An investment group made up of private equity underwriters (PEU's) and individual fat cats ponied up $900 million for BankUnited. It would've been more, but the FDIC crammed down equity holders to zero. In addition, the FDIC offered $4.9 billion to sweeten the deal. CNBC reported:
"We're assuming that things will get a lot worse and that's why there was the need for the $4.9 billion from the FDIC on top of our $900 million," Ross told "Squawk Box."
BankUnited made the riskiest of loans, of which billions will come due between now and 2010. The government backstopped the junk for the PEU boys. How much of BU's toxic assets will Treasury buy or the Fed take as collateral? There has to be more than one way for the Rubenstein's and Peterson's of the world to profit handsomely. Super returns await. The Government-Industrial Monstrosity will insure it:
The FDIC said on Thursday it is close to providing more guidance for how private equity firms can invest in failing banks. The government is looking for ways to better tap the $1 trillion of total uninvested private equity capital as bank failures accelerate.
