Friday, January 2, 2009

Slackened Bank Buyer Regulations Inaugurated

America's shadow banking system will soon own a real bank. IndyMac will be sold to a consortium of private equity firms and hedge funds. They will own 100% of the bank and not have to declare themselves bank holding companies.

When John Paulson's hedge fund runs into trouble, will he call on his captive bank for a loan? How about JC Flowers or Dune Capital Management? When they see an asset on the cheap, will they ring affiliate IndyMac for levered debt?

Yet more "hair of the dog medicine" from BushCo as he slinks toward the exit. There are no regulations on who can own a bank, not when the shadow system qualifies. Too big to fail morphed into too huge to lose. How long before the taxpayer bails out the PEU boys for bad IndyMac loans? Stay tuned...