FDIC Releases Final Policy Statement Governing Private Equity Investments in Failed Banks
The FDIC voted to reduce the Tier 1 capital leverage ratio from the 15% Tier 1 ratio originally proposed in July 2009 to a 10% Tier 1 (but only common equity) ratio. It also removed the "source of strength" requirement included in the draft proposal in an effort to make it easier for failing institutions to attract private equity buyers. However, the FDIC retained a number of items included in the draft proposal in order to adequately protect the failed institutions and the Deposit Insurance Fund.
“With the problem bank list up to 416, over 80 bank failures so far this year, and the Deposit Insurance Fund at its lowest ebb in 15 years, it is critical to obtain new funds to recapitalize the banking sector and protect the Insurance Fund,” says WilmerHale Regulatory Counsel and former FDIC General Counsel Sara A. Kelsey. “The FDIC's final policy statement seeks to achieve these needs balanced against their concerns about private equity investors. Although I’m not sure we are quite there yet, I am encouraged by the FDIC's willingness to listen and exercise flexibility on a case-by-case basis—as reflected in the Chairman's establishment of expedited procedures so the FDIC board may waive provisions of the statement if it is in the best interests of the Insurance Fund and the statement's goals and objectives can be accomplished by other means.”
To read the full text of a recent WilmerHale Email Alert on this subject, click here.
Lawyers in WilmerHale’s Corporate Practice are renowned for their work in initial public offerings, venture capital, private equity, mergers and acquisitions, strategic alliances, corporate governance matters and the representation of startup companies. Our business lawyers draw on the resources of our intellectual property, tax, labor and employment, employee benefits, real estate, bankruptcy, litigation and antitrust practices to provide a one-stop solution to our corporate clients. We serve a diverse range of clients, from public and private companies to families and individual entrepreneurs. For more information on this practice, click here.
Clients look to WilmerHale’s Financial Institutions Practice for assistance with complex, challenging federal regulatory and legislative, litigation, enforcement, and business transaction matters that impact them as banks, card issuers, insurance companies, broker dealers, mortgage lenders, database operators, on-line firms and other financial services providers. We have extensive experience in retail financial services, privacy and information security, international banking and anti-money laundering matters. Our lawyers are at the forefront of complex issues that impact financial institutions and providers of financial services here and worldwide. For more information on this practice, click here.