Schadenfreude is defined as gaining pleasure in the misfortune of others.Rather than that, making money from the misfortune of others is much more the American way - the way of capital always out shopping deals and for deals.
The context is at least a five sided thing [not having any Pentagon or militaristic dimension but not at all entirely private sector].
It is the context of bank failures. And the low hanging fruit that can be picked that way - or "bone picking" as it is alternately called, opening image and all.
"What's left for me to feed on being the vulture's habit" after the predator's killed and eaten.
With the banks, there's no predator - only five or more players, for State chartered banks: the Fed [because federal and state chartered banks of the smaller kind all have corresponding banks up the chain to the Fed itself, the bank for the larger corresponding banks], the FDIC [holding the bag on insuring depositor confidence], the Commerce Department [whenever a state chartered institution is failing they have a kill-switch finger to go with their ongoing auditing function to protect the public and to maintain institutional integrity], the failing entity, and the potential acquiring entity - the expansionist entrepreneur making cash from the misfortune of others. At least five, and more, if there is fighting among the buzzards, more than a single takeover entity wanting sway -
I certainly do not know how such complicated deals are cut for a "seamless" over-the-weekend cutover of depositor confidence (instead of a bank run where fractional reserves banking would fail if too big a run over too diverse a pool were to happen).
Chris Serres of Strib reports online yesterday, November 2, of how one Minnesota firm has prospered as other banking "dominoes" tumble:
U.S. Bancorp grabs failed banks
The Minneapolis firm quietly became the nation's largest buyer of busted banks, while exposing itself to minimal downside risk.
As the federal government sells dozens of banks amid the worst financial crisis since the Great Depression, its biggest customer is right here in Minneapolis.
Indeed, U.S. Bancorp has over the past year acquired 12 failed banks and thrifts, from Southern California to Idaho, with assets totaling $35 billion. No other bank in the nation has purchased as many failed institutions and failed-bank assets over the same period. The bank's latest transaction occurred Friday when it agreed to buy nine failed banks that were part of FBOP Corp., a multibank holding company based in Oak Park, Ill.
In so doing, U.S. Bancorp has quietly set the model for how to buy troubled franchises that have landed in government hands, analysts say. [...] "It's called expanding your bank on the cheap," said Jaime Peters, a bank analyst with Morningstar. "These failed-bank deals enable U.S. Bancorp to build its franchise on very, very favorable terms."
Though U.S. Bancorp executives largely sat on the sidelines during the bank acquisition wave earlier this decade, they went on the offensive last year, just as many of the bank's larger rivals -- beset with rising loan losses and indigestion from difficult acquisitions -- backed away. However, in keeping with its tradition of conservative investing, U.S. Bancorp has focused on smaller institutions in markets where it already operates.
The bank's return to the acquisition fray comes at a time when the government is seeking buyers for failed institutions all over the country. The FDIC, which insures bank deposits, has closed 115 institutions this year, including five banks in Minnesota. FDIC officials have said they don't expect the pace of bank closings to taper off until sometime next year.
"The ," said Rick Hartnack, vice chairman of consumer banking for U.S. Bancorp. "The key is to cut out the things that don't work ... and let the good parts keep running."
However, competition for troubled banks is beginning to intensify as loan losses at larger banks begin to ebb and capital levels stabilize. An FDIC official said Monday that the agency received 41 bids for the nine FBOP banks, a hopeful sign that more banks are willing to take risks on troubled institutions. Many failed banks have received only one or two bids.
"I can't recall seeing that many bids coming in for one institution," said David Barr, an FDIC spokesman. "It is definitely encouraging."
But even with the spirited competition, U.S. Bancorp still walked away with a "very low-risk deal," said Peters of Morningstar in Chicago.
The item is an extended report, well written, and has detail reaching well beyond this limited excerpt. All readers should have a look, again, this link.
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That subheadline Serres used is a teaser, identifying a firm as being a busted bank buyer with minimal downside risk --- something that seems to be a banker's wetdream - getting bigger, acquiring yet more depositors' trust and cash to work as bankers do, with the "minimal downside risk" being the real bell ringer.
Yet, the question remains - without transparency - with deals cut behind closed doors, is there favoritism, backscratching, things we might feel are questionable ways of doing business lurking in the details of the process; my big question being unanswered in reporting about US Bancorp - how in detail was the extended Schiavo-like life support accorded the Kiffmeyer experimental "Christian" bank in Otsego, and then when life support artifices were disconnected, who decided who the heirs and beneficiaries on death were to be? Who had seats at that decision-making table, was there a fight among potential takeover forces, was it all benign and sweet and keeping the most people possible happiest, given circumstances? And did the public take a royal screwing via inexplicable delay, while the insiders were all accorded the utmost courtesy and decencies?
