http://finance.yahoo.com/news/FDIC-eases-rules-for-private-apf-3414679871.html?x=0
Once again the compromise with unwise connotations prevailing, but we're in a jam so we'll let it slide, the hell with everything
Squeezed by rising bank failures, regulators made it easier Wednesday for private investors to buy failed institutions.
The Federal Deposit Insurance Corp.'s board voted 4-1 to reduce the cash that private equity funds must maintain in banks they acquire.
Private equity funds tend to buy distressed companies, slash costs and then resell them a few years later. They have been criticized for excessive risk-taking. But the depth of the banking crisis has softened the FDIC's resistance to them.
The agency's deposit insurance fund, which insures customers' deposits, has shrunk under the weight of collapsing banks. Analysts warn it could fall below zero by year's end. At least in theory, having private investors buy failing banks would allow the FDIC to reduce the losses it would have to cover at a failed bank.
Under the new rules, a buyer would need to maintain the bank's capital reserves equal to 10 percent of the failed bank's assets, down from 15 percent under an earlier proposal. That compares with a 5 percent minimum requirement for banks that buy other banks. And the new policy limits the circumstances under which private investors must maintain assets that could be provided if needed to bolster banks they own.
