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Struggling Bank Gets Bailed Out With Help From Former Trump Admin Treasury Secretary

New York Community Bancorp (NYCB) announced Thursday it will raise more than $1 billion from investors including a company run by Trump's former Treasury secretary to stabilize the bank.

The bank will receive $450 million from Mnuchin Liberty Strategic Capital, led by former Treasury Secretary Steven Mnuchin, as well as $250 million and $200 million in investments from Hudson Bay Capital and Reverence Capital. receive. according to This is a notice from the bank. NYCB posted a $252 million loss in the fourth quarter of 2023, and its stock price fell to its lowest level since 1997, leaving investors concerned about the possibility of another crisis in the banking sector. according to On CNN. (Related article: 'There's no evidence': Fed chair throws cold water on recession predictions)

“In evaluating this investment, we kept in mind aspects of the bank's credit risk,” Mnuchin said in the announcement. “The bank has more than $1 billion of capital invested and will have sufficient capital to meet or exceed the coverage ratios of large NYCB banks in the future. I think it will be possible.”

According to the announcement, NYCB will also add four new directors to its board of directors, including Secretary Mnuchin, former Comptroller of the Currency Joseph Otting, Hudson Bay's Allen Puwalski, and Reverence Capital's Milton Berlinski. It's planned.

Cash injection comes days after NYCB announced It has been announced that Alessandro Dinero will be appointed president and CEO, and current CEO Thomas Cangemi will step down.banks too announced We have added a number of new members to our management team and strengthened our risk framework.

“We welcome the approach Liberty and its partners have taken in evaluating banks and look forward to incorporating their insights in the future,” Dinero said in the announcement. “Strategic investments involving former Secretary of State Steven Mnuchin, former Comptroller Joseph Otting, Milton Berlinsky and other institutional investors positively support our ongoing turnaround and give us an advantage. We enter our next chapter with a strong balance sheet and liquidity position, supported by a diversified retail deposit base. ”

The banking sector experienced a crisis in early 2023 after Silicon Valley Bank (SVB) triggered a series of sector failures following a run.First Republic Bank and Signature Bank also followed suit with SVB as nervous depositors withdrew their cash, with the latter obtained By NYCB.

Investors are increasingly concerned that small and medium-sized banks like NYCB's huge exposure to commercial real estate loans could spark another banking crisis, but developers are High interest rates and low demand for commercial space have made it difficult to pay them back.

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