Chapter One Hundred and Thirty-Six: Why Complain About the Price?

"Go to hell, Patterson!"

"What's the difference between fifty-five thousand and fifty-six thousand?"

"Are you kidding us? What a waste of time!"

"Yeah, Sherman, let's go!"

After Patterson's new offer came out, the venue suddenly became noisy. The people who had been tense for a while suddenly began to let loose.

The voices cursing FDIC as "vampires," "brainwashed," and "living in a dream" were incessant. Some individuals, either truly disinterested or genuinely angered by Patterson's offer, slammed shut their notebooks, stood up abruptly, and marched towards the conference room door...

Even Goodman, who had been steady as a rock and calm, shook his head slightly at this moment. With a mocking look, he couldn't even be bothered to glance at Patterson.

Chairs being pushed back, people cursing loudly, and some rising from their seats—all of a sudden, what was a serious gathering moments ago turned into a chaotic scene reminiscent of a brawl in a street market.

"Hey, Carter, want a smoke?"

As Carter stared dumbfoundedly at the scene before him, his arm was suddenly tapped.

"What... what's going on?"

Taking the opportunity to offer a cigarette, Carter whispered to Goodman:

"Also, can we smoke during the meeting?"

"Why wouldn't we be able to smoke?"

After exhaling a puff of smoke, Goodman seemed somewhat surprised. Smoking wasn't prohibited in public places these days... After enjoying a drag from his cigarette, Goodman pointed towards Patterson, who was trying to persuade the crowd at the entrance:

"Patterson has gotten too greedy this time! How could he come up with this price?! I don't understand."

"You mean... this price is too high?"

Curious, Carter asked for clarification.

"It's not about whether it's high or not, it's about it being completely unrealistic! At this price, if FDIC handles the bankruptcy, they won't have to spend a penny; instead, they'll make a profit, you know?"

Shaking off the cigarette ash onto the carpet, Goodman expressed his dissatisfaction:

"Oh, so when everything is fine, they collect money, and when there's trouble, they collect money again?! Then what's the point of us buying deposit insurance? We might as well directly guarantee each other among the industry members and cut them out!"

"There's no such thing as a free lunch in this world. They want to get away without spending a dime, it's impossible!"

"What's the rule here? Can you explain in detail?"

Carter's eyebrows raised slightly, detecting a hint of something different in Goodman's tone, something resembling a struggle between industry associations and official institutions...

At this moment, Carter didn't care about Goodman's sense of public duty. Since he wasn't the one cleaning up the carpet, he eagerly inquired about the inside story...

"Well, let me tell you. First off, this fifty-six thousand, after giving it to FDIC, they need to pay Jesse Dennison from Forest Bank forty-three thousand eight hundred and sixty dollars because Forest Bank isn't technically bankrupt. Do you understand?"

Amidst the heated exchanges at the entrance, Goodman's voice sounded somewhat weak. But Carter heard it all and understood!

Bank capital, in other words, owner's equity, represents the portion of the bank that owners can claim as profit. Although Forest Bank has been forcibly restructured, it isn't truly bankrupt in financial terms.

It still has some owner's equity left, which will naturally be transferred to everyone. However, during FDIC's bankruptcy liquidation process, its assets will be temporarily frozen, so this money will still remain with Forest Bank.

It's not an acquisition cost; Carter understood that. But if you deduct the forty-three thousand eight hundred sixty dollars from fifty-six thousand—or rather, fifty-five thousand—then the actual cost of purchasing Forest Bank becomes even less!

Effectively, FDIC is selling this bank for eleven thousand two hundred dollars...

Even if the dollar appreciates in the future, this figure still seems like a giveaway. So what's there to complain about?!

"I understand that. What's next?"

"What's next? Isn't it obvious?"

Upon hearing Carter's understanding of the previous explanation, Goodman prepared to enjoy his cigarette and the spectacle. But to his surprise, Carter's questions kept coming...

"Forest Bank isn't truly bankrupt, which means its operations can still proceed normally. At least until the risks truly become dangers, it can still function, right? Settlements, withdrawals for depositors, it can still do all that, right?"

"Yeah, but isn't that good? After taking over, inject a little capital, reduce the risk ratio, and there's almost no need for any adjustment; it can operate directly. No, it can operate right away. Isn't that a good bank?"

Carter shook his head in confusion; he still didn't understand Goodman's point.

"Of course, it's good! Let me tell you, if Forest Bank's qualifications weren't good, and the merger difficulty wasn't low, I guarantee you that at least half of the people here today wouldn't have shown up! If it was a genuine financial bankruptcy, then within that remaining half, another half wouldn't have come! There would hardly be anyone left!"

Bending closer, Goodman whispered to Carter's ear, his voice barely audible amidst the commotion:

"Not everyone is making money in the stock market like you! Think about it, after deducting stock market profits, bank profits, and past savings..."

"I understand that. But this is also an issue of merger difficulty! In actuality, at eleven thousand two hundred dollars, no, let's say fifty thousand. Buying it for fifty thousand dollars, as long as you have three to five hundred thousand in slightly less urgent funds, allocate it to Forest Bank for a couple of years, and you'll still make a profit! So why is everyone complaining about the price?"

Although I wouldn't dare claim to be extremely clever, I'm not foolish either. Carter certainly knows how difficult it is nowadays for a small savings bank to come up with over three hundred thousand in idle funds...

Many banks, even if they manage to come up with the funds, easily find themselves affecting their own bank's reserves and risk levels. One misstep can lead to an embarrassing situation of gaining nothing despite trying to gain everything...

It seems like expanding the market on one side while the existing market hasn't fully settled yet. That's precisely why Carter was hesitant to expand too rapidly before, especially in these relatively traditional times.

Such indigestion is highly likely to occur!

But just as I mentioned earlier, this is an issue of merger difficulty, not profitability! From a profitability standpoint, Carter can't understand why everyone finds it too expensive...