The subprime mortgage crisis of 2007 sent several U.S. banks—and citizens—into financial ruins. However, the few financial institutions left standing are prospering more than ever since 2007. Two of those institutions are CIT and OneWest banks
Two weeks ago the lender group CIT reached a deal to buy its parent company OneWest for $3.4 billion. The deal is expected to double the size of its commercial bank to $28 billion in deposits and $67 billion in assets.
OneWest was formed by a group of investors who sought to salvage the remnants of the failed lender IndyMac, and it’s paid off. When the investors formed OneWest Bank in 2009 with $1.55 billion of their combined dollars, they didn’t anticipate looking at earning close to $2 billion in dividends in such a relatively short amount of time.
CIT’s CEO, John A. Thain, has experienced a complete turn around since recent years and beyond. During the banking crisis, Thain sold Meryll Lynch and was ousted from the bank. CIT was proving to take a similar downturn when the company filed for bankruptcy in 2009. Now, CIT has grown to the higher rankings of importance within the industry.
Another OneWest hedge fund investor, John A. Paulson, is reaping a significant financial comeback. Mr. Paulson was responsible for collecting close to $4 billion by betting against failing home mortgages and contributed to the 2007 financial crisis. He’s since invested $400 million for 24.9 percent stake in the company and will receive a notable return.
Interestingly (or not), the public’s perception of the (now) fledgling banking institution is not met with a congratulatory “attaboy” and support. Instead, many share the same and similar sentiments to these found over social media after hearing word of CIT’s acquisition of One West:
“Great idea. John Thain bankrupts Merrill Lynch and is fired by Ken Lewis CEO of Bank of America and now Thain is getting back into the Banking Business with another virtually Bankrupt Company CIT. If it were not for taxpayers neither of these companies would still be in existence. So now they are out buying a hedge-fund run OneWest Bank. This is how things are done on Wall Street! What a joke!”—Sherry
“I’m so happy to hear that the Corporate Persons who crashed the economy “have moved on, and even prospered.”
Too bad about you human persons. You don’t count in our new feudalism.”—masaccio
“The banks, the bankers, the brokers and the wheeler-dealers did fine on the backs of the taxpayer and those ordinary citizens who were prudent, didn’t use their homes as ATMs and didn’t buy more than they could afford are still taking it in the neck.”—Ronald
It appears “winning” is only half the battle. CIT and OneWest have a long way to go before they gain public support and a positive and, more importantly, trusting public opinion.