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IPFS News Link • Contractors, Government & Military

BlackRock Can't Wait Forever to Sell Failed Banks' Assets

• by Scott Carpenter

The selection of a top-tier manager by the Federal Deposit Insurance Corporation, and assurances that the sales would be "gradual and orderly," helped assuage any concerns the government might choose to quickly offload the securities, according to analysts. Regulators amassed the assets, mostly in the form of mortgage backed securities, from failed lenders Signature Bank and Silicon Valley Bank.

Prices of MBS were only modestly lower early Thursday afternoon against Treasury and Secured Overnight Financing Rate hedges, suggesting traders had mostly anticipated the FDIC's strategy to eventually offload the debt.

BlackRock and the FDIC declined to comment.

Still, BlackRock doesn't have an unlimited amount of time to conduct its sales. The FDIC hasn't given a timeline for the sales, but as a practical matter it can't wait forever. It's paying the Federal Reserve interest on credit lines to hold the securities, and holding the assets a long time brings other difficulties.