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PE Bidders Not Allowed For Guaranty Financial Ahead Of Monday Deadline
The Financial Times is reporting that even as the FDIC probably managed to avert disaster by pushing off Colonial on to BB&T's lap on Friday, its troubles keep escalating. Sheila Bair is trying hard to sell Texas' Guaranty Financial ahead of a Monday deadline, however it may have used up its jokers on Colonial, which was supposed to be the "easy sell."
Guaranty’s fate has become intertwined in recent weeks with that of
Colonial Bank, an Alabama-based bank that was forcibly closed on Friday
and largely sold to BB&T, another regional bank, in an FDIC-backed
deal.
The FDIC, which is juggling failing banks around the US in an effort to
minimise the fallout to consumers, had initially wanted to resolve
Guaranty’s problems before Colonial’s by arranging a sale of Guaranty,
which is struggling under the weight of burgeoning losses on
homebuilder loans and mortgage-backed securities.
But regulators’ concerns over Colonial’s instability recently overtook
their worries about Guaranty, because of Colonial’s deteriorating
credit quality and its role in two federal investigations, so
regulators contacted bidders and asked for offers for Colonial last
week.
Regulators have been hoping that three banks that had bid for Colonial – Canada’s Toronto Dominion, JPMorgan and Spain’s BBVA – would step in instead as bidders for Guaranty.
Ironically, Sheila is doing as much as it can to prevent PE interest in the failed bank, effectively giving all the leverage in the hands of the banks, which are able to submit lowball bids, in the absence of other, truly interested parties:
At least one private equity consortium, which includes Blackstone, Carlyle, Oak Hill Capital, TPG and Gerald Ford, is considering a bid for Guaranty.
The FDIC, however, has long made clear that it prefers other banks
as buyers of troubled financial institutions rather than private equity
firms.
Heading into the weekend, the private equity firms had not been given access to Guaranty’s confidential financial data.
One wonders why the artificial barrier, but then one remembers that other BHC's have access to the Fed's discount window, and if the artificially inflated loans on Guaranty's balance sheet actually have to get repriced to par, the banks will have much better access to capital than some mere, capitalist entities such as private equity firms. As to whether the ensuing loss-sharing arrangement which will be so optimistic as to be laughable, but nonetheless will result in at least a $2 billion in loss to the FDIC, would not have a lower impact on the DIF if a truly transparent auction process would be allowed to occur. Then again, with a financial system that is draped in a cloak of pervasive opacity, can one expect anything less from the authorities that need to make sure your dollar is in the ATM machine when you wish to withdraw it tomorrow?
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They wil let PE bid and low ball...Mark my words!!!
People will do the right thing once every single alternative is exhausted. You're going to have to wait it out for a little while longer before they let PE wade into these banks.
They will let PE bid and low ball...Mark my words!!!
Suze Orman says you can't lose a penny if your money is in an FDIC insured account.
There'll be a test tomorrow...... that's a joke, not a forcast. :)
We just
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The FDIC is solvent, until it isn't...
The FDIC will remain solvent until it isn't...
What path will Sheila Bair take to preserve the power delegated to the FDIC?
The Blair Witch Project.
It is amazing that the government can get away with hand selecting buyers of banks... rather then opening up the bidding process to all qualified buyers including private equity... which by the way since they would have "skin in the game" would likely do a much better job managing the ongoing operations of the bank and reducing unnecessary risk...
Isn't that the point of the government in this whole process? To create an unequal playing field?
If the field was equal, if the bidding process transparent, then true price discovery might occur. That would be deleterious (understatement) to the notion that the financial system is solvent.
The government predetermines the winners and the losers Then they just come up with the system to justify their conclusions. And 99% of people pretend not to notice/care that this is happening.
The government doesn't want banks to reduce risk. How can you blow another bubble without the appropriate risk takers?
You summed it up brilliantly!
Provided of course the risk takers are guaranteed 100% by the full faith of the US Government. After all, we cannot be seen as allowing risk to be borne by private enterprise when the financial system is involved!
It would be so farking cool if a bank went down and turbo timmy wouldn't give the blair witch project any more money to cover the deposits. BANK RUN BAYBEE!!
