Mar 6, 2024 - Business

Steve Mnuchin leads $1 billion rescue of NYCB

Felix Salmon

Steve Mnuchin holding dollar bills — Steven Mnuchin holding enough money to buy multiple shares of New York Community Bancorp. Photo: Andrew Harrer/Bloomberg via Getty Images

Steven Mnuchin, the former Treasury Secretary, has led a $1 billion cash injection into New York Community Bancorp at a price of $2 per share.

Why it matters: The investment is designed to ensure "a strong balance sheet and liquidity position" for the bank, per Sandro DiNello, who has been CEO for less than a week and who is now handing over the leadership reins to former OCC head Joseph Otting.

Between the lines: Mnuchin and Otting know each other well — they were chairman and CEO, respectively, of OneWest Bank.

OneWest bought most of the assets of IndyMac, a mortgage lender that failed in the 2008 financial crisis. Mnuchin personally made hundreds of millions of dollars from the deal.

Follow the money: The news caused NYCB shares to recover the losses they suffered upon news that the bank was looking for outside investors. After a trading halt was lifted, they rose back to roughly where they closed on Tuesday.

The bottom line: This is very expensive capital for NYCB, but does put it on a much firmer regulatory footing.

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Steve Mnuchin leads $1 billion rescue of NYCB

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