PE group buys IndyMac (taxpayers get shafted)

[TheBreeze]

[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

http://www.reuters.com/article/americasDealsNews/idUSTRE5014J620090102?pageNumber=1&virtualBrandChannel=0

[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).

[davelj]

[quote=TheBreeze]

It looks to me like the FDIC caused the confusion with their fact sheet. But, if the FDIC 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, 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).

[/quote]

I agree. That fact sheet is confusing. I’m 99.9% sure that FDIC is not using “deal value” in its generally accepted manner (maybe they’re doing a little “marketing” themselves?). The numbers on the term sheet don’t all add up or balance. We’ll know exactly what the balance sheet looks like when IMB has to file its Call Report for the quarter ended March 31, 2009 (by April 15). Then we’ll know exactly what the deal is.

On the surface it looks like IMB is reasonably well protected and I’m sure they wouldn’t do the deal if they didn’t THINK they were going to make out like bandits. Of course, TPG and its co-investors also thought they were going to make out like bandits in the WaMu deal. That worked out well for them.

I think we’ll see a wide variety of outcomes in this crisis. But I know that many billions were made by investors during the S&L crisis both in buying assets from the RTC and in recapitalzing banks. Ron Perlman, Nicholas Brady, Gerald (not former president) Ford, Mike Kelly… it’s a long list.

[davelj]

[quote=TheBreeze]

It looks to me like the FDIC caused the confusion with their fact sheet. But, if the FDIC 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, 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).

[/quote]

I agree. That fact sheet is confusing. I’m 99.9% sure that FDIC is not using “deal value” in its generally accepted manner (maybe they’re doing a little “marketing” themselves?). The numbers on the term sheet don’t all add up or balance. We’ll know exactly what the balance sheet looks like when IMB has to file its Call Report for the quarter ended March 31, 2009 (by April 15). Then we’ll know exactly what the deal is.

On the surface it looks like IMB is reasonably well protected and I’m sure they wouldn’t do the deal if they didn’t THINK they were going to make out like bandits. Of course, TPG and its co-investors also thought they were going to make out like bandits in the WaMu deal. That worked out well for them.

I think we’ll see a wide variety of outcomes in this crisis. But I know that many billions were made by investors during the S&L crisis both in buying assets from the RTC and in recapitalzing banks. Ron Perlman, Nicholas Brady, Gerald (not former president) Ford, Mike Kelly… it’s a long list.

[davelj]

[quote=TheBreeze]

It looks to me like the FDIC caused the confusion with their fact sheet. But, if the FDIC 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, 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).

[/quote]

I agree. That fact sheet is confusing. I’m 99.9% sure that FDIC is not using “deal value” in its generally accepted manner (maybe they’re doing a little “marketing” themselves?). The numbers on the term sheet don’t all add up or balance. We’ll know exactly what the balance sheet looks like when IMB has to file its Call Report for the quarter ended March 31, 2009 (by April 15). Then we’ll know exactly what the deal is.

On the surface it looks like IMB is reasonably well protected and I’m sure they wouldn’t do the deal if they didn’t THINK they were going to make out like bandits. Of course, TPG and its co-investors also thought they were going to make out like bandits in the WaMu deal. That worked out well for them.

I think we’ll see a wide variety of outcomes in this crisis. But I know that many billions were made by investors during the S&L crisis both in buying assets from the RTC and in recapitalzing banks. Ron Perlman, Nicholas Brady, Gerald (not former president) Ford, Mike Kelly… it’s a long list.

[davelj]

[quote=TheBreeze]

It looks to me like the FDIC caused the confusion with their fact sheet. But, if the FDIC 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, 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).

[/quote]

I agree. That fact sheet is confusing. I’m 99.9% sure that FDIC is not using “deal value” in its generally accepted manner (maybe they’re doing a little “marketing” themselves?). The numbers on the term sheet don’t all add up or balance. We’ll know exactly what the balance sheet looks like when IMB has to file its Call Report for the quarter ended March 31, 2009 (by April 15). Then we’ll know exactly what the deal is.

On the surface it looks like IMB is reasonably well protected and I’m sure they wouldn’t do the deal if they didn’t THINK they were going to make out like bandits. Of course, TPG and its co-investors also thought they were going to make out like bandits in the WaMu deal. That worked out well for them.

I think we’ll see a wide variety of outcomes in this crisis. But I know that many billions were made by investors during the S&L crisis both in buying assets from the RTC and in recapitalzing banks. Ron Perlman, Nicholas Brady, Gerald (not former president) Ford, Mike Kelly… it’s a long list.

