Comments Off on Marijuana-Reeking Tour Bus, Red Ferrari Are FDIC’s Crisis Booty

Marijuana-Reeking Tour Bus, Red Ferrari Are FDIC’s Crisis Booty

Posted June 25th, 2010 in Uncategorized by admin

The Omni National Bank tour bus

A 2001 Ferrari 360 Spider F1

A golf cart once owned by Riverside Bank

Freedom Bank’s armored truck

Dec. 22 (Bloomberg) — The financial crisis that popped the real estate bubble and pushed U.S. bank failures to a 17-year high landed the Federal Deposit Insurance Corp. a rapper’s tour bus that reeked of marijuana.

“It smelled so bad of pot after one tour that they had to completely pull out most of the interior and replace it,” said Jerry Jenkins, who sold the bus at Penny Worley Auctioneersafter the FDIC acquired it in the collapse of an Atlanta bank. “By the time we got it, it was almost brand-new.”

Worley Auctioneers, based in Maineville, Ohio, has the FDIC to thank for the bus, not to mention a red 2001 Ferrari, an eight-foot palm tree and stacks of unwanted office furniture — the detritus of 140 banks closed by the agency this year. Worley Auctioneers, Rick Levin & Associates and Tranzon Asset Strategies, the three firms hired by the FDIC to sell furnishings from shuttered branches and warehouses stuffed with repossessed collateral, are having a banner year.

The FDIC has reaped $6.2 million from the sale of so-called other assets in 2009, six times the total last year, according to the agency. While that’s a sliver of the $38.3 billion of failed bank assets that the FDIC held as of Sept. 30, any cash is useful after the surge in crippled lenders sent the FDIC’s deposit insurance fund into the red.

“Business has been good,” said Penny Worley, who opened her firm in 1993. “This can be a daunting task, because there are so much and so many different things. There’s an occasional Dali. There are rare gold coins.”

ATM Machine, Microwaves

Worley’s Web site offers a snapshot:

-Laptops, desk chairs and an ashtray, complete with stubbed-out cigarettes, from First Priority Bank of Bradenton, Florida, which failed in August 2008, and Freedom Bank, also in Bradenton, shut three months later.

-A Diebold ATM machine — empty, presumably — courtesy of Cooperative Bank of Wilmington, North Carolina, shuttered in June 2009.

-Ten refrigerators, plus assorted toasters and microwave ovens, from Vineyard Bank, the Rancho Cucamonga, California- based lender that lost more than $100 million last year as builders defaulted on construction loans. It was shut in July.

Then there was the tour bus, acquired by Omni National Bank in repossession from a leasing company before the Atlanta-based lender went bust in March, Jenkins said. The vehicle, which sported 12 coffin-like bunks, each with flat-panel televisions, sold for $310,000 to a company in Nashville, Tennessee, that leases buses to touring musicians.

Drive-Away Purchase

Financial assets such as real-estate loans are sold separately through auctions that can involve complex financing and profit-sharing arrangements. “Other assets” sales are as straightforward as old-fashioned live auctions.

When the electronic hammer comes down, a process conducted online, the deal is done and the auctioneers try to get the merchandise, and the customers, out the door as swiftly as possible. “PLEASE DO NOT BID if you are unable to remove your items during the scheduled removal times,” the auction company warns bidders.

“People get what we call auction frenzy,” Jenkins said. “We don’t want to give them a week to think about it afterwards, so items usually have to be picked up within one day.”

Most come prepared. That was the case with the Ferrari, a 360 Spider F1 with 27,363 miles that sold earlier this year. The buyer paid $61,000 for a car that New Frontier Bank of Greeley, Colorado, had repossessed from an auto dealer that had defaulted on a loan. The buyer arrived on a red-eye flight, paid cash, and drove away, Jenkins said.

Drag-Racing Truck

New Frontier, which cost the insurance fund $670 million, also left the FDIC with a 1,000-horsepower drag-racing Chevrolet pickup truck, and almost 1,000 milking cows. Sales from assets of other failed banks have included armored trucks, industrial equipment and Thomas H. Benton lithographs. The palm tree fetched $105.

The savings-and-loan and banking crisis of the 1980s produced even more unusual auctions, said Tom Moran, the FDIC’s resolutions and closing manager, based in Dallas. Back then, the FDIC ended up with items that ranged from yachts, antiques and luxury homes to paintings and sculptures, he said.

“I personally went in and found safety deposit boxes with things like collector-type guns,” Moran said.

Some of the one-of-a-kind items can provide special challenges. The FDIC is trying to unload a framed 10-by-70-foot watercolor mural by California artist Millard Sheets, Moran said, a sort of graphic history of California. It was seized when PFF Bank and Trust, a $3.7 billion bank in Pomona, California, failed in November 2008, leaving the insurance fund with $700 million in losses.

“It’s framed right to the wall, and we’re not sure how to get it off and protect it,” Moran said. “This is going to take a unique-type buyer.”

To contact the reporter on this story: James Sterngold in New York atjsterngold2@bloomberg.net

Comments Off on 90.3 WCPNideastream®: Failed Banks’ Assets Find Unusual Homes

90.3 WCPNideastream®: Failed Banks’ Assets Find Unusual Homes

Posted March 2nd, 2010 in Uncategorized by admin

Bankfailures can be dramatic. Regulators swoop in on a Friday night like a swatteam, seizing the troubled institution, and in most cases, orchestrate atakeover by another bank. But often the new owners don’t want everything,leaving the Federal Deposit Insurance Corporation stuck with unloved copiersand repossessed Bentleys. ideastream®’s Dan Bobkoff tells us what happens toeverything left behind

Therewere 140 bank failures last year—the most since the Savings and Loan crisis twodecades ago. That’s not great for the economy, but it’s very good news foranyone looking for a deal.

WORLEY:“It all has to go.”

PennyWorley is president of Penny Worley auctioneers near Cincinnati. That’sone of the three auction houses with contracts from the FDIC to sell off allthe leftover bits of failed banks.
WORLEY:“Everything from a 56 foot yacht to high tech conferencing systems, ITequipment, high end furniture.”

Worleyand her competitors place these so-called “other assets” online for auction.The proceeds only go a small ways to make up the losses to the FDIC’s fund, butevery bit helps.

Muchof the furniture and computer equipment goes to small businesses.BYERS:“They thought it was a really great concept to travel around in an armored carlimo.”

Byerslost out on the armored car, but he keeps bidding on other stuff.

BYERS:“I’ve bought fireproof filing cabinets. Couches, TV’s. I’ve bought safes, undercounter safes, big commercial safes, money counters.”

Thoseare particularly useful when your business involves a lot of dollar bills.

Byerssays more people know about the auctions now. It’s harder to get a real steal.But he still thinks it’s an opportunity.

BYERS:“I’m 45 years old. This is the last time I’ll ever see the banks collapse likethey’re doing so I gotta stock up on stuff that either I’m going to use or, ifI don’t, I just sell it off to somebody else.”

Banks’ loss; Byers’s gain.