State banks like toxic assets plan

Nevada financial officials Monday welcomed news that the federal government will help private firms buy toxic assets from banks although many remain leery of what details are hidden in a mountain of documents.

Community banks in Nevada as well as giant multistate banks are eligible to sell mortgage-backed securities and problem loans through the government program, said George Burns, commissioner of the Financial Institutions Division.

"It's available to banks of all sizes," Burns said.

While few Nevada-based banks hold mortgage-backed securities that may be sold through the program, numerous Nevada banks have problem loans that also may be liquidated through the program, Burns said.

By selling off toxic assets, Nevada banks may be able to increase their lending, the commissioner said.

Dale Gibbons, chief financial officer of Western Alliance Bancorporation, the holding company for Bank of Nevada, saw strong points in the strategy.

He liked that the private sector will be putting up its own money to buy assets and will set the price for toxic assets.

"I think that's going to protect the taxpayer," Gibbons said.

"The Treasury (Department) is going to match (the private sector investments) dollar for dollar," he said. The Federal Deposit Insurance Corp. is going to guarantee financing provided for toxic asset purchases, making financing far cheaper than would be available in the private sector, Gibbons said.

"Short-term there is still going to be a lot of uncertainty," said Tim Coffey, vice president of research at FIG Partners. However, Coffey considers it a good plan for dealing with problem loans and securities.

"The question is going to be what price are people going to pay and how do you value the assets," said William Uffelman, chief executive officer of the Nevada Bankers Association.

Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.