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2.7%  Q1 GDP    4.57%  avg. 30-year mortgage     9.5%  Unemployment

D.C.'s Carlyle Group Buys Into Failed Florida Bank

Washington's Carlyle Group -- the private equity firm run by former Carter White House adviser David Rubenstein -- is one of a few high-profile investors in BankUnited, a failed Florida bank seized and bailed out by the FDIC for $4.9 billion.

BankUnited was Florida's largest financial institution. Its failure marks the 34th so far this year, up from 25 last year and three in 2007.

The undercaptialized BankUnited was not ready for the wave of foreclosures that hit its state. It reported $1.2 billion in losses last year.

Even though BankUnited has $13 billion in assets, it was sold May 2 for only $900 million to a group of investors that includes Carlyle, Blackstone Group, Centerbridge Partners and the private-equity firm run by billionaire investor Wilbur Ross.

BankUnited is the second-largest bank to be recently bailed out by the FDIC, following IndyMac Bank, which cost the FDIC $10.7 billion. The FDIC bailout fund is now at its lowest level in nearly a quarter-century. At the end of 2007, the fund stood at $52.4 billion. As of the end of last year, it was down to $18.9 billion.

Bank failures, not stock market crashes, are the real harbinger of economic depression. The economy actually showed a slight rebound following the stock market crash of 1929. But it was the thousands of bank failures in the early '30s that pushed the nation into depression. In 1933, the nadir year of the Great Depression, some 4,000 banks failed, which led to the creation of the FDIC.

Carlyle was in the news recently for an unrelated piece of news: its agreement to pay $20 million to settle its role in a "pay for play" investigation by the New York attorney general. You can read the details of that here.

-- Frank Ahrens
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By Frank Ahrens  |  May 22, 2009; 10:47 AM ET
Categories:  The Ticker  | Tags: BankUnited, FDIC, IndyMac, great depression  
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