The Andy Beal Award For Eschewing Moronism

by Mr Juggles

Morons. They are everywhere. But brilliance, true brilliance, should eschew their limiting grasp. As we think important both the recognizing of brilliance and the eschewing of moronism, we are establishing The Andy Beal Award For Eschewing Moronism. Who is Andy Beal and why is he being so honored? He is someone who eschewed moronism, you moron. He sailed his Beal Bank through the choppy loan waters like an extraordinary seaman, navigating it to the point where it has capital to buy loan assets when everyone else is forced selling.

Beal stopped making commercial loans. “If I see another office condo in Las Vegas or Phoenix, I’m going to throw up,” he said at the time. He started selling, too. At a price of 115 cents on the dollar he unloaded a $75 million pool of loans that had been extended to Kmart, exercise chain 24 Hour Fitness and Regal Cinemas. That translated into a yield for the buyer of a mere 1.35 percentage points over Treasuries. “They were great loans at 85 cents,” says Beal, referring to the price he had paid for them years earlier. “They’re stupid at 115.”

He waited patiently for his time to come.

Beal started coming to work at 10:30 and leaving at 2:30. He challenged colleagues to backgammon games and took hour-long lunches, complaining of being “bored stiff.”

He’s not taking help from the government because their programs are scams on the public, designed to only benefit those who acted most irresponsibly during the boom times.

He’s getting scant help from the government. The Troubled Asset Relief Program does not accommodate a guy like Beal because the maximum amount available is 3% of 2008 assets. Had Beal leveraged up his capital to $25 billion and made toxic loans in the last few years, he would now qualify for $750 million. As things stand he can get only $150 million, hardly worth the trouble given the strings attached.

Finally, he berates the government publicly for its duplicity.

After New York state’s highest court ruled against him in a contract dispute in 2007, Beal took out a full-page ad in The Wall Street Journal asking: “When is a contract NOT enforceable according to its clear terms? When it is in the state of New York.”

Recommendation: Although only a baby compared to its predecessor, The Patrick Byrne Award for Operational Focus and Excellence, The Andy Beal Award For Eschewing Moronism is already incrementally more prestigious.

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