BankUnited Fails, Will Cost FDIC $4.9 BILLION

[Sapiens]

http://www.businessinsider.com/banku...billion-2009-5

After several tense days, during which Florida bank BankUnited scrambled to raise capital or sell itself, it has been shut down, put into receivership and sold to investors that include Wilbur Ross and the Carlyle Group.

It is the biggest bank failure of 2009 and it will cost the stretched FDIC $4.9 billion.

The FDIC's full announcement is here.

So how does the biggest bank failure since IndyMac square with what's putatively a stabilizing or "healing" banking sector, with a LIBOR rate that's returned to pre-crisis levels? Easy. The government is backing the entire thing up, and even with this failure (which the FDIC calls the "least costly" approach), bank investors are being ring-fenced and backstopped to all get out.

When the training wheels come off the sector, then we can get some clue about what's stabilizing, but in the meantime, events like these aren't very promising.

It's good to be the king. :rolleyes:

[Slimprofits]

Re: BankUnited Fails, Will Cost FDIC $4.9 BILLION

It is interesting that this wasn't done on Friday afternoon and over the weekend as is customary at FDIC.

Did the holiday weekend change things? I suppose Ms. Bair has plans at the beach.

[ax]

Re: BankUnited Fails, Will Cost FDIC $4.9 BILLION

It is interesting that this wasn't done on Friday afternoon and over the weekend as is customary at FDIC.

Did the holiday weekend change things? I suppose Ms. Bair has plans at the beach.

Good point, thought this was going to happen last Friday. Was there some trepidation over letting PE take over?

[zoog]

Re: BankUnited Fails, Will Cost FDIC $4.9 BILLION

So, according to the FDIC 2007 Annual Report, they had $53 billion to cover deposits. I can't seem to find a 2008 report (how convenient).

According to this WSJ story from March 2009, at the end of 2008 they had $19 billion.

Now another $5 billion gone, plus who knows how much more for smaller banks so far, and it's only May.

Only a matter of time:

WASHINGTON -- Senate Banking Committee Chairman Christopher Dodd is moving to allow the Federal Deposit Insurance Corp. to temporarily borrow as much as $500 billion from the Treasury Department.

[cjppjc]

Re: BankUnited Fails, Will Cost FDIC $4.9 BILLION

$500,000,000,000 :eek:

[jiimbergin]

Re: BankUnited Fails, Will Cost FDIC $4.9 BILLION

It is interesting that this wasn't done on Friday afternoon and over the weekend as is customary at FDIC.

Did the holiday weekend change things? I suppose Ms. Bair has plans at the beach.

They did close 2 banks late today (Friday).

http://bloomberg.com/apps/news?pid=2...d=a42Xg57jVTzM

May 22 (Bloomberg) -- Two Illinois banks with combined assets of almost $1 billion were closed by regulators, pushing the toll of failed U.S. lenders to 36 this year amid the longest recession since the 1930s.
Strategic Capital Bank in Champaign and Citizens National Bank in Macomb were closed and the Federal Deposit Insurance Corp. was named receiver of both, the FDIC said. Strategic Capital’s deposits were assumed by Midland States Bank of Effingham, Illinois, and deposits at Citizens National were purchased by Morton Community Bank.

[Slimprofits]

Re: BankUnited Fails, Will Cost FDIC $4.9 BILLION

so BankUnited was a special case or was it delayed from last week? It seems as if we're missing some details. They've been closing two every week for some time now.

[Judas]

Re: BankUnited Fails, Will Cost FDIC $4.9 BILLION

So, according to the FDIC 2007 Annual Report, they had $53 billion to cover deposits. I can't seem to find a 2008 report (how convenient).

According to this WSJ story from March 2009, at the end of 2008 they had $19 billion.

Now another $5 billion gone, plus who knows how much more for smaller banks so far, and it's only May.

Only a matter of time:

http://news.yahoo.com/s/ap/20090522/...s_bank_closure

"Legislation passed by Congress this week boosts the FDIC's authority to borrow from the Treasury Department if needed from $30 billion to $100 billion, allowing the agency to reduce the amount of the insurance fees."

[GRG55]

Re: BankUnited Fails, Will Cost FDIC $4.9 BILLION

http://news.yahoo.com/s/ap/20090522/...s_bank_closure

"Legislation passed by Congress this week boosts the FDIC's authority to borrow from the Treasury Department if needed from $30 billion to $100 billion, allowing the agency to reduce the amount of the insurance fees."

Isn't this another example of the standard FIRE economy solution...generate "better returns" by levering up the balance sheet...:rolleyes: :p

[Slimprofits]

Re: BankUnited Fails, Will Cost FDIC $4.9 BILLION

An effort by the Carlyle Group, a Washington, D.C.-based private equity firm, and other investors to buy the failed Silverton Bank of Atlanta, which provides services to smaller institutions nationwide, has fallen apart, ABA has learned. The FDIC informed the Silverton staff that the deal could not be completed and the agency was moving into liquidation. FDIC, which took over Silverton May 1, said shutting the bank down was less costly than the bids it had received. The bank had about 1,400 client banks, $4.1 billion in assets and $3.3 billion in deposits.

http://www.aba.com/News/insider.htm

[Mega]

Re: BankUnited Fails, Will Cost FDIC $4.9 BILLION

I wondered WHY the Gold price just jumped!
Mike

[Raz]

Re: BankUnited Fails, Will Cost FDIC $4.9 BILLION

I wondered WHY the Gold price just jumped!
Mike

Perhaps someone realized that thanks to vote-buying idiots like Chris Dodd, the Treasury of the United States is empty.
And the only way the Treasury can loan money to the FDIC (or anyone else) is to borrow it from me and thee, the Chinese, or counterfeit it. That serves to heighten interest in the "Fourth Currency".

I still think gold has another $30.00 to go on the downside - and possibly as much as $70.00. (I hope I DO have to eat those words!)

[jiimbergin]

Re: BankUnited Fails, Will Cost FDIC $4.9 BILLION

Perhaps someone realized that thanks to vote-buying idiots like Chris Dodd, the Treasury of the United States is empty.
And the only way the Treasury can loan money to the FDIC (or anyone else) is to borrow it from me and thee, the Chinese, or counterfeit it. That serves to heighten interest in the "Fourth Currency".

I still think gold has another $30.00 to go on the downside - and possibly as much as $70.00. (I hope I DO have to eat those words!)

I would not mind another $70 drop. I still could use some more.

jim