Editorial Board
NYCB Woes Offer Lessons Beyond Real Estate
More equity and seasoned management are the best defenses against losses, no matter what form they take.
A work in progress.
Photographer: Spencer Platt/Getty Images
When banks get into trouble, it often comes as a shock. Then the problems seem obvious in hindsight — if only managers and supervisors had been paying attention. The recent turmoil at New York Community Bancorp Inc. is a case in point.
Since a sudden writedown of two commercial real estate loans in January, NYCB has suffered a quarterly loss, 71% dividend cut, two-thirds decline in its stock price and credit downgrade, along with shareholder lawsuits, management upheaval and the disclosure of “material weakness” found in an internal loan review.