re: Alemada Research bought a one-branch bank for $11.5 million and it looks like…..this (FTX)

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Physical location means jack shite.

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FTX’s investment, which according to financial regulators was more than double the bank’s net worth, was led by Ramnik Arora, a top lieutenant of the exchange’s founder, Sam Bankman-Fried. Mr. Arora was responsible for many of the much larger deals that FTX signed with Sequoia Capital and other venture capitalists that eventually failed.

Farmington has more than one crypto connection. FBH bought the bank in 2020. The chairman of FBH is Jean Chalopin, who, along with being a co-creator of cartoon cop Inspector Gadget in the 1980s, is the chairman of Deltec Bank, which, like FTX, is based in the Bahamas. Deltec’s best-known client is Tether, a crypto company with $65 billion in assets offering a stablecoin that is pegged to the dollar.

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It’s unclear how FTX was allowed to buy a stake in a U.S.-licensed bank, which would need to be approved by federal regulators. Banking veterans say it’s hard to believe that regulators would have knowingly allowed FTX to gain control of a U.S. bank.

“The fact that an offshore hedge fund that was basically a crypto firm was buying a stake in a tiny bank for multiples of its stated book value should have raised massive red flags for the F.D.I.C., state regulators and the Federal Reserve,” said Camden Fine, a bank industry consultant who used to head the Independent Community Bankers of America. “It’s just astonishing that all of this got approved.”

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Money laundering of billions upon billions.

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I spent my career working with community banks. Now most of my clients were much, much larger than that. Most of their branches were bigger than this bank.

However I did have one client that was just 4 million in assets. A guy bought them for the charter. Several years after he bought them, the bank was now over a billion in assets. The new bank became my client because they outgrew the small firm they were using. Now they are over 10 billion in assets and on NASDAQ.

Getting a bank charter is so difficult after the Great Recession. Buying a small bank for the charter became popular. Often paying multiples of 2 to 3 times book value. HOWEVER, regulators have to approve and they want a business plan. They examine against that business plan but regulators are more than happy to get rid of small banks as they see them as a nuisance.

Would love to see the Moonstone bank exams but they are not public information.

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