FDIC Gains Private Partner for Toxic Loans

Federal Deposit Insurance Corporation FDIC bank banking finance bank closing teller sign and money, on texture
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.