Sunday, December 13, 2009

1st United Bancorp--Another beneficiary of the FDIC's banks gone bust program

Miami's Republic Federal Bank, was taken over by the FDIC with the taxpayer getting the bad loans, and the good stuff going to FUBC (6.73).

FUBC acquires $350 million in deposits for $3.4 million, and on the first $36 million of losses on any loans, the FDIC eats 80% of it, and 95% of any losses in excess of that.

These loss sharing arrangements are just a way for the FDIC to not have to acknowledge the severity of the banks losses.  They give a sweetheart deal to the acquiring bank, and it gets swept under the rug, and then the loans get sold to another vulture who profits immensely because the bank has no incentive to maximize profits, as the FDIC is eating 95% of all losses.

Everyone makes money on these banks failures except the taxpayer!!

And then Sheila Bair can do her public service announcements for the FDIC telling you that banks are safe!

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