Wednesday, May 27, 2009

PEU's Win Big with BankUnited

Last Thursday, the FDIC gifted BankUnited to Blackstone and The Carlyle Group. The private equity underwriters (PEU's) own between 20 and 25% of the Florida bank. The FDIC estimates their subsidy of the deal at $4.9 billion. noted the sterling outcome for the PEU boys:

BankUnited, a smaller player in a Florida market dominated by giants like Bank of America and Wachovia, now has an advantage over competitors because it is "overcapitalized" and completely independent, with no federal government TARP money.

This is newest version of "no strings attached" corporafornication. BU will have nearly $5 billion in federal subsidy, if the projected estimate is accurate. The PEU boys have a captive bank, one shifting focus to commercial loans. What a surprise, given David Marchick's recent remarks to a Senate committee. David noted staggering amounts of deal financing that would come due between 2010 and 2015. BankUnited's new chair will shop those deals from the Northeast, not South Florida.

Uncle Sam gave shadow bankers a real bank. Shadow banker greed and leverage brought the world to its knees. Now they get to buy what should be the rock of our financial system? How sad. President Obama loves PEU's and corporafornicates as well as George W. Bush. Next time, give $5 billion to real bankers, not the shadow version.