The Banker Who Got It Right

This piece from Forbes is one of the best I’ve read in a while.  It tells the story of Andy Beal, a Texas banker who foresaw the credit bubble and started raising cash in the years prior to the crash.  Now Beal is ramping up operations and is buying up distressed debt.  Isn’t capitalism great?

What’s really scary about this story is that the regulators and credit agencies actually questioned Beal and were puzzled by his actions.  In other words, these clowns gave the one banker who wasn’t making shoddy loans a hard time because they didn’t understand why he wasn’t participating in the stupidity.  It’s pretty unbelievable… here’s an excerpt from the article…

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.