The Federal Deposit Insurance Corporation has seemingly backed down on its hardline stance against private equity groups looking to acquire troubled banks, according to Reuters. The FDIC, which had in the past objected to non-banking groups taking stakes greater than 25 percent in collapsed banks, has since changed its attitude, and will vote today on final guidelines on the matter. The private equity community, which has massive capital reserves that could be valuable to the resuscitation of the country’s banking system, has lobbied for the right to invest in troubled banks, and is currently looking to amend a rule that requires private equity groups to maintain a 15 percent ratio of capital to assets—standard banks are only required to maintain a 5 percent ratio.
FDIC Looks to Allow PE Bank Buyouts
Private equity groups look to succeed in reversing the FDIC’s policy on bad bank buyouts.
August 26, 2009