The WSJ has a pretty good article on the failure of AmTrust.
Frankly, it reads like a reprise of the S&L days, replete with indecision on the part of the regulators, asset valuations that make no sense and political interference. Once upon a time politicians were punished for interfering in this manner.
I’ll let you read the story. It’s short and predictable but this caught my eye:
New York Community Bancorp Inc., Westbury, N.Y., is acquiring AmTrust and its 66 branches. The purchase is a dramatic expansion for New York Community, which runs a handful of banks in New York and New Jersey. The company has made seven acquisitions since 2000, none of them outside the New York City metropolitan area, where it has about 212 branches.
The Federal Deposit Insurance Corp. said the AmTrust failure was expected to cost its deposit-insurance fund about $2 billion. AmTrust’s deterioration over the past year likely resulted in the bank selling for a lower price than it would have fetched if the thrift had been seized earlier, said people familiar with the government-led auction.
As part of the deal, the FDIC is shielding New York Community from most losses on $9 billion of AmTrust’s assets.
When I read the FDIC press releases on the failure I scratched my head at the part about the acquiring institution. I had never heard of this institution and now with a little more data I’m still scratching my head. Based on the WSJ article one has to wonder what in the world a New York and New Jersey focused financial institution wants with an Ohio bank with a smattering of banks in some of the more destitute economies in this country.
There have been a few articles and posts concerning the plethora of bidders for FDIC seized banks and assets. This might be a good example of that phenomenon. One would hope that the agency is not just shunting failed bank assets off to anyone that can pay somewhere near their price but this one makes you wonder.
Hopefully, they aren’t just creating serial failures in their quest to rid themselves of banks but I wouldn’t bet on that.
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[...] AmTrust’s Peculiar Buyer – Tom Lindmark – The WSJ has a pretty good article on the failure of AmTrust. – … Based on the WSJ article one has to wonder what in the world a New York and New Jersey focused financial institution wants with an Ohio bank with a smattering of banks in some of the more destitute economies in this country. … – But Then What Blog [...]