Florida Bank's Collapse To Cost FDIC $4.9B

BankUnited FSB Seized By Feds After Posting $1.2B In Losses; 2nd Largest Hit To FDIC Of Financial Crisis

(CBS/AP)  The federal seizure of struggling Florida thrift BankUnited FSB is expected to cost the Federal Deposit Insurance Corp. $4.9 billion, representing the second-largest hit to the FDIC's insurance fund since the financial crisis began felling banks last year.

The costliest was last year's seizure of California lender IndyMac Bank, on which the bank insurance fund is estimated to have lost $10.7 billion.

The Office of Thrift Supervision, a Treasury Department agency, said Thursday that BankUnited FSB reported $1.2 billion in losses last year as defaults on loans piled up. The thrift "was critically undercapitalized and in an unsafe condition to conduct business," the agency said in a statement.

Coral Gables, Fla.-based BankUnited FSB is the 34th federally insured institution to be closed this year, and the biggest. Florida's largest banking institution with about $13 billion in assets as of May 2 was sold for $900 million to an investor group led by former North Fork Bancorp Chairman and CEO John Kanas. It will reopen as a newly chartered savings bank called BankUnited on Friday, with Kanas at the helm.

The investor group includes several prominent firms: the Blackstone Group, the Carlyle Group, Centerbridge Partners and WL Ross & Co., the private-equity firm run by billionaire investor Wilbur Ross.

The new bank will assume $12.7 billion in assets and $8.3 billion of its total $8.6 billion in deposits. In addition, the FDIC and the new bank agreed to share losses on about $10.7 billion in assets.

Deposits will be insured by the FDIC, and customers can continue to use BankUnited FSB checks, ATM cards and debit cards, the FDIC said.

The failed bank's parent was BankUnited Financial Corp. It had 1,083 employees and 85 branches, all in Florida, mostly located along the state's southeast coast.

CBS affiliate CBS4's Kimberley Chapin reports the troubles at BankUnited, FSB first surfaced in a filing with the Securities and Exchange Commission when they reported their Tier 1 capital, a key measure of their financial strength, as negative 0.2 percent -the minimum level required by regulators is 7 percent.

Bank officials said their equity suffered a substantial loss after they set aside $927 million in December to cover troubled loans, reports CBS4. In April of this year, bank officials increased their cushion against bad loans by adding another $154 million to the reserve. Most of the bank's troubled loans were the result of their adjustable rate mortgage products which took a major hit when delinquencies and defaults skyrocketed as South Florida's real estate market turned sour.

The 34 bank failures this year in the U.S. compare with 25 in 2008 and just three in 2007. As the economy nationwide has soured, amid rising unemployment, tumbling home prices and soaring loan defaults, bank failures have cascaded and sapped billions out of the deposit insurance fund. According to the most recent data available, the fund now stands at its lowest level in nearly a quarter-century - $18.9 billion as of Dec. 31, compared with $52.4 billion at the end of 2007.

The FDIC expects that bank failures will cost the insurance fund around $65 billion through 2013.

The FDIC has planned to impose a new emergency fee on U.S. banks to replenish the fund. Legislation passed by Congress this week boosts the FDIC's authority to borrow from the Treasury Department if needed from $30 billion to $100 billion, allowing the agency to reduce the amount of the insurance fees.

The failure of IndyMac, which had $32 billion in assets, was the second-largest last year, trailing only the September collapse of Washington Mutual Inc.

Thrifts have been the most troubled regulated institutions during the financial crisis and among the most spectacular failures. By law, they must have at least 65 percent of their lending in mortgages and other consumer loans - making them particularly vulnerable to the housing downturn. Seattle-based thrift Washington Mutual was the biggest bank to collapse in U.S. history, with around $307 billion in assets. It was later acquired by JPMorgan Chase & Co. for $1.9 billion.

[Ichabod09]

What I am really trying say here is what everyone knows but no one wants to face, WE ARE FINANCIALLY DOOMED because we did not breed as much as our grandparents and they have set up the system so that they get all the benifits at the tax payers expence. But now there is less tax payers per capita.
Posted by at 11:37 AM : May 24, 2009

"because we did not breed as much as our grandparents"

Wrong-we did breed as much if not more. We just didn't want the responsibility that our grandparents were willing to take so we aborted. We abrogated via abortion a centuries old reciprocity agreement in which parents take care of the children, while in later years the children take care of the parents Bluntly, we cut our own throats.

We violated a basic genetic rule which goes "If your grandparents don't have any children, there is a great possibility that you won't either.

[babooph]

If you rob a bank without buying it first,long prison time-white collar crime is not even charged.

As the baby boomers begin to rely on Medicare and Social Security the system is going to bleed dry of money as the Government tries to care for us. This is what we want now. The first baby boomers started retiring in 2008 and the cost are expected to triple of the next 20 years. It just happens to be taking place at the same time we have all this public and private debt is collapsing the banking instatutions that create all money we use.

From this point foreward there is only three ways out of this mess that nobody has the political or moral will to accomplish. 1- we have to kill off all the elderly in short order or 2 we all have to pay double the income tax, or 3 we have to eliminate the government entitlements and business taxes and take the elderly into our homes and care for them ourselves like the old days, or a combination of the three.

