Cash-Strapped FDIC Turns To Private Equity Firms To Buy Struggling Banks

nytimes.com:

Faced with a growing wave of bank failures, the Federal Deposit Insurance Corporation is taking extraordinary steps to attract buyers for troubled institutions to keep the fund that makes depositors whole from being drained.

Federal regulators are planning next week to make it easier for private equity firms to buy insolvent lenders, according to people briefed on the situation, a move that would reduce the number of failed banks that the fund would have to support.

Read the whole story: nytimes.com

Comments

[themodernleader]

I keep forebodingly predicting foreign ownership and control. Tonight, I learn on the Bloomberg site that the FDIC turned over the assets of the fifth largest banking foreclosure in American history to a Spainish owned banking conglomerate. So much for American contol of our own currency and governance. This Administration is a snake pit of coverup and traitorous decision making. Our true destitution is being covered up now to hide corrupt policy and giveaway to the big banks under Paulson and Geithner. We are being ruled by dangerous ideologues, incompetents and traitors. I am ashamed of my own country. And there appears nowhere to turn for solace or relief.
This President is leading our country down a one way road to destruction and ruin. Our elected leaders must persuade him to change directions. Their futures are in as much danger as our country's prospects.

[lloydblank]

Obama already failed to reform the banks & wall street; now he's failing with heath care, too. So much for change you can believe in.

good articles: http://iamned.blogspot.com ...

[PragmaticStatistic]

Why doesn't Goldman Sachs, with all its profits, acquire these failed commercial banks as part of its new commercial bank status that does not exist?

Could it be that they are waiting for the government to back the risk with more taxpayer funds? The FDIC now wants private equity firms to buy banks at a discount, reap all the deposits and have the government assume all the risk. This sounds like one more peg a never ending cycle of risk that favors the bankers. At what point does the government's risk end on each deal the FDIC makes? Stretching the FDIC's budget this way may solve its budget crisis now, but what happens when these deals come back and the government has to assume all the debt? And, who do you think the private equity firms are going to be? More bankers?

[sonofsamphm1c]

Why, just nationalize them. It's like magic, right? Poof, all our problems will be gone.

[DiogenesOfAlaska]

Aren't there a bunch of investment banks around who are desperately trying to be more commercial ever since last september?

Why don't they go out on a little shopping spree and get themselves a few banks with actual clients?

It would also solve their terrible problems of not knowing what to do with their profits. They would simply be happy with paying into the FDIC for what stabilizes the financial system:

no, not financial innovation Wall Street style, but financial innovation Jim Chanos style: deposit insurance, the greatest innovation of 20th century finance.

What are they waiting for?

[LHoney]

Note to government: If you are going to insure deposits in our banks, you might want to have some regulations in place so that said banks cannot use that money in long-shot gambling ponzi schemes... just sayin'

[DiogenesOfAlaska]

Yes, that's indeed the short version. Why am I making such a fuzz when it's really that simple?