Capmark

After seven months of investigating Goldman Sachs' legal and compliance divisions, former NYFed examiner Carmen Segarra found numerous conflicts of interest and breach of client ethics (specifically related to three transactions - Solyndra, Capmark, and the El Paso / Kinder Morgan deal) that she believed warranted a downgrade of Goldman's regulatory rating. Her bosses were not happy, concerned that this action would hurt Goldman's ability to do business, and, she alleges, they urged her to change her position. She refused, and as Reuters reports, she was fired and escorted from the building. “I was just documenting what Goldman was doing,” she said. “If I was not able to push through something that obvious, the [NY Fed] certainly won’t be capable of supervising banks when even more serious issues arise.”

If history has taught us anything, it is that those with the most money are not necessarily those that are best at investing money. There is a saying that encapsulates this in a somewhat more erudite manner (I would never be so forward, or so rude :-)) - "When playing poker, look around the table. If you can't find the sucker, it is probably you!". Obviously, the guys at Capmark didn't read BoomBustBlog...

Back in September, Capmark Financial Group, Inc., (100% owner of Capmark Bank) spiked Capmark Bank's capital with a $600 million dollar transfer of $490 some million in cash and $100 some million in "servicing advances." Just to keep everyone up to speed, in June of this year, Capmark Bank reported total assets of $11.12 billion and outstanding deposits of $8.39 billion. No small fish, Capmark. Just a few days after the hot cash injection, on October 2 to be precise, Capmark Financial consented to the entry of "Cease and Desist" orders effective immediately and imposing an 8% Tier 1 leverage ratio requirement on Capmark Bank along with a "Total Risk Based Capital" ratio of 10%. The firm was also required to issue capital plans to the FDIC and Utah authorities within 45 days.

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.