Replies to post #7434 on Loss to Profit, let's make your lost money back !

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News is out : Eventhough it looks like a bad news.
Go check TGIC from 50c to 3.5 : and TGIC news was : stop writing new (insurance) contracts , failed to fund $400M and co has to go into run-off : only servicing existing contracts !

"Regulators Tell Downey Financial To Raise Capital, Hire CEO
By Robin Sidel and Damian Paletta

Companies Featured in This Article: Downey Financial

Federal banking regulators are clamping down again on Downey Financial Corp., owner of a struggling California savings-and-loan that has been battered by its large exposure to adjustable-rate mortgages, according to people familiar with the matter.

The Office of Thrift Supervision, which is the regulatory agency that oversees Downey, has issued a cease-and-desist order that formally requires the bank to raise capital, name a new chief executive, and take other ...

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The reason I need Good DD's :

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DSL:Official news now:SEC 8K : Entry into a Material Definitive Agreement, Financial Statements and Exhibi

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I think a news that is not an immediate BankRupt event , will help DSL rally. DSL has untill december to prepare a plan. So i think the market will take it as a Relief as it is not a news like INDY MAC where the FDIC seize the co directly and sells the co.

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Item 1.01 Entry into a Material Definitive Agreement
On September 5, 2008, Downey Financial Corp. (the "Company") issued a press release announcing that the Company and its wholly-owned subsidiary, Downey Savings and Loan Association, F.A. (the "Bank"), have each consented to a Cease and Desist Order (the "Company Order" and the "Bank Order," respectively, and together, the "Orders") issued by the Office of Thrift Supervision (the "OTS"). The Orders became effective on September 5, 2008.

The press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.

The Bank Order requires the Bank to, among other things:

º meet and maintain a minimum Tier 1 Core Capital ratio of 7% and a minimum Total Risk-Based Capital ratio of 14% at each quarter-end;
º submit to the OTS an updated capital augmentation and strategy plan addressing how the Bank will meet and maintain the foregoing capital ratios and that provides for the raising of new equity and a capital infusion by no later than December 31, 2008, together with an alternative strategy to meet and maintain the Bank's capital and ensure its safe and sound operation if the plan to raise additional capital is not successful;
º submit for OTS approval within prescribed time periods (i) a comprehensive classified asset reduction plan, (ii) a real estate owned disposition plan,
(iii) an updated business plan containing strategies for a reduction in concentration of payment option adjustable rate mortgage and stated income loans and (iv) a plan to strengthen executive management;
º notify, or in certain cases receive the permission of, the OTS prior to (i) increasing its total assets in any quarter in excess of an amount equal to net interest credited on deposits during the quarter; (ii) making certain changes to its directors or senior executive officers; (iii) entering into, renewing, extending or revising any contractual arrangement related to compensation or benefits with any director or senior executive officer of the Bank; (iv) making any golden parachute or prohibited indemnification payments; (v) paying dividends or making other capital distributions; and
(vi) entering into certain transactions with affiliates;
º refrain from any unsafe and unsound practices regarding lending and from resuming payment option adjustable rate mortgage or stated income lending programs; and
º comply with the OTS' most recent report of examination with respect to the Bank.

The Company Order requires that the Company notify, or in certain cases receive the permission of, the OTS prior to (i) accepting or requesting that the Bank pay or make, or commit to pay or make, any dividends or other capital distributions; (ii) making certain changes to its directors or senior executive officers; (iii) entering into, renewing, extending or revising any contractual arrangement related to compensation or benefits with any director or senior executive officer of the Company; (iv) making any golden parachute payments or prohibited indemnification payments; and (v) incurring, issuing, renewing or rolling over any debt, increasing any current lines of credit or guaranteeing the debt of any entity.

The description of each Order and the corresponding Stipulation and Consent set forth in this Item 1.01 are qualified in their entirety by reference to the Orders and Stipulations, copies of which are attached as Exhibits 10.1, 10.2, 10.3 and 10.4 hereto and are incorporated by reference herein in their entirety.





