In summary, a banker basically sits out of the loan market…for 3 years. In a lengthy article, Forbes notes
Andy Beal, a 56-year-old, poker-playing college dropout, is a one-man toxic-asset eater–without a shred of government assistance. Beal plays his cards patiently. For three long years, from 2004 to 2007, he virtually stopped making or buying loans. While the credit markets were roaring and lenders were raking in billions, Beal shrank his bank’s assets because he thought the loans were going to blow up. He cut his staff in half and killed time playing backgammon or racing cars. He took long lunches with friends, carping to them about “stupid loans.” His odd behavior puzzled regulators, credit agencies and even his own board. They wondered why he was seemingly shutting the bank down, resisting the huge profits the nation’s big banks were making. One director asked him: “Are we a dinosaur?”
Now, while many of those banks struggle to dig out from under a mountain of bad debt, Beal is acquiring assets. He is buying bonds backed by commercial planes, IOUs to power plants in the South, a mortgage on an office building in Ohio, debt backed by a Houston refinery and home loans from Alaska to Florida. In the last 15 months Beal has put $5 billion to work, tripling Beal Bank’s assets to $7 billion, while such banks as Citigroup and Morgan Stanley shrink and gobble up billions in taxpayer bailouts.
Mike Masnick in the Techdirt blog sums it up well:
This guy — who actually saw what was going on, and prepared for it, now has to compete against those who screwed up and are being handed billions by the government.
Smart people are out there. They will lead us out of this mess. Government would do better to fund the smart people like this guy…and even better to get out of the guy’s way.