Bravo Mr. Robert Hertzog!
"The billionaires' club of private financiers who took over the remains of IndyMac Bank from the Federal Deposit Insurance Corp. turned a profit of $1.57 billion last year on the failed mortgage lender -- more than they invested less than a year ago.
Yet under the sale agreement, the federal deposit insurance fund still could lose nearly $11 billion on bad loans that the Pasadena institution made before it was sold last March and renamed OneWest Bank."
Wait, the FDIC has not paid a penny to OneWest YET!
Oh, like the "no-risk insurance" told to NY Times by our FDIC chairwoman on deals similar to this?
"Lennar... has purchased a 40% interest in the loan portfolios, while the FDIC is keeping the remaining 60% equity interest. The FDIC provided $627 million of financing at no interest for seven years.
With FDIC kicking in about $365 million in equity, Wall Street analysts pegged the portfolios' overall purchase price at $1.22 billion, or 40 cents on the dollar"
" 'We project no losses,' Sheila Bair, the chairwoman, told me in an interview. Zero? Really? 'Our accountants have signed off on no net losses,' she said. (Well, that’s one way to stay under the borrowing cap.)
By this logic, though, the F.D.I.C. appears to have determined it can lend an unlimited amount of money to anyone so long as it believes, at least at the moment, that it won’t lose any money."
By the way, the FDIC ended Q3 2009 with -$8 billion in balance. Its DIF ratio has fallen below the Congressional mandatory minimum since June 2008.
It is backing over $300 billion of bonds via TLGP for banks like Goldman Sachs and GAMC.
Wall Street paid out about $145 billion in total compensation in 2009.
Aren't those unlimited implicit tax dollar guarantees lovely?