WASHINGTON (AP) - The Federal Deposit Insurance Corp. has named
the first winning bidder under a test of the government's program to back private purchases of toxic mortgage assets and get them off banks' balance sheets.
Fort Worth, Texas-based Residential Credit Solutions Inc. is paying $64.2 million for a 50 percent stake in a new company that will have about $1.3 billion in home mortgages from the failed Franklin Bank.
The FDIC took over Houston-based Franklin Bank in November. Under the test sale to RCS, the new company will issue a note for $727.8 million to the FDIC.
The program is part of the government's public-private partnership to guarantee private investors' purchases of toxic assets to help banks raise new capital, get credit flowing and aid the economic recovery.