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Failed Banks May Get Pension-Fund Backing as FDIC Seeks Cash
Dakin Campbell
Bloomberg
Thursday, March 18th, 2010
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.
Full
article here
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