by Laura Conaway

American Banker is reporting that the FDIC has put the clamp on releasing certain types of information. Specifically, the FDIC has decided that for now it will no longer reveal losing bids for the assets for failed banks. If you're the winner, your bid is still public. If you're one of the losers, it's not.

 

In a note about "Failed Financial Institution Bid Documents," the FDIC writes:

The FDIC is currently undertaking a review of its disclosure policy concerning failed institution bids to ensure that the bidding process encourages an open flow of information and attracts the maximum participation by interested parties.

American Banker says banks don't like the secrecy because they used the data to help calculate future bids.

Over at Reuters, Matthew Goldstein knocks the FDIC for playing "hide the ball" in a year when 81 banks have failed. The number of troubled banks has jumped from 305 to 416. Goldstein writes:

[T]he FDIC has been forced to close banks at a brisk clip and just put in place a plan for allowing private equity firms to bid on bank assets.

Banks and other financial institutions never like to show weakness, and the issue of disclosure has been a sticky one throughout the economic crisis. A court recently ruled that the Federal Reserve must reveal the names of banks that have received help from its emergency loan program.

American Bankers reports that an unnamed source described as "familiar with the FDIC's thinking" says the agency is worried about a situation where a bank submits the highest bid but is rejected anyway. Would that leave the impression that the bidding bank was itself in trouble?

Jeffrey C. Gerrish, a former FDIC attorney, has a slightly different theory. "They don't want to do anything that chills acquirers bidding on failed banks," he told Ameican Banker. "The rationale might be, 'We don't want these folks who weren't successful to be in the public because they bid on it.' "

The FDIC expects to make a final decision by the end of September, American Banker reports.

(H/T: Ryan Chittum at Columbia Journalism Review)