Where were you when the regulators were not doing their job under the Bush administration and allowing this and other banks to give out bad loans? How come you weren't worried about America's credit rating back then? Where were you, union buster?
BankUnited Fails in Year's Biggest Bust
"BankUnited, based in Coral Gables, is a high-profile casualty of the banking crisis. Its problems stemmed largely from its forays into risky housing loans. The bank, founded in 1984, specialized in an exotic type of mortgage made to people living outside the U.S. who wanted to buy property in Florida. As of June 30, 2008, BankUnited was holding about $1.4 billion of these so-called "nonresident alien" mortgages, representing 11.4% of the bank's total loan portfolio.
Some investors questioned BankUnited's emphasis on such loans, which primarily went to people in Latin America who wanted a Florida home for vacation or investment purposes. Skeptics argued the loans were riskier than mortgages to U.S. residents because the loans didn't finance borrowers' primary residences. When the Florida real-estate market eroded, some borrowers became delinquent or defaulted on their loans.
BankUnited holds about 2.1% of deposits in Florida, according to the latest figures, a state hit hard by a real-estate collapse. That ranks it eighth among all financial institutions in the state.
The private-equity consortium buying the bank includes W.L. Ross, Blackstone Group, Carlyle Group and Centerbridge Partners. The sale represents one of the largest private-equity investments into banks since the financial crisis began two years ago.
It's the first bank investment for Blackstone, the New York private-equity giant led by Stephen Schwarzman. The new owners hope to use BankUnited as an acquisition vehicle when other Florida-based banks go under, according to a person familiar with the group's thinking.
As BankUnited struggled, it caused problems for the federal government. In March, the Treasury Department placed the acting head of the Office of Thrift Supervision on leave amid allegations the agency allowed BankUnited to improperly report its financial condition as healthier than it was.
The Treasury is still investigating the issue. Many people have called for the government to abolish the OTS because of its supervision of several banks that have failed in the past year, including Washington Mutual, IndyMac and Downey Savings & Loan.
When word recently leaked that Mr. Kanas and other investors were contemplating investing in BankUnited, markets cheered the news as a long-awaited sign investors were starting to tiptoe back into the beleaguered industry.
But investors were willing to pump money into BankUnited only after regulators seized it and agreed to protect investors against most losses on the bank's troubled loans. That doesn't bode well for other troubled banks looking to lure outside capital.
Regulators told BankUnited in April it needed to raise capital or sell itself to avoid being seized. The FDIC shopped the thrift to a host of potential bidders over the past few weeks people familiar with the matter said. Though BankUnited is the largest financial institution based in Florida, the FDIC didn't receive the kind of interest it had hoped for. There were only two bidders that emerged, including Mr. Kanas's group, those people said.
The FDIC has tried to head off potential confusion among customers in Florida, running public-service advertisements in both English and Spanish that explain how deposit insurance works. "We'll have staff at all the branches so that customers will understand it will be business as usual tomorrow," FDIC spokesman Andrew Gray said."
—Peter Lattman and David Enrich contributed to this article.
Write to Damian Paletta at damian.paletta@wsj.com
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