FDIC proposals on banks buys draw fire as comments end

August 11, 2009

A pedestrian walks in front of a BankUnited branch in downtown Miami, Florida May 22, 2009. Florida-based BankUnited, which was closed by the U.S. government and sold to investors, was conducting business as usual on Friday and there was no sign of panic among customers, its new chief executive said. Banking industry veteran John Kanas, who also took over as chairman, told Reuters that BankUnited planned no immediate layoffs among its work force of 1,100 and expected to expand branches in its Miami base while closing branches outside the city. REUTERS/Carlos Barria  (UNITED STATES POLITICS BUSINESS)   By Paritosh Bansal
   NEW YORK, Aug 10 (Reuters) – Lone Star Funds joined other big private equity names in opposing proposed U.S. rules for investments in failed banks, as a designated period for public comment on the draft regulations comes to an end on Monday.
   The Federal Deposit Insurance Corp (FDIC) kicked up a storm last month when it proposed tough guidelines for private investors seeking to buy failed banks, suggesting such groups should have to maintain higher capital levels and support the banks they buy.
   The proposed guidelines have drawn critical comments from many investors who argue that they unfairly place an onerous burden on them and warn that the rules, if finalized as they are, would chill private investments in banks.
   Firms such as Blackstone Group LP <BX.N> and Corsair Capital, and legal and financial advisors like Skadden, Arps, Slate, Meagher & Flom, Jones Day and FBR Capital Markets <FBCM.O> have opposed parts of the proposed guidelines, according to letters posted on the FDIC website.
   But the regulator’s proposed policy has also drawn some support. Three U.S. Senators — Susan Collins, Carl Levin and Daniel Akaka — have urged the FDIC to strengthen its policy related to use of offshore structures.
   In its letter on Monday, Lone Star, which has invested more than $60 billion in buying nonperforming loans and related securities from financial institutions, also highlighted a proposal dealing with the type of deal structures that can be used in bank takeovers.
   Lone Star said regulators should prefer the “silo” structures in bank takeovers, where an investor wants to take a controlling stake, rather than “club deals,” where several investors take smaller bits of the company.
   “‘Club’ or ‘consortium’ arrangements necessarily reduce the number of potential bidders for a given institution,” Senior Managing Director Len Allen wrote in the letter.
   In a separate letter, Kohlberg Kravis Roberts & Co [KKR.UL] said there was a case for engaging private equity firms to buy failed banks.
   “If we succeed, there is an understandable public concern that we may make too much money too quickly,” KKR’s Deryck Maughan wrote. “There is no easy way around this concern.”
   But he added the auction process resulted in lower cost to the taxpayer, and the FDIC could retain an interest in the bank so that it gets a piece of the recovery.
   Private investors’ interest in buying banks surged this summer after a group of buyout shops, including Wilbur Ross’ WL Ross & Co, Carlyle Group [CYL.UL] and Blackstone, took over Florida’s BankUnited in an FDIC-assisted deal.
   But uncertainty over the rules has stalled plans by investors to buy banks, and slowed some deals already in the works, sources previously told Reuters. For more details [ID:nN31427735]
   Last week, industry sources said the FDIC is expected to move quickly in finalizing the guidelines, possibly easing one of its most controversial proposals that would impose a high capital requirement. For more details [ID:nN0377697] (Reporting by Paritosh Bansal; Editing by Phil Berlowitz) (For more M&A news and our DealZone blog, go to http://www.reuters.com/deals) ((paritosh.bansal@thomsonreuters.com +1 646 223 6113; Reuters Messaging: paritosh.bansal.reuters.com@reuters.net)) Keywords: PRIVATEEQUITY/BANKS
Tuesday, 11 August 2009 00:50:41RTRS [nN10482437] {C}ENDS


We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/

I cannot thank you enough for the article.Really thank you! Much obliged.

Posted by fiverr.com/eebest8 | Report as abusive

Thank you ever so for you blog.Much thanks again. Awesome.

Posted by Rene Perras Lawyer Marketing Expert | Report as abusive

Awesome blog article.Thanks Again. Want more.

Posted by Muay Thai Website | Report as abusive

I loved your blog.Really thank you! Cool.

Posted by computers for sale | Report as abusive

Very neat blog. Awesome.

Posted by inflatable helmets | Report as abusive

Im obliged for the article. Really Great.

Posted by life ionizer review | Report as abusive

Fantastic blog article.Really looking forward to read more. Fantastic.

Posted by how to ask a girl to be your girlfriend | Report as abusive

Thank you for your article post.Really looking forward to read more. Great.

Posted by erase herpes | Report as abusive

Really informative article.Much thanks again. Awesome.

Posted by п»їOur Muay Thai | Report as abusive

Thanks for sharing, this is a fantastic blog.Much thanks again. Much obliged.

Posted by Learn to fly helicopters in Key West! | Report as abusive

Appreciate you sharing, great post.Thanks Again. Awesome.

Posted by building websites for money | Report as abusive

I really liked your blog post.Really looking forward to read more. Keep writing.

Posted by cheap hotel in Patong | Report as abusive

Major thankies for the post.Really looking forward to read more. Awesome.

Posted by water ionizer reviews | Report as abusive

Really enjoyed this article post.Really thank you! Awesome.

Posted by Fishing Lover | Report as abusive

Thanks a lot for the blog post. Fantastic.

Posted by free divorce papers | Report as abusive

I appreciate you sharing this article.Thanks Again.

Posted by mass sms | Report as abusive

You have brought up a very good points , thankyou for the post.

Posted by eebest Mickey | Report as abusive

Enjoyed every bit of your article post. Really Cool.

Posted by sex tube | Report as abusive

Thanks for sharing, this is a fantastic article post.

Posted by My Website 2015 | Report as abusive

This is really interesting, You are a very skilled blogger. I ave joined your feed and look forward to seeking more of your excellent post. Also, I have shared your web site in my social networks!

Posted by Free Money App | Report as abusive

Great post.Much thanks again. Great.

Posted by quality backing tracks | Report as abusive

Great, thanks for sharing this blog article.Much thanks again. Fantastic.

Posted by Our information | Report as abusive

Very informative article. Great.

Posted by bed bug exterminator san antonio | Report as abusive

Thank you ever so for you blog article.Much thanks again. Want more.

Posted by My website | Report as abusive

I cannot thank you enough for the article.Much thanks again. Fantastic.

Posted by anal tube | Report as abusive

Major thankies for the article post.Really thank you! Really Cool.

Posted by My Camp | Report as abusive

Muchos Gracias for your post.Much thanks again. Want more.

Posted by miracle garcinia cambogia | Report as abusive

I appreciate you sharing this blog post.Really looking forward to read more. Cool.

Posted by buy real instagram likes | Report as abusive

Thanks a lot for the article post. Cool.

Posted by Tchat Nostalgie | Report as abusive

Hey, thanks for the article post.Much thanks again. Will read on…

Posted by tchatch webcam | Report as abusive