While the government plans to write some big checks to stabilize the financial system, it's probably not enough. There are various sources of capital that can help out, such as private equity.
But there has been a big stumbling block: regulation. That is, if a private equity operator takes a 10% equity stake in a bank, the firm may be considered "controlling," which would trigger some onerous compliance requirements and may mean becoming a bank holding company.
Well, according to the Wall Street Journal [a paid publication], the Federal Reserve is now going to loosen things up. The trigger point is now a 33% equity stake (up to 15% can be voting stock). Something else: a private equity firm can even have as many as two board seats.
No doubt, this is a big deal for private equity firms. And it's a nice option for ailing banks.
According to Bloomberg, private equity firms raised $324.4 billion in the first half of this year, and as should be no surprise, the hot area is distressed investing. In other words, the private equity folks have something to be happy about.
Tom Taulli is the author of various books, including The Complete M&A Handbook
and The Edgar Online Guide to Decoding Financial Statements
. He is also the founder of BizEquity, a valuation website
But there has been a big stumbling block: regulation. That is, if a private equity operator takes a 10% equity stake in a bank, the firm may be considered "controlling," which would trigger some onerous compliance requirements and may mean becoming a bank holding company.
Well, according to the Wall Street Journal [a paid publication], the Federal Reserve is now going to loosen things up. The trigger point is now a 33% equity stake (up to 15% can be voting stock). Something else: a private equity firm can even have as many as two board seats.
No doubt, this is a big deal for private equity firms. And it's a nice option for ailing banks.
According to Bloomberg, private equity firms raised $324.4 billion in the first half of this year, and as should be no surprise, the hot area is distressed investing. In other words, the private equity folks have something to be happy about.
Tom Taulli is the author of various books, including The Complete M&A Handbook
and The Edgar Online Guide to Decoding Financial Statements. He is also the founder of BizEquity, a valuation website
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