The Evolution of Private Equity Investment in Failed Institutions
By TODD BEAUCHAMP
The ongoing financial crisis renewed an intense desire on the part of private equity firms to participate in the significant profit opportunities inherent in the acquisition of failed financial institutions by other banks, thrifts, bank holding companies, and savings and loan holding companies (each, a "banking organization"). However, this desire has been significantly tempered as investors not typically used to banking regulation learned that structuring investments in a manner acceptable to regulators can be a challenging, and often frustrating, exercise, due to the persistent evolution of the rules and guidance applied by regulators to such investments. This dynamic regulatory landscape leaves many open questions, resulting in a great deal of uncertainty for investors and a corresponding hesitance to move forward.