FDIC folding under pressure by private equity?

We will know more next week but the heavy lobbying efforts by this wealthy special interest are likely to get results at the next FDIC meeting. Following the financial collapse and required bailout, is it critical that the government bends (again) to the wishes of this industry? Asking this industry to be properly capitalized hardly sounds like it should be a problem. Let them gamble their own money instead of always having the government helping hand there to bail out their gambles. Reuters:

The U.S. Federal Deposit Insurance Corp will meet next week to vote on a proposed policy that would force private equity groups to maintain high capital levels and put a large amount of their own money at stake when investing in failed banks.

The FDIC provoked a backlash when it proposed the guidelines in July and is expected to soften the policy when it meets Aug. 26. The meeting’s agenda was posted to the FDIC website Wednesday, but provided few details on the specific proposals.

Some investors and regulators said earlier that the proposed rules were too harsh and would quash the interest of private equity groups at a time when the FDIC is trying to court investors for an increasing number of failed banks.

And the value of private equity groups is what? There’s certainly a need for it but it’s hardly a pivotal sector that requires special privileges.

An American in Paris, France. BA in History & Political Science from Ohio State. Provided consulting services to US software startups, launching new business overseas that have both IPO’d and sold to well-known global software companies. Currently launching a new cloud-based startup. Full bio here.

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