Marijuana-Reeking Tour Bus, Red Ferrari Are FDIC’s Crisis Booty
2009-12-22 05:01:01.0 GMT
By James Sterngold
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 Auctioneers
after 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 [TILB readers should be quite familiar with Vineyard].
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.”
*T
For Related News and Information:
Stories on FDIC: NI FDIC
Stories on bank failures: NI BANKFAIL
On the credit crisis: NI CRUNCH BN
Rescue programs: RESQ
Stories on banks: NI BNK
Today’s top financial stories: FTOP
*T
--Editors: Alec McCabe, William Ahearn.
To contact the reporter on this story:
James Sterngold in New York at +1-212-617-4946 or
jsterngold2@bloomberg.net
To contact the editor responsible for this story:
Alec D.B. McCabe at +1-212-617-4175 or
amccabe@bloomberg.net.
[HT: TW]
