Alfred Camner, the former chairman of BankUnited Financial Corp., was just another guy who made a really good living writing bad loans.
The seizure of his Coral Gables, Fla., bank on Thursday sticks the Federal Deposit Insurance Corp. with a $4.9 billion tab, the second-largest hit since California’s IndyMac Bancorp. blew in July.
It was the 34th failed bank to be seized this year.
Like many failed bank executives, Camner was a talented storyteller. As Florida’s real-estate market disintegrated into one of the nation’s worst foreclosure nightmares, Camner kept right on blowing sunshine in the Sunshine State.
Here’s what he said in a January 2008 conference call with analysts:
“The state is not falling into the ocean, contrary to a number of people who seem to make that commentary. People are still moving here, businesses continue to grow, and entrepreneurship continues to be a hallmark of the state. We really are in one of the best, if not the best, markets in the country.”
Camner, who founded BankUnited in 1984 and built it to 85 branches in 13 coastal Florida counties, appears to have believed his own tall tales.
He loaded up on stock options, but often converted them to stock when they vested. Even after stepping down as CEO and chairman in October, he remains the largest shareholder of the bank’s now-bankrupt holding company.
In the boom times, Camner spent undisclosed “millions” of the bank’s money on a 10-year deal to name the convocation center at his alma mater, the University of Miami. The BankUnited Center is home to the Miami Hurricanes, associating the venue with two kinds of multibillion-dollar disasters.
Camner also hired one of his daughters to work in the bank’s investor-relations office, when times were good, and another to be the bank’s full-time lobbyist in Washington, D.C., an unusual position for a bank its size.
BankUnited was different, Camner always claimed.
It did not make piggyback loans, involving more than one lender, or subprime loans, involving customers with bad credit histories. BankUnited’s customers had high credit scores and high loan-to-value ratios. Camner stuck to this story, even when it was obvious that his exotic form of lending was yielding massive defaults.
BankUnited had built an enormous portfolio of option-adjustable rate mortgages. Option-ARMs allowed borrowers to choose whatever monthly payment they liked, even if it didn’t even cover interest expenses. And it allowed the bank to book the interest charged on these loans as revenue, even when it wasn’t all paid.
Camner either didn’t understand the risks of these loans, or he was just a very persistent storyteller.
When he finally resigned, his fellow board members lavished him with praise for his long and storied career, making all those billions in bad loans.
“His integrity, loyalty and dedication are unquestioned,” board member Allen Bernkrant said in a news release. “All of us wish him the best in his well-deserved retirement.”
Florida, by the way, has always been a great place to retire. And now it has plenty of cheap housing, too.
Al Lewis: 201-938-5266 or al.lewis@dowjones.com; read Al’s blog at .
