Loans going, going, gone at FDIC auction
- By Joab Jackson
- May 07, 2004
The Federal Deposit Insurance Corp. has begun auctioning loans online in much the same way eBay sells Beanie Babies.
Last month, the agency conducted its first-ever online asset auction, agency spokesman David Barr said. Since mid-2003, the FDICSales.com Web site has notified potential bidders of sales. About $22.9 million worth of assets were sold, for $21.8 million.
FDIC, a self-funded independent agency, insures more than $3 trillion in U.S. bank and thrift deposits. If an institution goes bankrupt, FDIC sells its loans.
The agency held the electronic version of a so-called outcry auction, in which bidding starts at the lowest acceptable price, which is successively raised by competing parties. Top bidder wins each asset.
Forty-five financial institutions participated. They specified the maximum they would pay for a particular asset, and the FDICSales.com software automatically bid on their behalf by increments. The site displayed copies of the original loan documents for inspection.
Prior to the online auction system, FDIC sold assets through live, in-person auctions and by bids faxed in or sent by overnight courier.
'It was a more cumbersome process,' Barr said of the sealed-bid auctions, which allowed only one round of bidding and required FDIC personnel to enter the bids.
Joab Jackson is the senior technology editor for Government Computer News.