And keep in mind the FDIC legally has 99 years to pay off all those obligations if the banks truly do collapse 8)
Sheila is going to have to go beg Turbo Tax Timmy for some money then the Oh-man is going to have to send Hillary over to China to do the same thing. HAaaaaaaaaaaaaa
That is a nonstarter, There will be unlimited FRNs to cover the deposits. The question is will the FED use QE to cover the deposits and how will that be received?
One of these fine *cough* public servants is gonna pull an Alan Smithee at some point.
Why doesn't she just have Citi take them over? It's just one big circle jerk anyway.
I guess the banks that are to small to save are getting devoured by the too big to fail banks. The big banks get the good stuff while the tax payer gets stuck with the junk.
What's pissed me off is that a lot of these small banks were funded by hot money provided by the big banks. They paid the JP Morgan’s of the world a high interest rate for this quick cash. The JP Morgan’s and such got a high interest rate of return with an FDIC guarantee.
How do you think that new sub-primer lending bank in your neighborhood got the cash for loans without a deposit base--HOT MONEY BITCHES. The big guys get the tarp, they get the 0% fed funds, and they get the good chunks of these failed banks--the vary same banks they funded with hot money. In short, these crooks are getting the good stuff and an FDIC reimbursement on the bad. They win both ways!
MadMax, That is the state of free market capitalism in the Anglo-Saxon world!
Nope no need for dollars at the ATM on monday here.. I already took my cash out of the bank.
But suze ortman is right- you can't lose a penny... That's how much your dollar will be worth when they finish printing enough money to cover all the insured deposits.
? The remainder of the concepts are old as mud. I have nothing against the paper itself.
We just
good articles; good articles 4 slow news day ..http://www..
hat tip: finance news & finance opinions
Just call GS's CEO and force him to buy it or else! Oh wait a sec. that only works on morons like the CEO of BAC. Never mind
Just call GS's CEO and force him to buy it or else! Oh wait a sec. that only works on morons like the CEO of BAC. Never mind
I'm telling you, go get your money back while you CAN. Even Jamie Dimon said in the Q2 conference call that the regional banks will be crushed.
and now the media is trying to catch up
WSJ: Loss Rates for FDIC higher than during S&L Crisis
http://online.wsj.com/article/SB125046283572235251.html
I'm moving money around like mad on Monday. Announcement for FDIC is the 26th, I think.
From the FDIC
"Today, after protecting almost $300 billion in deposits since the current financial crisis began, the FDIC's guarantee is as certain as ever. Our industry funded reserves have covered all losses to date. In fact, losses from today's failures are lower than had been projected. I commend our staff for their excellent work in assuring once again a smooth transition for bank customers with these resolutions. The FDIC continues to stand by the nation's insured deposits with the full faith and credit of the U.S. government. No depositor has ever lost a penny of their insured deposits."
Yep. Just as long at the Congress keeps on appropriating our tax money the FDIC needs since charging the banks the money needed to maintain the industry funded guarantee of all deposits is asking too much of the banks.
The song remains the same,
Again
Well, thank god all is well at the FDIC... by reading that you would think it is business as usual... could they not have given a balanced report of both the bad and good of the situation they are facing. Our government just perpetuates the skepticism of the public because they fail to provide an honest appraisal of how things really are when they have the opportunity... but instead put the 'happy spin' on everything... so then nothing they say can be believed by anyone except the most optimistic people who live in denial.
Denial - One of the strongest of all human emotions. Be it jobs, housing, banking, investments of all kinds, denial is what the oligarchs and kleptocrats are betting all of us on.
The FDIC cannot provide an honest assessment, as cannot any organ of government simply because to do so would spoil the effort af massive PSYOP to pump up "confidence". What a friggin racket. A racket fully funded and with the full force and guarantee of the American taxpayer and to those that derive their livelihoods from the same.
And while the powers that be continue to their vain attempt to treat our current circumstance as if it were simply a matter of liquidity loss rather than one of solvency loss the pathway to self destruction is assured.
Blair's populist appeasement is catching up to her, she needs to go. There is no reason to not let KKR or Blackstone in on this, she's a power mongering fool.
I'm shocked, shocked to find that BB&T common stock offering is going on in here!