Christopher Flowers Finds the Bloom May Be Off

This should be a great time to be Christopher Flowers.

As a private equity investor and former Goldman Sachs (GS) investment banker, Flowers has acquired a reputation for turning around struggling banks with help from governments. And it just so happens that the Obama administration's revamped rescue plan for the banking system intends to rely on partnering with investors interested in taking a chance on troubled financial companies.

Flowers, the head of the eponymous J.C. Flowers & Co., hopes to see a future in which "low-life grave dancers like me make a tremendous fortune out of the mess," he said at a recent breakfast hosted by Source Communications.

He has already started positioning himself for the recovery, teaming up with a group of investors to buy IndyMac from the Federal Deposit Insurance Corp. for $13.9 billion. And more recently, rumors have circled that Flowers is looking at an investment in Bank of America (BAC), which has been hounded by concerns about the adequacy of its capital reserves as the credit crisis has lingered.

But questions over the role private equity will play in the government's attempts to address the banking crisis are still being resolved, and will be critical to Flowers' future impact on the banking industry, says Rodgin Cohen, a high-powered bank merger attorney and partner at Sullivan & Cromwell.

"I think he will be quite important, relatively, because he's a guy who really understands it, focuses on it, and is very shrewd," Cohen says. "The question as to how important he will be absolutely is going to depend in large part on where the Federal Reserve is going to come out on private equity investing in banks."

Before they decide, Fed officials might want to talk with their counterparts in Japan about Long Term Credit Bank, which Flowers and a group of investors bought from the Japanese government in 2000 after it failed in 1998. LTCB, now known as Shinsei, or "new life," made Flowers a fortune and became known as one of the most successful private equity deals ever.