The South Florida Business Journal is reporting Government won’t help with BankUnited purchase.

The U.S. government won’t aid private groups that are considering a purchase of struggling BankUnited Financial Corp., The Wall Street Journal reported Friday.

In a story citing “people familiar with the matter,” the paper said the government declined to provide assistance to a bid by investors W.L. Ross and Carlyle Group to buy BankUnited, the largest Florida-based bank.

The BankUnited thrift had $291.9 million in total risk-based capital on Dec. 31, which left it nearly $1.14 billion short of meeting the capital ratio the OTS’s required.

In a phone interview Friday, BankUnited CEO Ramiro Ortiz said he wouldn’t comment on the Wall Street Journal report, which he called rumor and speculation.

“We continue to remain actively involved in negotiations with different private equity firms,” Ortiz said. “This is an incredible franchise, which has an incredible franchise value. This is a bank that is important to the community. How could I not step up to the challenge?”

Step Up To The Challenge

I would like to see BankUnited CEO Ramiro Ortiz “step up to the challenge” with his own wealth and buy into the “incredible franchise” that his management team ran into the ground.

The market cap of Bank United is $8.2 million. If it’s such an incredible franchise why not buy half of it for $4.1 million, or at least 10% for $820,000?

Insider Transactions

Note there were no insider purchases for 6 months. However, insiders did take the opportunity to dump 408,268 shares.

Bank United Headlines

The government has decided the collapse of BankUnited doesn’t constitute a risk to the financial system, suggesting that the administration may allow smaller institutions to fail.

That statement likely seals the fate of Bank United. The problem is not the failure of the government to bailout Bank United, but rather that government bails out any failing or failed bank.

Kiss Bank United Goodbye

Given the government’s decision to not help such banks, expect to see a huge wave of banks headed into receivership in the coming months. This is a good thing. It’s time to stop wasting taxpayer money and let these failed banks go under.

Mike “Mish” Shedlock
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