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Under the possible new rules, Bloomberg reports that the FDIC may require PE firms to put down more capital should lenders falter. Additionally, Bloomberg reports that the new rules would likely be effective immediately and could be changed under a certain review period. Some of the other guidelines would:
Under current rules, PE firms are limited to holding a 20% stake in a bank. Some are wondering: What if the rules for buying banks were changed dramatically for buyout firms? Would firms such as Blackstone Group LP (NYSE:BX) and Carlyle Group, which bought BankUnited Financial Corp., continue to flock in droves to acquire these financial institutions? With 45 bank failures in 2009 and hundreds of more banks at risk, PE firms are eager to buy banks. However, the current rules have limited their participation in dealmaking. Buyout firms invested $1 billion in banks after May, according to Bloomberg. At the same time, banks took massive write-downs and were forced to seek capital elsewhere following government stress tests. PE firms don't want the new rules to be so restricting they would stifle their ability to make a potential profit. But, at the same time, the government wants the private sector to be able to acquire banks, including distressed ones, in a controlled manner that benefits buyers, sellers and ultimately strengthens the banking system. "Senator [Jack] Reed [D-R.I.] and other watchdogs have effectively pressured the regulators by saying private equity is welcome but needs proper safeguards," Patricia McCoy, who teaches banking and securities regulation at the University of Connecticut School of Law in Hartford, told Bloomberg. "For a regulator, the danger of not proposing sufficient guidelines is that Congress creates a law that's less flexible and out of their control." - Gerald Magpily
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Thursday is judgment day for private equity firms seeking to acquire banks because the Federal Deposit Insurance Corp. is expected to release new guidelines. 
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