In effect, an entity, Central Bank reportedly based in Stillwater, took over other failed community banks besides the Kiffmeyer bank, and did so prior to its latest Otsego acqusition, (the Kiffmeyer bank being its latest growth burp). The whys and wherefores of such a thing, with that acquired bank having its unique Christian - GOP ties, and how the story unfolded uniquely, remains of interest, and remains largely a mystery except, perhaps, to insiders. Insiders at the GOP controlled Commerce Department, at the Kiffmeyer camp of demised banking, in the acquiring camp, and under federal involvement where State and federal banking regulatory forces had to be in some kind of harmony to have an over-the-weekend seamless cut-over profitable to the Central Bank acquiring entity.
Who are the exact players behind this Central Bank out of Stillwater, and with Strib reporting "competition for troubled banks is beginning to intensify as loan losses at larger banks begin to ebb and capital levels stabilize," and "economics of these deals are attractive because what you're getting is a mature network of branches that have customers and real net income at the branch level," what were the full ins and outs of Central Bank becoming the regulators' favored bone picker, (the one vulture to feed to carry on the opening analogy, when others might have been hovering); and how sweet a "minimal downside risk" deal did these Central Bank people get and how was it negotiated [a totally open question given the nontransparency of things so far in terms of public notice beyond press releases of barebones facts of a takeover]?
It seems that at least the State's involvement would be something a reasonably aggressive Attorney General might find interesting to look at, documents, persons of interest, length of time on the ropes before a knockout punch, all the nuances.
Lori Swanson holds the office, but does she have the curiosity?
Should she plunge into what could be branded as partisanship witch hunting? Should she only reluctantly and surgically enter into a study if hounded into it by bloggers, the press, and by others having concerns among the general public?
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For a flavoring of earlier background coverage during last month of the Kiffmeyer banking fiasco, and the savior behavior it touted from its inception, there are these links, (each having further link-overs):
Crabgrass, here, here, and here [chronologically ordered].
Blue Man, here and here [chronologically ordered].
Political Muse, here, and here [chronologically ordered]
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photo credits - this outstanding photo-video naturalist website - opening item; Political Muse, here, for the Kiffmeyer candidate screenshot.
For that screenshot, the slogan "Integrity Counts" perhaps was well chosen, given that the way that bank was run aground in such a short time suggests "Capability Counts" would have been a mischoice as the candidate's slogan. Of course, "integrity" in how that bank was run is a question left hanging absent a thorough investigation that either uncovers less than total integrity, or gives a clean bill of health. We don't know, but we most certainly have a very, very good guess on "capability" - as in sorry, Kiffer, it's looking clearly like "tried and found wanting" on that line of the box score.
The Kiffmeyer bank lasted less than five years.
In contrast, another community bank serving largely the very same community, prudently, has more history to offer - less theater, less circus-like atmosphere, just sound long lasting banking; this link.
Said another way, there is long-established banking capability, and there is Mary Kiffmeyer.
________UPDATE________
Political Muse slams the St. Cloud Times for non-coverage of the Kiffmeyer bank failure; this link.
I am ambivalent toward Star News [serving Elk River and regional environs on a weekly print basis] since it had coverage twice, a week apart, here and then here [chronologically ordered]. And they reported Oct. 9, this link, the purported robbery that happened the same day Mary Kiffmeyer was signing papers with the Mpls. Fed. as President of the bank's holding company; but all that without any report of Mary Kiffmeyer's integral inseprable role in things - as if it was a bank being run at its highest holding company level by ghosts, a bank noted as having been run aground without a single Kiffmeyer fingerprint declared to be anywhere - or as if the host of Kiffmeyer fingerprints at the scene of the death were somehow not "news."
(Curiously with the fold-up imminent, the purported October 9 robbery served to make a closing balancing of the books easy - for any noted shortfall "the robber took it.")
The Star News did publish this chart, at this link:
That publishes the facts of very, very questionable bank management that must have been on the ropes for quite some time before any regulatory knockout punch, and it does that via a factually tight snapshot chart and without naming management names.
Lack of such basic newsworthy coverage as naming key names is perplexing.
And I know I may be ignorant and reading the chart wrongly, but to me it looks as if the GOP-Pawlenty Commerce Department sat on its hands with this "venture" not really thriving throughout the 2008 election cycle and the tail end of the Bush federal presidency. I find that also perplexing. I think it barely spans the times Mark Olson was having his difficulties with Heidi Olson, pushing her down repeatedly during a family disagreement - something from which charges ensued with the seat he held in the Minnesota House consequently vacated, but held by the GOP that election cycle.
_______FURTHER UPDATE______
From June 2008 to June 2009 deposits dropped - people must have lost faith and drew down bank funds - particularly if more than the insured limit $250,000 were deposited by any person or entity; i.e., if exposure beyond FDIC insured limits existed. It would be interesting to see if such high-roller deposits existed but were drawn down, the history of CD rollovers vs pulling cash out over such a time span, and how the capital account became so vastly depleted over that one year span; i.e., whether there was capital being withdrawn by insiders via dividends or redemption of shares, etc. Again, more questions exist than can be answered from scant public data, and an investigatory arm of government might have to look at things. With FDIC and Fed involvement the current US Attorney might be interested and with inaction by the Pawlenty Commerce Department while things at the bank look bleak much earlier, Attorney General Swanson should show an interest.