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He warned that Co-op could lose even more control of its lender if it is unable to stump up another £120m to maintain its 30% stake.
Last month, the firm struck a settlement with the United States attorney's office in Manhattan, which had been investigating the Baum firm and whether, on behalf of its lender clients, it filed misleading legal papers to expedite foreclosures.
Its low share price was boosted this week after it confirmed it was in talks with its lender and one of its strategic partners about raising additional financing.
Two years later Hartz gave back the building in lieu of foreclosure to its lender, Chase Manhattan, which sold it in 1995 to Archon, a Manhattan-based investment firm.
(Separately, Colony and Mr. Ribis are co-owners of the Atlantic City Hilton, which missed an interest payment on its debt this summer and was in default on a $348 million loan. In filings with the casino commission, the company said it was in negotiations with its lender to modify the loan's terms).
This is a secure form of credit because the borrowing bank sells a liquid instrument such as a Treasury bond to its lender, and agrees to buy it back for a higher price on a specified date.
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Congress sought to deflect responsibility for the crisis by saddling the Fed with new regulatory responsibilities, even as it clipped its lender-of-last-resort power.
The Fed lent not only to banks, but, seeking to stem the panic in wholesale funding markets, it also extended its lender-of-last-resort facilities to support nonbank institutions, such as investment banks and money market funds, and key financial markets, such as those for commercial paper and asset-backed securities.
The Fed began its lender-of-last-resort role in 2007, but did little to avoid or minimize the financial crisis.
In fact, for the first year, the Fed filled its lender-of-last-resort job as intended, quickly injecting cash into banks after the stockmarket crashed, and ring- fencing healthy banks with loans when weaker banks failed.The real failures came later.
"Unless I hear from Congress that I should not be responding to a crisis situation, I think that it's a long-standing role of the central bank to use its lender-of-last-resort facilities," Ben Bernanke, Mr Greenspan's successor at the Fed, said last month.
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