Private equity could save the day

Author: | Published: 1 Oct 2009

Kyle Siskey
Americas staff writer

The Federal Deposit Insurance Fund (FDIC) is nervous. In the past year its deposit insurance fund, which insures more than $6 trillion in deposits, dropped below $10.5 billion for the first time since 1993. Its balance sheet added more than 120 troubled banks (some of which have since been sold) in the past two years and there are 416 more on its Problem List.

So the FDIC is liberalising its guidelines for bidding on failed banks to bring in more buyers, and private equity firms are first in line. With un-deployed capital and a desire to get into a market previously closed to them, private equity is eager to buy the banks.

On July 9 2009 the FDIC proposed guidelines for private equity bids on these failed banks. Those proposals were met with wide criticism; the FDIC policy statement released on August 26 revises the...