BankUnited's resurrection illustrates everything that went wrong in the housing bubble.

Commentary about business and finance.
Jan. 26 2011 7:22 PM

The Sure Thing

BankUnited's resurrection illustrates everything that went wrong in the housing bubble.

(Continued from Page 2)

1.) The Office of Thrift Supervision was the primary regulator of BankUnited, not the FDIC. But because the FDIC acts as deposit insurer for all banks and oversees the deposit insurance fund, the FDIC had no choice but to step in as the bank's receiver. BankUnited had approximately $9.34 billion in insured deposits. These are liabilities that the FDIC is legally obligated to pay no matter what. The winning bid from the private equity consortium cost the fund less than any alternative would have; the only alternate bid by a banking institution would have cost the FDIC an additional $1 billion.

2.) Because BankUnited gets its money immediately upon a loan modification, that gives the bank more incentive to modify loans, not less, than other lenders without such an arrangement might have.

3.) The FDIC deposit insurance fund is now in reasonably good shape, and any fears about its solvency should be put to rest. Throughout the crisis, the FDIC maintained funding through assessments on the banking industry.

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