From IndyMac to OneWest: Steven Mnuchin’s Big Score (Bloomberg – March 22, 2012)
January 25, 2017 § Leave a comment
March 22, 2012, 5:35 PM CDT
In the fall of 2008 very few institutions or individuals were looking to go long on mortgages and mortgage-backed debt. Mnuchin was one. He soon persuaded others, including John Paulson, George Soros, and Chris Flowers. Together they purchased IndyMac, whose primary assets were $23.5 billion in commercial loans, mortgages, and mortgage-backed securities. How risky was the investment? When the FDIC was looking to sell IndyMac, Mnuchin was the only bidder for all of the bank’s assets. He’s since turned OneWest into Southern California’s largest bank, with more than 79 branches and $27 billion in assets. His bet on IndyMac’s portfolio of troubled loans has proved to be a hugely profitable one, as the mortgage market has stabilized. It’s a success story he’s proud of, yet reticent about celebrating too excessively lest those protestors march back up to Bel Air.
“What I’d say is this …” he says when asked about the IndyMac purchase. “In 2008 the world was a scary place. When we agreed to buy the bank, committing capital to the financial system was viewed as a pretty risky proposition.” As he says this, he allows the faintest of grins. Almost as soon as it appears, he suppresses it. Perhaps more than any other lender in the U.S., OneWest has benefited from the transformation of the banking industry since the financial crisis. The question is whether that’s due solely to Mnuchin’s nimbleness and acumen—or whether, from the start, the deck was stacked in his favor.