The Government never ceases to amaze me...
BankUnited, a newly chartered federal savings bank, acquired the banking operations, including all of the nonbrokered deposits, of BankUnited, FSB, Coral Gables, Florida, in a transaction facilitated by the Federal Deposit Insurance Corporation (FDIC). As a result of this transaction, BankUnited, FSB, offices and branches will be operated as BankUnited offices and branches.
For those who don't follow The Market Ticker closely (or who are new to it and the forum) Tickerforum and Market Ticker readers know that I and many others made a very nice profit shorting these guys some time back; we identified this bank, among others, as ones that were absolutely going to be zeros.
Of course there's nothing particularly wrong with business failure - except when regulatory agencies ignore their mandate and let it cost the taxpayers billions. Like this time.
The FDIC facilitated the transaction with John Kanas and a consortium of investors after BankUnited, FSB, was closed today by the Office of Thrift Supervision, which appointed the FDIC as receiver. The FDIC estimates that the cost to its Deposit Insurance Fund will be $4.9 billion. BankUnited's acquisition of all the deposits and assets of BankUnited, FSB was the "least costly" resolution for the DIF compared to alternatives.
Sure, it was "least-costly" now. But PCA, "Prompt Corrective Action", is supposed to prevent a bank from getting here. And further, if the FDIC had done its damn job, along with the OTS, there would have been no loss, since according to the basic principles of sound banking if you never allow unsecured lending to exceed excess capital, there can never be a loss to the taxpayer or insurance fund!
Speaking of the OTS....
May 21 (Bloomberg) -- The Office of Thrift Supervision authorized “inappropriate” backdating of capital by six institutions, including IndyMac Bancorp Inc., that led to “misleading financial reporting,” the U.S.
