Hedge Fund, P.E.-Backed Bank Buys Another Failed Bank

Feb 23 2010 | 7:19am ET

A bank owned by a consortium of hedge and private equity funds has snapped up another failed bank.

OneWest Bank, itself the former failed lender IndyMac, has agreed to buy the deposits and most of the assets of La Jolla Bank, a California bank with $2.8 billion in deposits. It is the second failed bank bought by OneWest from the Office of Thrift Supervision and Federal Deposit Insurance Corp., following its deal for First Federal Bank in December.

As part of the agreement for La Jolla, the FDIC and OneWest will share losses of $3.31 billion on the failed bank. The FDIC’s Deposit Insurance Fund is expected to take an $882.3 million hit on the deal.

OneWest is owned by Paulson & Co., Soros Fund Management, JC Flowers & Co. and Dune Capital Management, among others.

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