As the financial crisis was close to its climax in late 2009, a group of highly experienced bankers gathered in a private room at Midtown Manhattan's 21 Club one afternoon to make a pitch to some of the country's most successful hedge fund managers. Veterans of Bank of America and Wachovia, the bankers said they were looking for several hundred million dollars to set up an institution that would buy failed banks in the South, profiting from the abundant government support available for such deals at the time.
The sales presentation to a standing-room-only crowd of at least 60 was highly polished, according to a person who attended. It also proved a winner. CertusBank, the company the four bankers went on to found, garnered a commitment of half a billion dollars from what one investor called "the smartest of the smart money." Among its members: the hedge fund billionaire John Paulson and Tricadia Capital Management, a pioneer of financial instruments like the CDO-squared.