Government agencies don't generally enjoy a reputation of being cutting edge. Yet as it turns out, when it comes to using the Internet to advertise and sell unwanted loans, the federal government, and the Federal Deposit Insurance Corp. in particular, is a leader. In fact, the FDIC accounts for the lion's share of business on the two most popular online auction sites for such loans, HanoverTrade and DebtX. Many of the loans sold are linked to previous securitizations.

Since January of 2001, for example, HanoverTrade has auctioned $2.1 billion in loans, about $1.25 billion of which came from the FDIC, the Small Business Administration, and the Department of Housing and Urban Development. Meanwhile, DebtX, which has auctioned about $800 million in loans since its inception in January 2000, has handled eight FDIC deals. Although the specific value of those deals was not available, according to information on the company's Web site, just three of those deals totaled $226 million.

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