Sunday, January 31, 2010

When Real Bankers = Shadow

Five banks failed this weekend. The FDIC transitioned assets from four to an existing bank. One they gave to brand new entity. The AP reported:

Miami-based Premier American Bank, N.A., a new bank with a national charter set up last week, is buying the deposits and $499.1 million of the assets of Florida Community Bank. The FDIC will retain the remaining assets for later sale. In addition, the FDIC and Premier American Bank – owned by the investment firm Bond Street Holdingsagreed to share losses on $305.4 million of Florida Community Bank's loans and other assets.

Who is behind Premier American Bank's corporate sponsor? Bond Street wrote the FDIC on the subject of failed bank acquisitions. The letter was signed Stuart I. Oren. Mr. Oren is a shadow banker, who sits on a number of corporate boards. One proxy filing describes Stuart as:

He is the Managing Member of Roxbury Capital Group LLC, a New York based merchant banking firm that he founded in April 2002. Since May 2009, Mr. Oran has also been a Senior Managing Director of FTI Consulting, a global business advisory firm.

Stuart saw the handwriting on the wall, i.e. there's money to be made from Uncle Sam. Did he watch The Carlyle Group et al's takeover of BankUnited? It became one of the best capitalized banks in America, virtually overnight. BankUnited announced an emphasis on commercial lending. One might think $4.9 billion in subsidies from Uncle Sam would be enough for Carlyle and company, but Obama could add more green to the trough.

In his State of the Union address this week, President Barack Obama said he will initiate a $30 billion program to provide money to community banks at low rates, if they boost lending to small businesses.

America's shadow bankers are now "real bankers." That the gifts keep coming from Uncle Sam should be no surprise. Now if we could just get bankers to lend.

Update: Private equity has $1 trillion in dry powder.

Update 2: Real bankers are going after PEU like returns with short term loans at 120% interest. Profits win over customer service, nearly every time.

Update 3: The Carlyle Group invested $150 million in a Bermuda bank. Yet affiliate Boston Private still owes Uncle Sam $153 million in TARP funds.