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Guaranty May Follow In BankUnited's Private Equity Bankruptcy Fire-Sale

What a gloomy week for regional banks. But as the bankruptcies are getting bigger, opportunities for private equity investors are getting better.

Earlier this week, I reported here at BNET how Federal Reserve officials were pondering the approval of bids such as that of a consortium including private equity giants Carlyle Capital and Blackstone Group to buy ailing Florida lender BankUnited Financial.

Thursday, as BankUnited filed for the largest bankruptcy of a financial institution in the U.S. this year, the consortium of investors not only got their way -- they got a helping hand from the federal government just for stepping up to the plate:

The government will share in any future loan losses on $10.7 billion of the bank's $12.8 billion in assets. The Federal Deposit Insurance Corp. will assume 80% of the first $4 billion in losses and 95% of any remaining losses, according to people familiar with the deal. That effectively gives the new owners a clean balance sheet from which to operate the bank's 85 branches and expand the franchise.
Friday, Texas-based Guaranty Financial missed its deadline to submit a financing strategy to federal regulators. Some now suggest that Guaranty Financial might become the next "largest" bankruptcy victim in 2009. With $15 billion in assets and $11.6 billion in deposits by the end of last year, Guaranty's bankruptcy would be no small-time event.

As an aside, Rolfe Winkler over at Seeking Alpha points out some of the accounting tricks which will have to be unwound if Guaranty does file for bankruptcy.

But you can also bet on one more thing that looks increasingly likely: if Guaranty does file for bankruptcy, it will be a private equity group with federal assistance that will end up snapping up the juicy parts of the bank for cents on the dollar.

Related Reading at BNET Finance:

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