Wednesday, January 29, 2014

Beware Bair's Naming to Bank Board

Former FDIC Chair Sheila Bair gifted BankUnited to a consortium of private equity underwriters (PEU's) in the midst of the financial crisis.  After getting $2.4 billion in cash from the FDIC, BankUnited's PEU owners took the bank public a mere year after "saving it."  They stand ready to cash in further.  South Florida Business Journal reported:

BankUnited announced that its largest shareholders would sell a combined 8 million shares to the public in a secondary stock offering.

The Miami Lakes-based company (NYSE: BKU), the owner of the largest bank based in South Florida, said it would not receive any proceeds from the sale of its stock by the Blackstone Group, The Carlyle Group, WL Ross & Co. LLC and Centerbridge Partners.

Oddly, she dinged Tim Geithner's decision to cash in big as a PEU.

Former FDIC Chair Sheila Bair on Wednesday defended ex-Treasury Secretary Timothy Geithner's move to the private equity firm Warburg Pincus, but delivered a backhanded compliment to Geithner in the process.

When asked about the revolving door between Washington and Wall Street during an interview with HuffPost Live, Bair said that some people are actually better suited for the banking world than for policymaking -- and Geithner might be one of them.

"I don't think people should go work for entities they regulated, and Tim didn't, and I have not criticized Tim for that," Bair said.

After making this statement Sheila Bair accepted a board position with Banco Santander. (She already serves on the Host Hotels Board, think Marriott).

Santander values Bair’s experience and knowledge of financial markets in the U.S. where the bank runs retail banking and auto-loan businesses.

Apparently Bair's mirror offers little reflection.  Santander USA's largest shareholders is its Spanish parent and a number of PEU's, including Tim Geithner's Warburg Pincus Private Equity, KKR and Centerbridge (amply enriched in Bair's BankUnited gifting).

The little spat between Bair and Geithner is for public consumption.  Bair enriched PEU's as FDIC Chair and its time for PEU's to return the favor.  

Update 3-16-14:  FT mentioned Warburg's ownership stake in Santander

Update 3-27-14:  Sheila Bair's Banco Santander failed the latest round of Federal Reserve stress tests, as did Citigroup