What I am really trying say here is what everyone knows but no one wants to face, WE ARE FINANCIALLY DOOMED because we did not breed as much as our grandparents and they have set up the system so that they get all the benifits at the tax payers expence. But now there is less tax payers per capita.

When peoples unemployment runs out things are going to get really hard for allot or people. I hope you are prepared because there won't be enough money going around to pay for tens of millions of people on welfare.

[swin5]

So who bails out the FDIC?

And who bails out the banks when the credit card crisis hits after everybody losing job and income defaults on their payments?

And who will bail out the states? They are all bankrupt. Only three states are not now financially insolvent - Montana, Wyoming, North Dakota - combined population - 2,052,700.
For comparison - the metropolitan population of Cleveland, Ohio - 2,250,871

Hey all you ranchers in Wyoming - can you bail the rest of the country out? All 500,000 of you.

[gosstom]

This Depression is in lock-step with the 1929 Depression. In 1930, the general tone for the economy was upbeat, but as the year passed, the cascades of failure (employment, business level, spending) avalanched all the positive factors and, as 1931 approached, even the "spin doctor" experts had to admit defeat. The worst is yet to come. The Fat Lady is just now clearing her throat. We have a long, brutal way to go.

[stn_sage]

IF I could have seen into the future forty years ago, that the political system would act to assist the banking community to ripoff the public and pay for all their bad investment decisions---I would have gone into BANKING as a career! OH, if I only would have known!

[rushlimpdrug]

and Jeb Bush is from Florida.

Hope some of us remember that next time
the Great Family wants us to elect another of
their members to "fix" America.

[cbsblogger]

Hope and change continues. There are 26 more major banks on the brink of failure. Must be a hard pill to swallow for the "it's getting better" crowd. Barney Fife or Chris Dodd still hasn't admitted to any of this mess. The blame Bush mantra continues.
Posted by tbbaot at 3:14 AM : May 22, 2009

As Jesse Ventura says both the Ds and Rs are to blame.

They are both in the pocket to outside interests that view the USA as their personal cash cow and bodyguard, and they are not making decisions and laws that benefit the USA at large. They look at reelection as much more important than doing the job they were elected for conscientiously.

[grumpas]

sgt ... So you think truth and facts are stupid ?
Posted by one_2258

The facts according to whom????? Rush Limbaugh or one of the other right wing clowns?????

[whitemale08]

...and yet Goldman Sucks marches on.

How's that?

Because Warren Buffet is Obama's friend, that's how.

CALL CONGRESS AND DEMAND THAT PARASITES LIKE GOLDMAN SUCKS FILE CHAPTER 11

[babooph]

How many of those horrible communist banks failed,how are their car companies doing ,are there ins companies bankrupt??What are the salaries of the Chinese bankers -maybe 5% of the US ? Lets "outsource " some of these guys instead of US workers.Turns out the propaganda system that brainwashed all against communists should have been exposing corrupt US business & CEO guys first .

[F4551]

CBSBLOGGER has it right on the money. This is all about greed and creating a financial monopoly in the United States. We have always been one but the club has gotten a little too big for some peoples taste so they are just kicking out the wanna be rich!

This is just another example of people jumping on the free money bandwagon. These banks sold to companies like JP MOrgan for 1/1000 their worth, but it does not say how the executives of these banks faired. I am sure they are drawing unemployemnt right now!

One last little rant. You remember the bail-out money? 2.3 trillion, oh excuse me, thats 750 billion dollars. Wasn't that supposed to stop things like this happening, you know, after the oversight committees and everything we put into effect AFTER President Obama was elected? For all you democrats and republicans out there, you need to pull your heads out of the party line nad get a grip on whats really happening in the world.

Oh yeah, that 2.3 TRILLION dollar bailout was back 2 months ago. You don't hear much about the costs that are being added to that everyday, do you?

[cbsblogger]

The US taxpayers take the big hit while the connected oligarch vultures swoop in to buy up assets for pennies on the dollar. This transfer of wealth from taxpayers to the vultures was the intent of the US Federal Reserve created bubble from day one. Soon we'll also see fire sales of US, state and local government owned assets such as infrastructure, land and parks to this stern gang.

[salmoc44]

"The fundamentals of our economy are strong"
Sept. 2008
John McCain, the chosen one of the Republican Party for President last year

[jtdev1]

The blame Bush mantra continues.
Posted by tbbaot at 3:14 AM


So your implying that all the banks that failed since the begining of the year were in perfect health the prior year and since Obama came into power they all the sudden became unstable and failed?


When exactly do you think these banks engaged in poor business practices that caused this failure? Under who's watch?

Please explain...

[formrusmcsgt]

85 branches , mostly located alone Florida's southeast coast.
These are counties that supported Barack Obama.....................
Just like in the rest of the United States, the areas that supported
Obama seem to the ones that are failing the most .....................
----------------------- Why is this the case ? ----------------------------
Posted by one_2258 at 3:17 AM : May 22, 2009

About the stupidest post I've ever read.....

[tbbaot]

Hope and change continues. There are 26 more major banks on the brink of failure. Must be a hard pill to swallow for the "it's getting better" crowd. Barney Fife or Chris Dodd still hasn't admitted to any of this mess. The blame Bush mantra continues.

[clancy49]

Carlyle Group? another Bush coffer? So with the new feel good administration slowly the family not only owns oil and controls major banking firms, with the new bailouts the family is buying up banks. HMMMMM.