FDIC seeks stronger rules for sale of failed banks

Private equity firms seeking to buy failed banks would face strict capitalization and disclosure requirements under government rules proposed yesterday that some regulators already warn may go too far. The Federal Deposit Insurance Corp. is seeking to expand the number of potential buyers for the growing number of banks it has closed during the financial crisis. With mounting interest from private equity firms, whose methods and motives aren't always clear, the FDIC is trying to set requirements to ensure the banks won't fail again. One proposal would require investors to maintain a healthy amount of cash in the banks they acquire, keeping them at about a 15-per-cent leverage ratio for three years. Most banks have lower leverage ratios, which measure capital divided by assets. Investors also would have to own the banks for at least three years and face limits on their ability to lend to any of the owners' affiliates.