NEW YORK (
) -- There was lots of public hand wringing after
failed and was bought from the Federal Deposit Insurance Corp. in January by a group of super-savvy investors, including hedge fund giants George Soros and John Paulson, and soon-to-be-beaten-up private equity whiz Chris Flowers.
The hand wringing was not immediate, however, because most people had no clue what was going on.
And, speaking at an industry conference a few days after the deal closed, Flowers bragged about the IndyMac deal, saying that "the government has all the downside and we have all the upside." But those comments were not widely known until they surfaced
Soon after, the FDIC began rejecting private equity bids for failed banks,
creating the impression the much-anticipated bank buyout boom might never come.
But buried in Friday's latest raft of bank failure announcements from the FDIC was an interesting nugget.
First Federal Bank of California
in Santa Monica, Calif. would be bought by
. What is OneWest Bank? Why none other than IndyMac II.
It will be some time before we know exactly how much Soros, Paulson, Flowers & Co. will make on this deal, but recent price pops in shares of regional banks that have bought failed institutions from the FDIC suggest the private guys will do pretty well for themselves.
The poster child for the publicly-held winners is
East West Bancorp
. The California bank saw a 55% gain on Nov. 9 following its Nov. 6 acquisition of
. Interestingly, East West had help from a private equity firm,
, which quietly took a 9.9% stake in East West to help it shore up its balance sheet so it could complete the deal.
But East West is far from the only bank to see a significant stock surge after doing a deal with the FDIC. Since mid-November, at least three other banks,
City National Corp.
Southern National Bancorp of Virginia
, all saw one day gains of more than 15% after completing FDIC-assisted acquisitions.
And in December alone, banks that saw one-day stock price pops of at least 5% on Mondays after buying failed banks on the previous Friday include
1st United Bancorp
Heritage Financial Group
New York Community Bancorp
( NYB) and
I have not been systematic about looking through all the deals and all the share price movements, so there are almost certainly several other examples I have missed. One thing is clear, though: a lot of people are already getting very rich off of this banking crisis. The IndyMac investors are not alone among the private winners. Another rich guy almost certainly getting a lot richer is Andy Beal, head of privately-held
in Plano, Texas, which picked up its own little pre-Christmas gift from the FDIC on Friday in the form of New South Federal Savings Bank of Irondale, Alabama.
With most experts estimating hundreds more bank failures in 2010, FDIC chief Sheila Bair must be one popular lady these days. At least among bankers looking to strike it rich.
Written by Dan Freed in New York