Item 9.01 Financial Statements and Exhibits.
(d) Exhibits

10.1 OTS Order to Cease and Desist with the Company dated September 5, 2008

10.2 Stipulation and Consent to Issuance of Order to Cease and Desist with the Company dated September 5, 2008

10.3 OTS Order to Cease and Desist with the Bank dated September 5, 2008

10.4 Stipulation and Consent to Issuance of Order to Cease and Desist with the Bank dated September 5, 2008

99.1 Press Release issued by the Company, dated September 5, 2008




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The reason I need Good DD's :

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DSL:ok full NEWS here ! Big RELIEF imo

Downey Reaches Agreement on Regulatory Consent Orders and Enhances Financial Strength
Friday September 5, 5:16 pm ET
Raises $109 Million in Regulatory Capital


NEWPORT BEACH, Calif., Sept. 5 /PRNewswire-FirstCall/ -- Downey Financial Corp. (NYSE: DSL - News) today announced that the Company and its subsidiary, Downey Savings and Loan Association, F.A. (the "Bank"), have reached agreement with the Office of Thrift Supervision (OTS) on Consent Orders which, to a large extent, formalize certain measures previously announced by the Company to enhance the Bank's financial strength. As a direct result of these measures, the Company also announced the sale of certain non-core real estate assets to a third party for aggregate cash proceeds of $110 million. Downey expects to report a net pre-tax gain of approximately $68 million from this sale. That gain, combined with a dividend to the Bank from a wholly owned subsidiary of the Bank, will result in an immediate increase in the Bank's regulatory capital of approximately $109 million.
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"We have been working closely with our regulators to aggressively address the challenges Downey has been facing in this unprecedented financial environment and are pleased to have reached agreement on a formal plan that addresses the OTS' concerns," said Michael Bozarth, Downey's Chairman of the Board. "The Orders reflect a number of measures that Downey has already undertaken and, in some cases, is close to completing. Having reached agreement on these Orders, and having successfully raised a significant amount of new capital, Downey has made substantial progress."

"Our customers can rest assured that the Orders do not restrict us from meeting their banking needs and providing the services and customer care they have come to expect," added Mr. Bozarth. "Downey continues to serve its customers with its full range of lending and retail banking services."

The Orders require, among other things, that the Bank meet and maintain a minimum Tier One Core Capital ratio of 7% and a minimum Total Risk-Based Capital ratio of 14% at each quarter end. In addition, the Bank must complete a capital raising initiative by December 31, 2008. Downey has already made substantial progress on this capital plan and has enhanced the Bank's regulatory capital by approximately $176 million through the real estate sale and the subsidiary dividend described above and previously disclosed contributions of capital from the Bank's parent company. The Orders also require that, within 45 days, the Bank submit for OTS review and non-objection a comprehensive classified asset reduction plan, a long-term business plan, a real estate owned disposition plan, and a plan to strengthen executive management.

Since Downey is now subject to an order requiring it to meet and maintain a specific capital level, it is deemed "adequately capitalized" under OTS regulations even though it exceeds minimum regulatory capital ratios that would otherwise qualify it to be "well capitalized." As a result, the Bank is subject to restrictions on accepting brokered deposits, which have not historically been a significant part of the Bank's deposit base, and upper limits on interest rates the Bank may pay on deposits.

Mr. Bozarth continued, "Downey's Board and management will continue to diligently explore a broad range of strategic alternatives by working with our financial advisor, Sandler O'Neill + Partners, L.P. to further enhance the Bank's capital position. We have made substantial progress in strengthening this institution and are committed to continuing to meet the demands of this challenging environment."

The description of each Order and the corresponding Stipulation and Consent set forth herein are qualified in their entirety by reference to the Orders and Stipulations, copies of which are attached as Exhibits 10.1, 10.2, 10.3 and 10.4 to the Company's Current Report on Form 8-K filed today with the SEC.

About Downey Financial Corp.

Downey Financial Corp., headquartered in Newport Beach, California, is the parent company of Downey Savings and Loan Association, F.A., which has assets of $13.4 billion, and 169 branches throughout California and five in Arizona.