I've got a deal that you can't refuse. How would you like to buy a bank worth nearly $13 billion by assets for a measly $900 million?
That's what a group led by Blackstone Group LP (NYSE: BX) did. The bank in question is BankUnited, which failed and was taken over by the FDIC. Regulators decided to put it up for auction. Blackstone will share in $10.7 billion of the bank's 12.8 billion in assets. The government will will take 80% of the first $4 billion in losses and 95% of any remaining losses. In return the government will receive warrants giving it a share on any further upside.
BankUnited was the largest independent bank in Florida. Its demise was caused by its large portfolio of adjustable rate mortgages.Terms and conditions of the sale have been ongoing for several months
Regulators have been reluctant to put failed banks up for auction because of potential public criticism that the deals favor the buyer with the government taking the big hit. Such was the case earlier this year when JC Flowers Company bought the assets of IndyMac. In that deal the government had all the downside and the JC Flowers Company had all the upside.
So keep an eye out, you may be able to buy a bank on the cheap.
Do you believe that this deal is fair?
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Reader Comments (Page 1 of 1)
5-22-2009 @ 5:36PM
clikdawg said...
"There is no rule of fairness or reasonableness which regulates competition." (John G. Johnson and John G. Milburn, brief for Standard Oil Company, St. Louis, Missouri, 1909)
"Perhaps the most revolting character that the United States ever produced was the Christian businessman." (H.L. Mencken, 1956)
"Are we going to guarantee businessmen against their own incompetence?" (Willian Proxmire, 1979)
"Corruption is the market economy operating in political life." (Kenneth Boulding, 1965)
"Corruption of politics has nothing to do with the morals, or the laxity of morals, of various political personalities. Its cause is altogether a material one." (Emma Goldman, 1911)
"The Americans burn incense before democracy, but they are themselves ruled by the Boss and the Trust." (William Ralph Inge, 1919)
"The biggest corporation, like the humblest private citizen, must be held to strict compliance with the will of the people." (Theodore Roosevelt, 1902)
"Bigness is still the curse." (Louis Brandeis, 1940)
"There are no generalizations in American politics that vested selfishness cannot cut through." (John Gunther, 1947)
"Politics is property." (Murray Kempton, 1968)
"A Holding Company is a thing where you hand an accomplice the goods while the policeman searches you." (Will Rogers, 1949)
"I think politics is an instrument of the Devil. Just that clear. I think politics is what kills; it doesn't bring anything alive. Politics is corrupt; I mean, everybody knows that." (Bob Dylan, 1984)
"Nobody knows what's happening, and THAT'S what's happening." (Unattributed; can't remember where I read it)
"Drive safe this weekend, y'heah?" (clikdawg, 2009)
5-23-2009 @ 9:52AM
Mike Rath said...
FAIR???? When was the last time you paid more than you needed to for anything???