"This is one hell of a deal for those owners, but hardly a good deal for the banking industry, which pays the FDIC's bills," said Bert Ely, a longtime consultant to banks.
In taking over IndyMac's assets, the investor group, led by Steven Mnuchin of Dune Capital Management, put up $1.55 billion to revitalize the bank. Other investors included hedge-fund operators George Soros and John Paulson, bank buyout expert J. Christopher Flowers and computer mogul Michael S. Dell.
OneWest's financial results were filed with regulators Friday. Regulators and the investors declined to comment on the profit.
IndyMac failed in July 2008 after depositors, worried about its souring portfolio of complex mortgages, rushed to pull out cash. IndyMac specialized in loans that didn't require much borrower documentation, such as verification of income. And it became one of the earliest high-profile meltdowns in the mortgage market, which helped lead to a crisis that threatened to undermine the nation's financial system.
The run on deposits occurred too quickly for the FDIC to find another bank to take over the failing institution, forcing the agency to operate IndyMac for eight months. During that time, FDIC Chairwoman Sheila Bair oversaw the creation of an anti-foreclosure effort that became the model for the Obama administration's loan-modification program.
In selling the lender, the regulator agreed to absorb a large majority of the potential losses not yet recorded in IndyMac's loan portfolio.
The investors pledged to continue to restructure borrowers' loans.
They also said they would expand OneWest into a larger, solid retail bank. In December, they bought First Federal Bank of Los Angeles when it failed. OneWest's financial results for the fourth quarter do not include FirstFed figures.
The OneWest profit was reminiscent of those earned by aggressive investors who paid low prices for assets of numerous savings and loans that failed in the 1980s. But this time, such profit may make the FDIC a lightning rod for criticism of the government's efforts to clean up the latest debacle.
Posted via web from Living in Phoenix-Real estate-Neighborhoods & Homes
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