Banking Law

To many readers, this story is merely a routine business transaction between two banks. A New Mexico-based bank sells its Colorado branches to a bank with a larger footprint in Colorado. The seller nets a nice little premium (5.8%) for the deposits. Yet, toward the end of the article comes the kicker.

The move will boost First State?s capital levels, prompting the bank to withdraw its application for federal funding from the U.S. Treasury Department?s Troubled Asset Relief Program (TARP).

Get ready folks, but the list of banks bailing on TARP is only going to grow.

Also bailing out are those private equity investors who've been waiting on the sidelines to see if the US Treasury Department and the FDIC are ever going to get their collective act together and start offering deals that will attract the big bucks. One group I've been talking to, based in Europe, has had enough. They were nice about it, but when billionaires tell you that they're not confident that they'll ever see anything out of the Keystone Cops currently implementing Rube Goldberg concoctions that seem to spring forth full blown from the heads of The Three Stooges, and also tell you that they see more stable investment opportunities in the Middle East than in solvent US banks and in the assets of failed US banks, you lose the "easy, peaceful feeling" that things are going to get better anytime soon.

You want private equity to buy troubled banks and/or their troubled assets? Cover ALL the losses and finance the acquisition costs cheaply in such a way that the investor is guaranteed a minimum yield on the assets (can you spell "Y-I-E-L-D M-A-I-N-T-E-N-A-N-C-E"?). You'll have private money rushing in, recapitalizating the banking business,  and pulling assets back into private hands (which the government claims it desires) faster than Barney Frank can beat Nancy Pelosi to a TV camera.

Just sayin'...

This week wasn't a total waste, however. While I've been Rick Rolled before (Who hasn't been?), until this week, I'd never been "Barack Rolled."