BlackRock Inc. will begin selling failed banks’ securities to help the Federal Deposit Insurance Corp. offload $114 billion of assets it picked up from Silicon Valley Bank and Signature Bank. Meanwhile, Wells Fargo & Co. became the first large US lender to sell bonds since the collapse of Silicon Valley Bank. Su Keenan reports on Bloomberg Television.

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BlackRock, the largest investment management company in the world, has been selected by the Federal Deposit Insurance Corporation (FDIC) to manage the sale of securities from failed banks. The FDIC is responsible for insuring deposits in banks and resolving failed financial institutions, and as part of its role, it takes over the securities of failed banks.

The FDIC has accumulated a significant portfolio of securities from failed banks, and it has been seeking to sell them to recoup the funds deposited in those financial institutions. The securities comprise mortgage-backed securities, collateralized debt obligations, and other complex investments that became toxic during the financial crisis of 2008.

The FDIC has turned to BlackRock to tap its expertise in managing such securities, and the firm’s extensive network of investors to sell these securities. BlackRock has a track record of successfully managing and disposing of such assets, having managed similar assets for large institutional investors.

BlackRock will act as a fiduciary to the FDIC, managing the sale of the securities in a way that maximizes the value for taxpayers. As part of its role, BlackRock will create an investment vehicle to hold the securities, and sell them through an auction process.

The auction process will be open to a broad set of investors, including hedge funds, pension funds, and other institutional investors. The sale of the securities is expected to generate significant interest, given the current market conditions, and the potential for attractive returns.

The FDIC has noted that the partnership with BlackRock is a crucial part of its ongoing efforts to resolve failed financial institutions and protect taxpayers. By relying on BlackRock’s expertise and capabilities, the FDIC expects to achieve a successful sale of the securities, while also managing the risk associated with these complex investments.

The sale of failed banks’ securities by BlackRock for the FDIC is a positive development for the financial sector, and the broader economy. The successful sale of these securities will provide much-needed funds to the FDIC, which can be used to stabilize the banking system and protect depositors.

Overall, this partnership underscores the importance of capable asset management and disposition in resolving the aftermath of financial crises. As the economy continues to recover from the pandemic, we may see a growing need for these types of services as banks and other financial institutions struggle with loan defaults and other challenges.