Monday, September 29, 2008

New World Order in Bank Acquisitions: Asset Stripping De Rigueur

In regulatory intervention, the regulators have the authority and have now the ability and willingness to strip the assets away from bondholders and stockholders, especially leaving them a smaller asset pool for recoveries. These powers were enacted with the FDIC Act of 1991 whereas many of the major bank failures in the last real estate cycle occured prior to the its passage. Therefore history has given little guidance in the way of a template of major bank resolutions under these circumstance.

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