Home › Forums › Financial Markets/Economics › PE group buys IndyMac (taxpayers get shafted)
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patientrenter.
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January 2, 2009 at 3:10 PM #14735January 2, 2009 at 3:40 PM #322715
TheBreeze
ParticipantBy the way, my prediction on this deal: The PE guys find a way to saddle IndyMac with enormous debt while making out like bandits for themselves. IndyMac fails again within three years with the taxpayers taking an even bigger hit than they took the first time.
January 2, 2009 at 3:40 PM #323216TheBreeze
ParticipantBy the way, my prediction on this deal: The PE guys find a way to saddle IndyMac with enormous debt while making out like bandits for themselves. IndyMac fails again within three years with the taxpayers taking an even bigger hit than they took the first time.
January 2, 2009 at 3:40 PM #323136TheBreeze
ParticipantBy the way, my prediction on this deal: The PE guys find a way to saddle IndyMac with enormous debt while making out like bandits for themselves. IndyMac fails again within three years with the taxpayers taking an even bigger hit than they took the first time.
January 2, 2009 at 3:40 PM #323059TheBreeze
ParticipantBy the way, my prediction on this deal: The PE guys find a way to saddle IndyMac with enormous debt while making out like bandits for themselves. IndyMac fails again within three years with the taxpayers taking an even bigger hit than they took the first time.
January 2, 2009 at 3:40 PM #323120TheBreeze
ParticipantBy the way, my prediction on this deal: The PE guys find a way to saddle IndyMac with enormous debt while making out like bandits for themselves. IndyMac fails again within three years with the taxpayers taking an even bigger hit than they took the first time.
January 2, 2009 at 4:04 PM #323146davelj
ParticipantJesus, Breeze! Slow the hell down. I see you’ve learned absolutely nothing from our prior discussions.
From what I can surmise, the taxpayers are NOT financing “91% of this deal.” You simply don’t know enough about banking to comment intelligently on this stuff. The article clearly states that IMB will be taking on $6.5 billion in deposits in the deal. Deposits are liabilities, Breeze. I thought I cleared that up in a prior post.
Now, part of the problem here is that I THINK the reported “deal value” is not the ACTUAL deal value. From what I can gather, the FDIC is selling ASSETS with a (discounted) value of $13.9 billion (in addition to deposits and branches) to IMB, whereby IMB will put up $1.3 billion in cash in order to capitalize the company. I believe that in this instance the reporters (who will just quote each other until someone corrects them) are confusing the amount of assets being sold with the “deal value,” not realizing that a bunch of liabilities are being transferred along with the assets. Reporters often get the facts confused in complicated deals (which this one is).
For some perspective, IndyMac’s PEAK market cap – back during the Bubble – was just shy of $3 billion. Now does it make any sense whatsoever for an investor group to pay $13.9 billion for a now failed company that previously had a peak value of less than $3 billion as a healthy company? Please. So, I’m pretty sure that the reporters have got something screwed up here and we’ll find out in due time.
I suspect that the investor group is putting up $1.3 billion in cash to capitalize the new company, then they’re taking on $6.5 billion in deposits, they’ll raise another $2 billion in the wholesale deposit market, and fund the remainder of the assets with FHLB borrowings. That would result in a pretty normal S&L structure. And then they have the loss sharing agreement with the FDIC.
Now, my read could be wrong here. And I’m willing to admit that. But what I know for sure is that we still don’t have enough information on this transaction to know exactly what’s going on here. So, why don’t we heed the following from the FDIC’s website and wait until we have more info: “The transaction is expected to close in late January or early February, at which time full details of the agreement will be provided.” This may be a horrible deal for us taxpayers. But, frankly, until we see the balance sheet and actually understand more about the deal, we simply don’t have enough information to know.
January 2, 2009 at 4:04 PM #323226davelj
ParticipantJesus, Breeze! Slow the hell down. I see you’ve learned absolutely nothing from our prior discussions.
