Starved for Capital, Lenders Call on Banks

"Deposits will be our principal source of funding going forward," Delaney says.

However, many lenders will not be able to convince bank regulators to trust them with deposits, which in most cases are insured up to $100,000 by the FDIC. Indeed, that may be one of the reasons MatlinPatterson, a vulture investment firm that has reportedly been trying to acquire a bank for some time as an additional source of capital for struggling Santa Fe, N.M.-based Thornburg Mortgage, has not yet sealed the deal.

"Regulators will allow you to originate new, good, clean assets in a bank, but they are not going to let you use a bank to solve a problem," Delaney says.

Mark Patterson, a principal at MatlinPatterson, did not return calls.

The regulatory hurdle is not to be underestimated by any means. Though the banking industry's woes suggest regulators have been asleep at their posts, banks' struggles are not as severe as those of more lightly regulated financial entities.

"Even though we've seen a number of bank failures, that number pales in comparison to the number of capital markets vehicles that have failed," Delaney says. "Probably 2,000 securitizations have failed, and yet the press focuses on the handful of banks that have gone under."

Given the recent bank failures, one might expect regulators to be more cautious about approving new buyers for banks. On the other hand, banks need capital, and Delaney says regulators are interested in encouraging lenders to diversify beyond mortgages. That's one reason he believes CapitalSource was successful in getting approved to own a bank.

An FDIC spokesman declined to make anyone available to discuss the Fremont acquisition.