Banks' auctioned assets include oddities

The financial crisis that popped the real estate bubble and pushed United States bank failures to a 17-year high left the Federal Deposit Insurance Corp with 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, a 2.4m 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 US$6.2 million ($8.9 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 US$38.3 billion of failed bank assets that the FDIC held as of September 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. "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."

Worley's website 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 Co-operative Bank of Wilmington, North Carolina, shuttered in June 2009.

- Ten refrigerators, plus assorted toasters and microwave ovens, from Vineyard Bank, the California-based lender that lost more than US$100 million last year as builders defaulted on construction loans.

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 US$310,000 to a company in Nashville, Tennessee, that leases buses to touring musicians.

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 out the door as swiftly as possible.

Sales from assets of other failed banks have included armoured trucks, industrial equipment, 1000 milking cows and Thomas H. Benton lithographs.

- BLOOMBERG