Two famous faces of the financial crisis today closed a deal that reportedly made one of them a billion dollars richer

June 25, 2024

REUTERS/Brendan McDermid

Johannes Thain

John Thain was CEO of Merrill Lynch in 2008 when the company collapsed and was sold to Bank of America.

Meanwhile, John Paulson sold mortgage loans and became a billionaire when the housing market collapsed.

Both were involved in the recent consolidation movement in the financial services sector.

Thain, currently CEO of commercial lender CIT, is now CEO of a regional retail bank.

CIT Group today announced that it has entered into an agreement to acquire OneWest for $3.4 billion in cash and stock. OneWest is a privately held regional bank founded in 2009 that operates 73 branches in Southern California and has $23 billion in assets and $25 billion in deposits.

Following the merger, OneWest’s branches will operate under the name “CIT Bank” and the merged bank will have assets of $67 billion.

New Jersey-based CIT Group said in a statement that the transaction would increase the company’s earnings per share by 20 percent in 2016.

George Soros James Simons John Paulson Phil Falcone Ken Griffin

REUTERS/Jonathan Ernst

John Paulson

The deal was also a boon for John Paulson, the hedge fund investor who made a fortune betting against the real estate market using credit default swaps before the 2008 financial crisis. A Bloomberg report, citing a person familiar with the matter, said Paulson & Co. earned about $939 million from the deal through a fund and a loan pool.

The deal marks another major turning point for CIT, which emerged from bankruptcy protection in late 2009 after nearly collapsing in the wake of the financial crisis. Thain joined the company as chairman and CEO in February 2010.

In addition to announcing the deal, CIT also announced that its second-quarter earnings were better than expected. For the quarter, the company’s net income from continuing operations was $1.02 per share, better than the $0.85 expected by analysts.

Following the news, CIT shares rose 10.8%.