July 01, 2009

The Federal Deposit Insurance Corp. on Thursday is expected to propose new guidelines for private-equity investors seeking to buy failed banks, people familiar with the matter said.The issue is a tricky one for the FDIC. It wants to open the door for more types of investors to buy failed banks, reducing the potential cost to the agency of bank collapses. At the same time, it wants to prevent largely unregulated private-equity firms from acting too aggressively.

The FDIC's proposal isn't final and could change before it's issued for public comment, people familiar with the matter said.Seventy banks have failed since January 2008 and federal bank regulators are eyeing private-equity firms as a potential source of capital for both operating and failed institutions.The proposal is expected to deter private-equity investors from buying and flipping failed banks and could include a mandatory investment period.