The Federal Deposit Insurance Corp. said late Thursday that it has completed the sale of IndyMac Federal Bank FSB, the firm it took over last year, and that it took a $10.7 billion loss on the deal, far more than originally expected.
The FDIC said OneWest Bank, FSB, a newly formed Pasadena, California-based federal savings bank organized by IMB HoldCo LLC, would assume IndyMac's deposits.
"As of January 31, 2009, IndyMac Federal had total assets of $23.5 billion and total deposits of $6.4 billion. OneWest has agreed to purchase all deposits and approximately $20.7 billion in assets at a discount of $4.7 billion. The FDIC will retain the remaining assets for later disposition," the FDIC said in a press release.
I mention this for the following reasons:
1.) Nationalization advocates seem to think it's the best thing since sliced bread (at least to my ears). Yet three are no panaceas -- no easy answers to the questions faced by the financial sector right now.
2.) This is in line with the Swedish experience. While advocates point to the Swedish model as one to emulate Sweden still lost approximately 2% of thier GDP on the deal.
3.) I still think the best idea is to use the remaining TARP money to make one giant bank, transfer good assets to it and let the bad assets sit in the remaining shells.