[davelj]

[quote=TheBreeze]

It looks to me like the FDIC caused the confusion with their fact sheet. But, if the FDIC 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, 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).

[/quote]

I agree. That fact sheet is confusing. I’m 99.9% sure that FDIC is not using “deal value” in its generally accepted manner (maybe they’re doing a little “marketing” themselves?). The numbers on the term sheet don’t all add up or balance. We’ll know exactly what the balance sheet looks like when IMB has to file its Call Report for the quarter ended March 31, 2009 (by April 15). Then we’ll know exactly what the deal is.

On the surface it looks like IMB is reasonably well protected and I’m sure they wouldn’t do the deal if they didn’t THINK they were going to make out like bandits. Of course, TPG and its co-investors also thought they were going to make out like bandits in the WaMu deal. That worked out well for them.

I think we’ll see a wide variety of outcomes in this crisis. But I know that many billions were made by investors during the S&L crisis both in buying assets from the RTC and in recapitalzing banks. Ron Perlman, Nicholas Brady, Gerald (not former president) Ford, Mike Kelly… it’s a long list.

[patientrenter]

Isn’t IndyMac the bank that Sheila Bair is using to launch her populist political career?

If that’s the bank, then clearly the taxpayer will be suckered in for vast amounts so she can win political support. Whether the bank was held by the FDIC or “sold off” whilst almost all the losses continue to be covered by the taxpayer makes little difference. At the end of the day, the taxpayer loss will be in the many billions, and will just be a little less or more depending on whether this PE deal was good or not.

I suspect it’s being sold only because that gets the cost of IndyMac’s generous loan mods off the govt’s books for a while, until Sheila has moved on. That may cost the taxpayers a little more than keeping it, but I doubt Sheila is very concerned about that.

[patientrenter]

Isn’t IndyMac the bank that Sheila Bair is using to launch her populist political career?

If that’s the bank, then clearly the taxpayer will be suckered in for vast amounts so she can win political support. Whether the bank was held by the FDIC or “sold off” whilst almost all the losses continue to be covered by the taxpayer makes little difference. At the end of the day, the taxpayer loss will be in the many billions, and will just be a little less or more depending on whether this PE deal was good or not.

I suspect it’s being sold only because that gets the cost of IndyMac’s generous loan mods off the govt’s books for a while, until Sheila has moved on. That may cost the taxpayers a little more than keeping it, but I doubt Sheila is very concerned about that.

[patientrenter]

Isn’t IndyMac the bank that Sheila Bair is using to launch her populist political career?

If that’s the bank, then clearly the taxpayer will be suckered in for vast amounts so she can win political support. Whether the bank was held by the FDIC or “sold off” whilst almost all the losses continue to be covered by the taxpayer makes little difference. At the end of the day, the taxpayer loss will be in the many billions, and will just be a little less or more depending on whether this PE deal was good or not.

I suspect it’s being sold only because that gets the cost of IndyMac’s generous loan mods off the govt’s books for a while, until Sheila has moved on. That may cost the taxpayers a little more than keeping it, but I doubt Sheila is very concerned about that.

[patientrenter]

Isn’t IndyMac the bank that Sheila Bair is using to launch her populist political career?

If that’s the bank, then clearly the taxpayer will be suckered in for vast amounts so she can win political support. Whether the bank was held by the FDIC or “sold off” whilst almost all the losses continue to be covered by the taxpayer makes little difference. At the end of the day, the taxpayer loss will be in the many billions, and will just be a little less or more depending on whether this PE deal was good or not.

I suspect it’s being sold only because that gets the cost of IndyMac’s generous loan mods off the govt’s books for a while, until Sheila has moved on. That may cost the taxpayers a little more than keeping it, but I doubt Sheila is very concerned about that.

[patientrenter]

Isn’t IndyMac the bank that Sheila Bair is using to launch her populist political career?

If that’s the bank, then clearly the taxpayer will be suckered in for vast amounts so she can win political support. Whether the bank was held by the FDIC or “sold off” whilst almost all the losses continue to be covered by the taxpayer makes little difference. At the end of the day, the taxpayer loss will be in the many billions, and will just be a little less or more depending on whether this PE deal was good or not.

I suspect it’s being sold only because that gets the cost of IndyMac’s generous loan mods off the govt’s books for a while, until Sheila has moved on. That may cost the taxpayers a little more than keeping it, but I doubt Sheila is very concerned about that.

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