. avoided signing up private-equity firms ..concern that they might take too much risk

So let me get this straight, they dont want equity firms to buy them due to the risk, but they want the retirement funds to buy them and expose the retirement of millions of workers to the risk?

:banghead:

[dixiegrrrrl]

2. Wonder how many contributors will ever hear about this?

[Bozita]

3. pure unadulterated infuckingsanity!

So, ... pension funds (think old people) should invest in real risky stuff.

I think I'm going nuts.

[seanhartnett]

4. a better idea....

someone may bring to their attention an alternate idea of using those same funds to establish a state bank system based upon north dakota. it won't save the existing banks, but customers could quickly move to the new system leaving the commercial bankers to finally be left holding the bag. a win, win...

[MisterP]

5. will they put Milken in charge? that would be par for the course nt

[No Elephants]

6. Brilliant!

Inasmuch as retirees have Medicare, Social Security and access to low cost senior housing, they don't need anything else.

:sarcasm: