Capmark To File For Bankruptcy, More FDIC Headaches

Tyler Durden's picture

It's game over for Capmark, which is expected to file for bankruptcy within 24 hours. The firm which was formerly GMAC's commercial real estate business (Or GMAC Commercial Holding Ccapital Markets Corp in short), and had originated over $10 billion in CRE loans (by the way, did we say that CRE REITs are undervalued? if you didn't buy at least 5 shares of some multi-apartment or hotel REIT yesterday with every share of Amazon you were covering you are a bubble uninflating traitor and have to be shot for not believing in a 100x P/E), was LBOed by KKR and Goldman in 2006. Needless to say, that particular investment won't be making the next Calpers pitch book.

Hopefully at least Warren Buffett will make off like a bandit:

Capmark recently entered an agreement to sell its North American
servicing and mortgage-banking operations to a new company owned by
Warren Buffet's Berkshire Hathaway and Leucadia National Corp. for as
much as $490 million. Under the deal's terms, the sale could occur
while Capmark is in bankruptcy, but would require a bigger cash payment.

The other question is how this bankruptcy will impact Ms. Bair's soothing message that all is well with the banking system.

Adding to Capmark's pressures, the Federal Deposit Insurance Corp.
had notified the company that it must raise capital and boost liquidity
at its Utah bank, which has roughly $10 billion in assets.

The bank would not be part of Capmark's bankruptcy filing, a person familiar with the situation said.

Maybe not tomorrow, but give it a few weeks. If the operating company was specialized in underwriting the kinds of loans that were responsible for a $1.6 billion second quarter loss, one can imagine that GMAC's bank which in May changed its name to Ally to cover its tracks, can't be far behind, especially not with Ally desperately trying to poach depositors as recently as 4 months ago with abnormally high interest rates. Zero Hedge previously wrote about the ABA's complaint against Ally: if Ally was that desperate for deposits that it would pay far higher rates then, one can only imagine how bad things must be. And with $10 billion in assets getting the traditional 30-40% haircut, there goes another $4 billion that the insolvent FDIC does not have.