FDIC to "Soften" Rules for Buyers of Bad Banks
If you find yourself wondering why the FDIC would be changing its tune and bending the rules to allow private equity to gobble up failed banks, you may want to start by asking yourself how much cash the FDIC has remaining in its coffers. Here's a hint: ZERO
In an attempt to attract more buyers for failed banks, the Federal Deposit Insurance Corp. is expected next week to soften its proposed restrictions on private-equity firms buying collapsed lenders, according to people familiar with the matter.
While FDIC officials are still hammering out details of the final rule, the agency is expected to back away from aspects of its July proposal, including a requirement that buyout firms that bid on failed institutions maintain much-thicker capital cushions than banks, these people said.
The tin foil hattists are saying the FDIC has become a victim to the private equity vultures but I say the FDIC isn't caving because of pressure, it's caving because that's the only way it's going to be able to pawn off these broken banks without having to foot the bill.
But that's just my $0.02, what do I know? Maybe Sheila is sitting on a cache of gold coins that we don't know about.
We will know more next week but the heavy lobbying efforts by this wealthy special interest are likely to get results at the next FDIC meeting. Following the financial collapse and required bailout, is it critical that the government bends (again) to the wishes of this industry? Asking this industry to be properly capitalized hardly sounds like it should be a problem. Let them gamble their own money instead of always having the government helping hand there to bail out their gambles. Reuters:It's not lobbying, it's called not having any money. I'm shocked the ruse has lasted this long.
The U.S. Federal Deposit Insurance Corp will meet next week to vote on a proposed policy that would force private equity groups to maintain high capital levels and put a large amount of their own money at stake when investing in failed banks.
The FDIC provoked a backlash when it proposed the guidelines in July and is expected to soften the policy when it meets Aug. 26. The meeting's agenda was posted to the FDIC website Wednesday, but provided few details on the specific proposals.
Some investors and regulators said earlier that the proposed rules were too harsh and would quash the interest of private equity groups at a time when the FDIC is trying to court investors for an increasing number of failed banks.
And the value of private equity groups is what? There's certainly a need for it but it's hardly a pivotal sector that requires special privileges.
And we will still bring you all the worst from the bank failure frontlines at Bank Fail Friday because let's face it, things will get a lot worse before they can get any better.