July 21 The Federal Deposit Insurance Corp, a
regulator of U.S. banks, is itself embroiled in a mess related
to subprime mortgages, the Wall Street Journal said on Monday,
citing court documents.
The U.S. government gave out high-interest, subprime
mortgages, according to government documents filed in federal
court, the newspaper said.
The Journal said federal officials seized Superior Bank FSB,
a national subprime lender based in Illinois, in 2001, and the
FDIC continued to run the bank's subprime-mortgage business for
months as it looked for a buyer.
Superior funded more than 6,700 new subprime loans worth
more than $550 million, according to federal mortgage data, the
newspaper said, and the FDIC sold a big chunk of the loans to
The Journal also said Texas-based Beal Bank SSB bought a
portfolio of Superior loans, about half of which originated
under the FDIC.
Beal sued FDIC in 2002 and is seeking to recover damages
arising from the regulator's alleged breaches of contract
regarding subprime mortgage portfolios the bank bought from it,
according to court documents.
Beal said in an amended complaint filed in U.S. District
Court for the District of Columbia last year that it paid the
regulator nearly $340 million to buy 5,315 home mortgage loans
subject to the regulators representations and warranties.
The FDIC recently took over mortgage lender IndyMac
IDMC.PK after withdrawals by depositors led to the bank's
(Reporting by Varsha Tickoo in Bangalore and Paritosh Bansal in