Client Alert

FDIC Private Equity Policy Evolves

May 06, 2010

Kevin L. Petrasic, Lawrence D. Kaplan, and Emily Hartman

On a day in which the Federal Deposit Insurance Corporation (FDIC) closed seven Illinois banks with total assets of approximately $6.3 billionselling all of the failed banks to other bank acquirers the agency also issued additional guidance on its August 26, 2009 policy statement governing private equity investments in failed banks (Policy Statement). The Policy Statement, which generally imposes restrictions on private investors and the activities of failed banks acquired from the FDIC by such investors, is intended to provide stability and continuity to banks resulting from failed banks acquired by private equity investors. This is effected by a concept of imputed control to certain investors, even when such investors do not necessarily exhibit the typical characteristics of control under existing banking laws.

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