Steven Mnuchin worked at Goldman Sachs. Steven Mnuchin’s brother worked at Goldman Sachs. Steven Mnuchin’s father worked at Goldman Sachs. For some people, finance runs in the blood. That’s why Steve-o is back doing deals, landing the biggest bank buyout of 2024.

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Gresham’s law

My mother always told me to assume the best in people. The 16th-century English merchant Thomas Gresham disagreed, and he has the receipts.

Gresham’s law is the concept that “bad money drives out good.” Imagine you have two types of coins in circulation: pure gold coins and coins with only 90% gold content, but both are valued equally. People will naturally want to hold onto the pure gold coins and spend the debased ones. Over time, only the inferior coins will remain in circulation.

Some argue that the theory still holds today in areas like crypto. In 2021, Kraken strategist Pierre Rochard forecasted that more companies would hold bitcoin on their balance sheets. In an environment where the dollar is being devalued, he predicted that businesses would spend fiat money before liquidating their bitcoin holdings because they hoped that the crypto assets would appreciate. This would create a feedback loop that would further inflate the value of bitcoin.

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Steve Mnuchin leads $1 billion attempt to rescue NYCB

Donald Trump’s former Treasury secretary has landed the highest-profile bank deal of 2024. Steve Mnuchin’s Liberty Strategic Capital led a group of investors that swooped in to rescue New York Community Bancorp, injecting more than $1 billion of capital and effectively taking control of the lender to apartment landlords.

NYCB shares rebounded on the news, after dipping to $1.70 on a report that it was seeking fresh equity, down from more than $13 last year. The bank surprised analysts in January by cutting its dividend and setting aside more for loan losses. Last week, it disclosed the departure of its previous CEO, weaknesses in internal controls, and a 10x increase in 4Q losses. Investors are also nervous about commercial real estate weaknesses a year after the fall of Silicon Valley Bank.

Former Comptroller of the Currency Joseph Otting will become NYCB’s new CEO, the bank’s third leader in just a few weeks. The deal marks a reunion for Otting and Mnuchin, who have a track record of controversial investments. They previously led a group that bought failed mortgage lender IndyMac, more than doubling their investment. But the lender was hit by accusations that it hurt communities as a ‘foreclosure machine’.

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