From what I can surmise, the taxpayers are NOT financing “91% of this deal.” You simply don’t know enough about banking to comment intelligently on this stuff. The article clearly states that IMB will be taking on $6.5 billion in deposits in the deal. Deposits are liabilities, Breeze. I thought I cleared that up in a prior post.
Now, part of the problem here is that I THINK the reported “deal value” is not the ACTUAL deal value. From what I can gather, the FDIC is selling ASSETS with a (discounted) value of $13.9 billion (in addition to deposits and branches) to IMB, whereby IMB will put up $1.3 billion in cash in order to capitalize the company. I believe that in this instance the reporters (who will just quote each other until someone corrects them) are confusing the amount of assets being sold with the “deal value,” not realizing that a bunch of liabilities are being transferred along with the assets. Reporters often get the facts confused in complicated deals (which this one is).
For some perspective, IndyMac’s PEAK market cap – back during the Bubble – was just shy of $3 billion. Now does it make any sense whatsoever for an investor group to pay $13.9 billion for a now failed company that previously had a peak value of less than $3 billion as a healthy company? Please. So, I’m pretty sure that the reporters have got something screwed up here and we’ll find out in due time.
I suspect that the investor group is putting up $1.3 billion in cash to capitalize the new company, then they’re taking on $6.5 billion in deposits, they’ll raise another $2 billion in the wholesale deposit market, and fund the remainder of the assets with FHLB borrowings. That would result in a pretty normal S&L structure. And then they have the loss sharing agreement with the FDIC.
Now, my read could be wrong here. And I’m willing to admit that. But what I know for sure is that we still don’t have enough information on this transaction to know exactly what’s going on here. So, why don’t we heed the following from the FDIC’s website and wait until we have more info: “The transaction is expected to close in late January or early February, at which time full details of the agreement will be provided.” This may be a horrible deal for us taxpayers. But, frankly, until we see the balance sheet and actually understand more about the deal, we simply don’t have enough information to know.
January 2, 2009 at 4:04 PM #323130davelj
ParticipantJesus, Breeze! Slow the hell down. I see you’ve learned absolutely nothing from our prior discussions.
From what I can surmise, the taxpayers are NOT financing “91% of this deal.” You simply don’t know enough about banking to comment intelligently on this stuff. The article clearly states that IMB will be taking on $6.5 billion in deposits in the deal. Deposits are liabilities, Breeze. I thought I cleared that up in a prior post.
Now, part of the problem here is that I THINK the reported “deal value” is not the ACTUAL deal value. From what I can gather, the FDIC is selling ASSETS with a (discounted) value of $13.9 billion (in addition to deposits and branches) to IMB, whereby IMB will put up $1.3 billion in cash in order to capitalize the company. I believe that in this instance the reporters (who will just quote each other until someone corrects them) are confusing the amount of assets being sold with the “deal value,” not realizing that a bunch of liabilities are being transferred along with the assets. Reporters often get the facts confused in complicated deals (which this one is).
For some perspective, IndyMac’s PEAK market cap – back during the Bubble – was just shy of $3 billion. Now does it make any sense whatsoever for an investor group to pay $13.9 billion for a now failed company that previously had a peak value of less than $3 billion as a healthy company? Please. So, I’m pretty sure that the reporters have got something screwed up here and we’ll find out in due time.
I suspect that the investor group is putting up $1.3 billion in cash to capitalize the new company, then they’re taking on $6.5 billion in deposits, they’ll raise another $2 billion in the wholesale deposit market, and fund the remainder of the assets with FHLB borrowings. That would result in a pretty normal S&L structure. And then they have the loss sharing agreement with the FDIC.
Now, my read could be wrong here. And I’m willing to admit that. But what I know for sure is that we still don’t have enough information on this transaction to know exactly what’s going on here. So, why don’t we heed the following from the FDIC’s website and wait until we have more info: “The transaction is expected to close in late January or early February, at which time full details of the agreement will be provided.” This may be a horrible deal for us taxpayers. But, frankly, until we see the balance sheet and actually understand more about the deal, we simply don’t have enough information to know.
