March 11 (EIRNS)—On March 7, an investor group led by former President Trump’s Treasury Secretary Steve Mnuchin’s Liberty Strategic Capital, a private equity firm, announced that it would invest more than $1 billion into the virtually bankrupt New York Community Bank, in order to prop it up.
During the week of March 4, Morningstar downgraded NYCB’s credit rating, citing “outsized” exposure to the $20.7 trillion U.S. commercial real estate market. The rating agencies Fitch and Moody’s also lowered NYCB’s credit rating, Fitch to the lowest level of investment grade, BBB−, and Moody’s lowered it to below investment grade or junk rating.
The NYCB effectively failed because of its own activities, but also because of its deep involvement in the failures of several U.S. banks last year. An NYCB subsidiary acquired the $110 billion in assets of Signature Bank on March 19, 2023, one week after the Federal Deposit Insurance Corp. assumed control of that failed bank. At the time, the Signature Bank failure was the third largest bank failure in U.S. history. To make matters even more dicey, the NYCB bought the Flagstar Bank, which was already in significant trouble.
Thus, this is the ever ongoing recycling of the failure of 2023: the $209 billion Silicon Valley Bank, the Signature Bank and other banks, whose problems were never solved, so that Signature Bank, and its holdings, helped bring down NYCB.
