Remember the heyday of the housing boom when investors would "flip" properties? Speculators would put a down payment on a property, usually a new construction, and sell it before it was completed with a fat profit. But the "flippers" got bagged when the price of real estate started dropping. Many just walked away from their deposits and left developers holding the bag.

Why is this idea of flipping real estate important now? Well, it seems that private equity investors buying troubled banks will be prohibited from "flipping" the bank for at least three years. In addition, regulators are requiring purchasers to maintain a capital ratio of 15%, three times the ratio required of other banks.

When The Blackstone Group (NYSE: BX) went public, many observers -- myself included -- were concerned by the total lack of corporate governance checks and balances.

But at the time, the private equity industry was so hot that Blackstone could do no wrong, and no one cared enough to complain. But now that KKR is mulling a plan to list on the New York Stock Exchange, things could be different. The wheels have come off the industry, at least for now, and the arrogant attitude of "We'll tell you what we feel like telling you and you'll like it" may not play so well.

On Thursday, the Federal Deposit Insurance Corp. (FDIC) is expected to propose new guidelines for private-equity investors seeking to buy failed banks. Those guidelines are intended to ensure that these largely unregulated firms don't take too many risks with troubled banks or buy and flip them.

The new rules come as private-equity firms have grown increasingly active in the banking sector. FDIC Chairman Sheila Bair said she's comfortable with the private-equity deals the agency has struck for failed banks such as IndyMac and BankUnited, but that a more structured process needs to be put in place.

Many of the bit players are being flushed out of private equity by the tight credit market, and Fidelity Investments, which will close its private equity division next month, is no exception. While buyouts have never been a significant part of the company's business, the firm was managing $500 million as part of an operation that was founded two years ago -- at or near the height of the private equity boom.

Fidelity's private equity arm has investments in four companies, but spokeswoman Ann Crowley told (subscription required) The Wall Street Journal that "Basically debt financing is largely unavailable because of the economic conditions of the last several months."

Not a good day for those looking for green shoots with markets down strongly. And no wonder. Credit card problems with the U.S. consumer are off the hook as CapitalOne (NYSE: COF) charge-offs rose to their highest historical level of 9.91% (via ZeroHedge) and American Express (NYSE: AXP) rose to 10% (via Mish Shedlock).

Higher chargeoffs and retracting credit means further consumer spending retraction. A semi-annual survey by Collier Capital found that 20% of institutional investors plan to downsize their target allocation to private equity, (via PEHub) the largest negative response since the survey started in 2004. An article by two Harvard University economists found that the biggest reason for the growing income inequality is lagging educational improvement in the American workforce (via VoxEU). There is no quick fix for this so its fairly bad news (although better than blaming the inequality on globalization and some neo-capitalist cabal).

Alex Salkever is Director of Research at Piqqem.com, a stock analysis site powered by the Wisdom of Crowds.

Last week was a busy one for San Francisco-based private equity firm Golden Gate Capital. It not only reached an agreement to acquire the assets of the J. Jill Group Inc. from Talbots Inc. (NYSE: TLB), but also reached a deal in the sale of SoftBrands Inc., a Minneapolis-based software producer.

Jill Acquisition LLC, an affiliate of Golden Gate, agreed to purchase the womenswear retailer for approximately $75 million. The deal includes assets and liabilities, including a distribution center in New Hampshire, and intellectual property and inventory. Jill Acquisition assumes the leases of 204 J. Jill stores, with the remaining 75 expected to be closed by Talbots. Talbots' board unanimously approved the deal, and the transaction is expected to be completed in the second quarter.

In what could be the most watched private equity deal of the year, a consortium of buyout firms led by billionaire investor Wilbur L. Ross has set its sights on BankUnited Financial Corp. (NASDAQ: BKUNA), says the Wall Street Journal (subscription required). The consortium includes Carlyle Group and Blackstone Group (NYSE: BX).

Earlier this year, federal regulators declared that the Florida-based lender was "critically undercapitalized" and demanded that it find a buyer or raise new capital. While regulators have traditionally favored other lenders in sales of banks, if Ross's group is successful, it would not only be one of the largest acquisitions in the financial-services sector made by private equity, but could also signal a shift in the government's attitude toward private-equity buyers of banks.