January 2, 2009 at 4:04 PM #323069davelj
ParticipantJesus, Breeze! Slow the hell down. I see you’ve learned absolutely nothing from our prior discussions.
From what I can surmise, the taxpayers are NOT financing “91% of this deal.” You simply don’t know enough about banking to comment intelligently on this stuff. The article clearly states that IMB will be taking on $6.5 billion in deposits in the deal. Deposits are liabilities, Breeze. I thought I cleared that up in a prior post.
Now, part of the problem here is that I THINK the reported “deal value” is not the ACTUAL deal value. From what I can gather, the FDIC is selling ASSETS with a (discounted) value of $13.9 billion (in addition to deposits and branches) to IMB, whereby IMB will put up $1.3 billion in cash in order to capitalize the company. I believe that in this instance the reporters (who will just quote each other until someone corrects them) are confusing the amount of assets being sold with the “deal value,” not realizing that a bunch of liabilities are being transferred along with the assets. Reporters often get the facts confused in complicated deals (which this one is).
For some perspective, IndyMac’s PEAK market cap – back during the Bubble – was just shy of $3 billion. Now does it make any sense whatsoever for an investor group to pay $13.9 billion for a now failed company that previously had a peak value of less than $3 billion as a healthy company? Please. So, I’m pretty sure that the reporters have got something screwed up here and we’ll find out in due time.
I suspect that the investor group is putting up $1.3 billion in cash to capitalize the new company, then they’re taking on $6.5 billion in deposits, they’ll raise another $2 billion in the wholesale deposit market, and fund the remainder of the assets with FHLB borrowings. That would result in a pretty normal S&L structure. And then they have the loss sharing agreement with the FDIC.
Now, my read could be wrong here. And I’m willing to admit that. But what I know for sure is that we still don’t have enough information on this transaction to know exactly what’s going on here. So, why don’t we heed the following from the FDIC’s website and wait until we have more info: “The transaction is expected to close in late January or early February, at which time full details of the agreement will be provided.” This may be a horrible deal for us taxpayers. But, frankly, until we see the balance sheet and actually understand more about the deal, we simply don’t have enough information to know.
January 2, 2009 at 4:04 PM #322725davelj
ParticipantJesus, Breeze! Slow the hell down. I see you’ve learned absolutely nothing from our prior discussions.
From what I can surmise, the taxpayers are NOT financing “91% of this deal.” You simply don’t know enough about banking to comment intelligently on this stuff. The article clearly states that IMB will be taking on $6.5 billion in deposits in the deal. Deposits are liabilities, Breeze. I thought I cleared that up in a prior post.
Now, part of the problem here is that I THINK the reported “deal value” is not the ACTUAL deal value. From what I can gather, the FDIC is selling ASSETS with a (discounted) value of $13.9 billion (in addition to deposits and branches) to IMB, whereby IMB will put up $1.3 billion in cash in order to capitalize the company. I believe that in this instance the reporters (who will just quote each other until someone corrects them) are confusing the amount of assets being sold with the “deal value,” not realizing that a bunch of liabilities are being transferred along with the assets. Reporters often get the facts confused in complicated deals (which this one is).
For some perspective, IndyMac’s PEAK market cap – back during the Bubble – was just shy of $3 billion. Now does it make any sense whatsoever for an investor group to pay $13.9 billion for a now failed company that previously had a peak value of less than $3 billion as a healthy company? Please. So, I’m pretty sure that the reporters have got something screwed up here and we’ll find out in due time.
I suspect that the investor group is putting up $1.3 billion in cash to capitalize the new company, then they’re taking on $6.5 billion in deposits, they’ll raise another $2 billion in the wholesale deposit market, and fund the remainder of the assets with FHLB borrowings. That would result in a pretty normal S&L structure. And then they have the loss sharing agreement with the FDIC.
