FDIC loosens rules for private equity

Getting fresh buyers into the banking system and moving away from the same old Wall Street crowd. “Too big to fail” has only become worse since the recession started. That said, easing regulations for an industry known for taking too many risks is not the most comforting news.

Squeezed by rising bank failures, regulators made it easier Wednesday for private investors to buy failed institutions.

The Federal Deposit Insurance Corp.’s board voted 4-1 to reduce the cash that private equity funds must maintain in banks they acquire.

Private equity funds tend to buy distressed companies, slash costs and then resell them a few years later. They have been criticized for excessive risk-taking. But the depth of the banking crisis has softened the FDIC’s resistance to them.

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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