http://www.wnd.com/index.php?fa=PAGE.view&pageId=126555A company formed by an investor group that includes billionaire George Soros swooped in to purchase a failed California bank in the latest acquisition by the company, despite controversy surrounding some of its previous bank takeovers.
OneWest Bank entered into a purchase and assumption agreement with the Federal Deposit Insurance Corporation, or FDIC, for the acquisition of all of the deposits and certain assets of La Jolla Bank.
The acquisition is the latest in a string of failed bank purchases for the California-based OneWest, a federal savings bank formed by an investor group that includes billionaire George Soros and Dell Inc. founder Michael Dell.
According to a press release, under the terms of the transaction OneWest acquired $3.6 billion in assets, including $3.3 billion in loans, and $2.8 billion in deposits of La Jolla, as of Dec. 31, 2009. The FDIC and OneWest have entered into a loss-sharing agreement covering a majority of the acquired loans.
Last March OneWest completed the purchase for $13.9 billion of the failed lender IndyMac Federal Bank, described as one of the largest casualties of the housing crisis. IndyMac had been seized by the government prior to OneWest's purchase.
OneWest also reportedly acquired and will continue to operate Financial Freedom, one of the nation's largest reverse mortgage businesses, as part of that deal.
Another bank which recently entered a deal with OneWest is First Federal Bank of California, which had been closed by the FDIC. All deposits were transferred to OneWest, with California locations reopening as branches of OneWest Bank.
Investment News quoted insiders as saying the true draw for the kinds of purchases by OneWest are the properties and real estate debt the banks hold.
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OneWest modifies loans in accordance with Obama administration
OneWest Bank last August announced in a press release it was implementing the Obama administration's Home Affordable Modification Program, or HAMP, across its entire loan portfolio. OneWest said it would apply HAMP to all of the eligible loans that it owns as well as all eligible loans that it services for third parties.
According to its release, since opening its doors in March 2009, OneWest has modified nearly 15,000 loans under the FDIC modification program and 3,600 under Obama's HAMP for loans serviced on behalf of Fannie Mae and Freddie Mac.
Loss-sharing deals like those entered between the FDIC and OneWest have the potential to be particularly controversial since they allow institutions acquiring failed banks to benefit from new deposits while limiting losses from bad assets, noted Alistair Barr of MarketWatch.
Recent YouTube videos posted by financial bloggers have been hurling a slew of accusations at the FDIC regarding its deals with companies like OneWest, drawing a rare response from the FDIC. The central accusation that drew the response, notes eCreditDaily.com, was the federal agency's so-called "loss-sharing agreement" with OneWest, which critics claim makes it a much more profitable incentive for the bank to move forward with short sales or foreclosures instead of working with homeowners on mortgage modifications.
The YouTube video produced by the mortgage news company Think Big Work Small implies favoritism by the FDIC and focuses on a loss-sharing agreement between the FDIC and OneWest.
FDIC Director of Public Affairs Andrew Gray posted a response on his agency's website.
"It is unfortunate but necessary to respond to blatantly false claims in a web video that is being circulated about the loss-sharing agreement between the FDIC and OneWest Bank," said Grey. "OneWest has not been paid one penny by the FDIC in loss-share claims. The loss-share agreement is limited to 7 percent of the total assets that OneWest services, and OneWest must first take more than $2.5 billion in losses before it can make a loss-share claim on owned assets."
Think Big Work Small posted a YouTube response to the FDIC statement.
"So maybe the reason why so many people are having trouble getting loan modifications from OneWest is that they're working to hit that magical $2.5 billion loss mark," said a host in the YouTube video. "If you think about it, this makes even more sense now,"
Topic: Soros swoops in, takes another bank (Read 520 times)