The bonds are backed by long-term, low-rate loans made mainly to developers building affordable apartment buildings. They were part of a $114 billion portfolio that ended up with the Federal Deposit Insurance Corp. when it took over SVB and Signature.
The project-loan bonds the FDIC aims to offload amount to the volume that Ginnie Mae often sells in about a year. The trouble with these bonds underscores the pain that failed banks can bring to the government, even after new lenders take them over. The Financial Markets Advisory group, the BlackRock team that the FDIC hired, is a clean-up crew for financial crises that worked for the US government during the global financial crisis as well as during the outbreak of the pandemic in 2020. The $114 billion portfolio was the biggest the FDIC had ever found itself with in short order from failed banks.