The Contrarian Banker Who Avoided Bad Loans... And Is Now Buying Up The Scraps
from the no-gov't-money-needed dept
While we've wondered why those who made such bad bets on Wall Street are getting bailed out and even relied upon to save the economy, Forbes has found one of the guys who knew better: Andy Beal. A banker in Texas who basically stopped taking on any new loans for years as he thought things were going out of control. In fact, he barely worked at all -- stopping by just a few hours a day, playing board games with his staff, and even laying off about half of his employees. He did this while waiting for the market to collapse, knowing that things were way out of control. In return, he got investigated by regulators, who couldn't understand why he wasn't joining in the fun.Of course, now that things have collapsed, he's buying up distressed assets for pennies on the dollar, and wants to buy more, planning to become a huge bank. Oh, and all that government money that's supposed to help those private companies who are buying up these assets? He doesn't qualify for most of it (no more than a token amount that's not even worth taking). Instead, it's really designed for the folks who screwed things up in the first place. This guy -- who actually saw what was going on, and prepared for it, now has to compete against those who screwed up and are being handed billions by the government.
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Filed Under: andy beal, banks, contrarian, economy, loans
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Typical
Once it's said and done, those responsible will have become much wealthier and the banking cartels will have new global powers.
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Toxic Assets
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Re: Toxic Assets
This guy got that.
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Seen it before
BTW, TA, when you say [Andy] will "start to try to collect on these bad loans", what do you mean? That kind of a question makes me think you have no idea what you are talking about.
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berkshire hathaway annual report for fy 2008
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i don't think you guys get it
ron paul 2012
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Re: i don't think you guys get it
Umm, you do realize that nobody was talking about "toxic waste", don't you?
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Re: i don't think you guys get it
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Re: Re: i don't think you guys get it
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Inflation
"If the American people ever allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children wake up homeless on the continent their fathers conquered."
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Re: Inflation
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Re: Re: Inflation
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"i don't think you guys get it"? We, and especially Andy, do get it. The wikipedia entry on Andy is thin but still accurate.
http://en.wikipedia.org/wiki/Andrew_Beal
As it shows, he's absolutely willing to invest in debt, when it is priced right.
Investors are now so afraid to hold these assets that they are a good, cheap investment for those willing to buy them. As you suggested, he will buy them at a discount, although probably for more on the order of 60 cents on the dollar.
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inflation
the inflation is coming, the government will not let deflation happen and will replace personal spending with government spending. also as the world moves away from the dollar standard there will be much less of an appetite for our debt. dollars abroad will be cycled into our economy for our goods, all the dollars we were hoping would stay untouched back in a dark area of other central banks. the chickens will soon be coming home to roost.
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-- Franklin D. Roosevelt
November 21, 1933
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Beal Bank's Mortgage Arm (no pun intended)
He closed down Loanstream after only a couple years, but not because of the reasons you might think. It had to do with the job performance of the guy in charge of Loanstream moreso than any particular reason of "getting out of the toxic mortgage industry". I would venture to say that was just a happy coincidence.
Of course, Andy Beal is a very smart guy and now realizes that it's very worth it to buy these loans for pennies on the dollar. It is really a shame that we reward the failures and punish the successful, but that's the way bailouts work. The well don't need a doctor.
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His number one advantage
Many people go on about directors being held accountable to shareholders but these days shareholders are just as much to blame as directors. No one realy buys shares long term anymore and feel like the they own part of the company and have a stake in it's future, now it's all just company mnemonics and numbers in a portfolio and making the quick buck by getting in and out at the right time
I think over the next 50 to 100 years we will start to see the end of public companies and banks (because situations like the current one will wipe them out) and massive increase of private ones, because the latter will not have to be accountable to shareholders looking for short term profits, thus allowing them to take long term views and side step stuff pitfalls like Beal did
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Of course...
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Quite encouragable
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nice
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