Now, my read could be wrong here. And I’m willing to admit that. But what I know for sure is that we still don’t have enough information on this transaction to know exactly what’s going on here. So, why don’t we heed the following from the FDIC’s website and wait until we have more info: “The transaction is expected to close in late January or early February, at which time full details of the agreement will be provided.” This may be a horrible deal for us taxpayers. But, frankly, until we see the balance sheet and actually understand more about the deal, we simply don’t have enough information to know.
January 2, 2009 at 4:53 PM #323104TheBreeze
Participant[quote=davelj]Jesus, Breeze! Slow the hell down. I see you’ve learned absolutely nothing from our prior discussions.
From what I can surmise, the taxpayers are NOT financing “91% of this deal.” You simply don’t know enough about banking to comment intelligently on this stuff. The article clearly states that IMB will be taking on $6.5 billion in deposits in the deal. Deposits are liabilities, Breeze. I thought I cleared that up in a prior post.
[/quote]Yes, I understand that deposits are liabilities. The article states that the ‘deal’ is valued at $13.9 billion — presumably that is net of assets and liabilities. This article clearly states that the sale of “IndyMac” includes the deposits:
Following is the FDIC’s fact sheet on the agreement:
* The transaction is structured as a sale of IndyMac to IMB HoldCo, controlled by IMB Management Holdings, for approximately $13.9 billion
* IndyMac consists of:
– The retail bank headquartered in Pasadena, California, with 33 branches located primarily in the Los Angeles with about $6.5 billion in deposits
[quote=davelj]
For some perspective, IndyMac’s PEAK market cap – back during the Bubble – was just shy of $3 billion. Now does it make any sense whatsoever for an investor group to pay $13.9 billion for a now failed company that previously had a peak value of less than $3 billion as a healthy company? Please. So, I’m pretty sure that the reporters have got something screwed up here and we’ll find out in due time.
[/quote]It looks to me like the FDIC caused the confusion with their fact sheet. But, if the FDIC and uninsured depositors ate several billion in losses, then couldn’t that raise the value of the bank to $13.9 billion?
In any event, with such a small amount of capital injected and the taxpayers being forced to eat most of the loan losses, it looks like the PE guys are well protected and could make out like bandits (especially if they can sell their loan portfolio to the TARP).
January 2, 2009 at 4:53 PM #323261TheBreeze
Participant[quote=davelj]Jesus, Breeze! Slow the hell down. I see you’ve learned absolutely nothing from our prior discussions.
From what I can surmise, the taxpayers are NOT financing “91% of this deal.” You simply don’t know enough about banking to comment intelligently on this stuff. The article clearly states that IMB will be taking on $6.5 billion in deposits in the deal. Deposits are liabilities, Breeze. I thought I cleared that up in a prior post.
[/quote]Yes, I understand that deposits are liabilities. The article states that the ‘deal’ is valued at $13.9 billion — presumably that is net of assets and liabilities. This article clearly states that the sale of “IndyMac” includes the deposits:
Following is the FDIC’s fact sheet on the agreement:
* The transaction is structured as a sale of IndyMac to IMB HoldCo, controlled by IMB Management Holdings, for approximately $13.9 billion
* IndyMac consists of:
– The retail bank headquartered in Pasadena, California, with 33 branches located primarily in the Los Angeles with about $6.5 billion in deposits
[quote=davelj]
For some perspective, IndyMac’s PEAK market cap – back during the Bubble – was just shy of $3 billion. Now does it make any sense whatsoever for an investor group to pay $13.9 billion for a now failed company that previously had a peak value of less than $3 billion as a healthy company? Please. So, I’m pretty sure that the reporters have got something screwed up here and we’ll find out in due time.
[/quote]It looks to me like the FDIC caused the confusion with their fact sheet. But, if the FDIC and uninsured depositors ate several billion in losses, then couldn’t that raise the value of the bank to $13.9 billion?
