The FDIC announced late today the sale of the remaining assets of the failed thrift, IndyMac, to a private consortium for $13.9 Billion. Dune Capital Management, J.C. Flowers & Co., and Paulson & Co. spear headed the buy in search of a rehabilitated servicing portfolio Sheila Blair reworked with her aggressive loan modification strategy.
This will make Dune and the consortium the 10th largest mortgage servicer in the country controlling approximately $16 billion in mortgages. The new owners will also get about $7 billion in other securities and the 33 branch retail reverse mortgage operation, Freedom Financial.
A Fishy Deal
A few things about the deal are little fishy…
One, the Paulson & Co. head honcho is John Paulson who made $15 billion with his hedge fund shorting the subprime mortgage-backed security markets. Nothing like making a ton of dough profiting from the subprime “perfect storm”…and then turning those profits into more profits by cherry-picking rehabbed assets after the storm subsides. These guys are making bank…literally…coming and going.
Two, the consortium bought IndyMac assets with a newly formed bank holding company they call IMB Management Holdings. As I revealed here on BiggerPockets in recent weeks, unfettered access to TARP Treasury funds is easy for bank holding companies. So it appears to me these uber-rich, incredibly well informed corporate raiders seem to be smart enough to “cover” themselves with a bank holding company. The plan being to just ask the Treasury to bail them out should anything go wrong with their new purchase!
Kleptocracy in Action
This plan is perfection in it’s simplicity.
If it all goes well…pocket these super-powerful members of the corporate ruling class make billions of dollars. If not…they are primed and ready for a multi-billion bailout.
Leave it to former subprime bankers and Wall Street insiders…the same folks that that made billions selling and securitizing subprime loans causing the banking crisis in the first place…not to mention a protracted recession we must all endure….to find a way to profit yet again.
It’s a “no loose” scenario for these guys. This is kleptocracy in action…brought to you by your friendly government regulators the FDIC, the Treasury, and the SEC.
Until next week…