While mega-deals made possible by cheap credit and lots of leverage may be a thing of the past, a biannual survey of M&A activity by the Association for Public Growth (ACG) and Thomson Reuters shows that dealmaking is expected to pick up, and even thrive in certain sectors, in the second half of 2009, according to BusinessWeek. An ACG spokesperson described dealmakers as "cautiously optimistic."

The recession has put company prices in the bargain basement -- buyout targets are suddenly affordable. Those buyers with cash in hand are expected to begin scooping up bargains. Private equity firms are eyeing bankruptcy courts, on the lookout for distressed and busted companies, such as Polaroid and Stila Cosmetics, were snapped up recently.

Leveraged buyout guru Henry Kravis, cofounder of the legendary private equity firm Kohlberg Kravis Roberts, tells Forbes that he believes private equity will come back from the hit it has taken from the financial crisis.

"It's not dead at all, but it will take different forms," he said.

Kravis compares the current economic environment to 1979, when, the U.S. economy was struggling, inflation was at 13%, unemployment at 11%, and zero financing was available. But then, of course, followed the explosion of private equity in the 1980s and 1990s.

Back in early 2007, KKR Private Equity Investors -- along with Citigroup (NYSE: C) -- invested $700 million in Sun Microsystems (NASDAQ: JAVA). The investment structure was a convertible senior note (both firms split the investment).

And, just like many other private equity deals, KKR wrote down the investment -- by about $167 million. This was as of last year.

Well, in light of Oracle's (NASDAQ: ORCL) announced $7.4 billion buyout of Sun yesterday, there is a nice surprise for KKR. You see, according to the note agreement, KKR is entitled to get its investment repaid. In fact, this also includes payment of accrued interest, according to Reuters.

Just as foreclosures account for a record share of the real estate market, foreclosed companies are also one of the few areas of activity in the private equity space.

Sun Capital Partners took Stila Cosmetics private back in 2006, but defaulted on loans from Wachovia and CIT Group (NYSE: CIT) -- leading those lenders to foreclose on the company.

Now Stila has been sold to New York private equity firm Patriarch Partners for an undisclosed sum sure to be considerably lower than what Sun Capital paid when it bought the brand from Estee Lauder (NYSE: EL), which originally purchased the company from founder Jeanine Lobell back in 1999.

If you want a view into the travails of the private equity industry, you can check out the shares of AP Alternative Assets, which is operated by Apollo Management. Traded on the Euronext, the price has gone from $20 in 2006 to $1.

According to a piece in this week's Barron's [a paid publication], AP Alternative Assets could be headed for even more trouble. Keep in mind that the fund focused on the frothy deals of 2006 to 2007 (although, there are some 2008 transactions). This means there are positions in ailing companies like Harrah's, Realogy, and Claire's Stores. Yikes!

Quadrangle Group, a powerful investment bank and private equity player headed by Steven Rattner (the on-again, off-again Car Czar for the Obama team), has stopped trying to raise money for it's new private equity fund, according to PE Hub. Private equity has certainly gotten a bad rap of late, with many market seers claiming that the whole PE industry was headed for a giant blowup.

The percentage of deals done by private equity shops fell by over 50% in 2008. Many of the university endowments and state and municipal pension funds that had been key patrons of PE fundraisers are now so far underwater that they can't even conceive of coughing up cash for PE, let alone explaining why they are reserving money for an asset class that looked incredibly toxic in 2008. Certainly, the PE sector will bounce back because every single pension and endowment fund manager will chase the highest returns, even if there is no strong statistical research that PE profers higher returns (or even any returns) over time.

Alex Salkever is Director of Research at Piqqem.com, a stock research community powered by the Wisdom of Crowds.

Leon Black, head of Apollo Management, uses the term "black hole" to describe the pressure being put on commercial banks from nonperforming commercial loans. He estimates that it would take $2 trillion to clean up the mess.

So far losses from commercial property loans have not been reflected on bank balance sheets. In the go-go days of the past eight years, money came in from private equity to buy up troubled assets, clean up their balance sheets, and resell them. Now that has all but dried up, leaving only a few firms in the market for distressed assets.

The credit crunch has pretty much brought the private equity industry to a halt: Without access to cheap, readily available, debt with liberal terms, the leveraged buyout shops lack the paper they need to get the deals done.

But the Wall Street Journal reports (subscription required) that some firms are now trying "equity buyouts" or EBOs -- deals that involve taking companies private without the use of debt. With companies available as cheap as they are now, some titans are betting that they can earn excellent returns without the leverage the has historically led to outsized profits.