In any event, with such a small amount of capital injected and the taxpayers being forced to eat most of the loan losses, it looks like the PE guys are well protected and could make out like bandits (especially if they can sell their loan portfolio to the TARP).
January 2, 2009 at 4:53 PM #323165TheBreeze
Participant[quote=davelj]Jesus, Breeze! Slow the hell down. I see you’ve learned absolutely nothing from our prior discussions.
From what I can surmise, the taxpayers are NOT financing “91% of this deal.” You simply don’t know enough about banking to comment intelligently on this stuff. The article clearly states that IMB will be taking on $6.5 billion in deposits in the deal. Deposits are liabilities, Breeze. I thought I cleared that up in a prior post.
[/quote]Yes, I understand that deposits are liabilities. The article states that the ‘deal’ is valued at $13.9 billion — presumably that is net of assets and liabilities. This article clearly states that the sale of “IndyMac” includes the deposits:
Following is the FDIC’s fact sheet on the agreement:
* The transaction is structured as a sale of IndyMac to IMB HoldCo, controlled by IMB Management Holdings, for approximately $13.9 billion
* IndyMac consists of:
– The retail bank headquartered in Pasadena, California, with 33 branches located primarily in the Los Angeles with about $6.5 billion in deposits
[quote=davelj]
For some perspective, IndyMac’s PEAK market cap – back during the Bubble – was just shy of $3 billion. Now does it make any sense whatsoever for an investor group to pay $13.9 billion for a now failed company that previously had a peak value of less than $3 billion as a healthy company? Please. So, I’m pretty sure that the reporters have got something screwed up here and we’ll find out in due time.
[/quote]It looks to me like the FDIC caused the confusion with their fact sheet. But, if the FDIC and uninsured depositors ate several billion in losses, then couldn’t that raise the value of the bank to $13.9 billion?
In any event, with such a small amount of capital injected and the taxpayers being forced to eat most of the loan losses, it looks like the PE guys are well protected and could make out like bandits (especially if they can sell their loan portfolio to the TARP).
January 2, 2009 at 4:53 PM #323181TheBreeze
Participant[quote=davelj]Jesus, Breeze! Slow the hell down. I see you’ve learned absolutely nothing from our prior discussions.
From what I can surmise, the taxpayers are NOT financing “91% of this deal.” You simply don’t know enough about banking to comment intelligently on this stuff. The article clearly states that IMB will be taking on $6.5 billion in deposits in the deal. Deposits are liabilities, Breeze. I thought I cleared that up in a prior post.
[/quote]Yes, I understand that deposits are liabilities. The article states that the ‘deal’ is valued at $13.9 billion — presumably that is net of assets and liabilities. This article clearly states that the sale of “IndyMac” includes the deposits:
Following is the FDIC’s fact sheet on the agreement:
* The transaction is structured as a sale of IndyMac to IMB HoldCo, controlled by IMB Management Holdings, for approximately $13.9 billion
* IndyMac consists of:
– The retail bank headquartered in Pasadena, California, with 33 branches located primarily in the Los Angeles with about $6.5 billion in deposits
[quote=davelj]
For some perspective, IndyMac’s PEAK market cap – back during the Bubble – was just shy of $3 billion. Now does it make any sense whatsoever for an investor group to pay $13.9 billion for a now failed company that previously had a peak value of less than $3 billion as a healthy company? Please. So, I’m pretty sure that the reporters have got something screwed up here and we’ll find out in due time.
[/quote]It looks to me like the FDIC caused the confusion with their fact sheet. But, if the FDIC and uninsured depositors ate several billion in losses, then couldn’t that raise the value of the bank to $13.9 billion?
In any event, with such a small amount of capital injected and the taxpayers being forced to eat most of the loan losses, it looks like the PE guys are well protected and could make out like bandits (especially if they can sell their loan portfolio to the TARP).
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