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FDIC Sets Standards for Private-Equity Firms to Buy Shut Banks

Posted by WARREN MOSLER on August 26th, 2009


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So why should capital ratios be a fuction of who the shareholders are?

FDIC Sets Standards for Private-Equity Firms to Buy Shut Banks

By Alison Vekshin

August 26 (Bloomberg) — The Federal Deposit Insurance Corp. approved guidelines for private-equity firms to buy failed banks, opening a growing pool of failing lenders to new buyers and limiting costs to the agency and the industry.

The FDIC board approved the rules today at a meeting in Washington, agreeing to lower to 10 percent from the proposed 15 percent the Tier 1 capital ratio private-equity investors must maintain after buying a bank.


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4 Responses to “FDIC Sets Standards for Private-Equity Firms to Buy Shut Banks”

  1. Captain CraZ Says:

    So why should capital ratios be a fuction of who the shareholders are?

    LOL! Because first by inflation, and then by deflation, this nation will be stole from j6p and passed to the rich. Too bad you aren’t in the “in” club and can get those superior capital ratios you little william black wannabe! The best way to rob a bank is to own the one with the best capital ratios!

    Reply

  2. Warren Mosler Says:

    Specifically, the FDIC raised the capital ratio for private equity buyers from 8% to 10%, but didn’t go to the proposed 15%.

    This lowers the bids they get from private equity firms.

    Reply

  3. Winslow R. Says:

    So your proposing the capital ratio should be the same for any purchaser public/private foreign/domestic, right?

    Reply

  4. Warren Mosler Says:

    right, until someone has a good reason to do otherwise

    Reply

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