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Christopher Flowers Finds the Bloom May Be Off

Though a person close to Flowers says many of J.C. Flowers & Co.'s investors are former and current Goldman Sachs executives, Whitehead says he has never invested with the private equity firm.

There is no question, however, that Flowers' initial group of investors and backers formed an impressive group. Former AIG (AIG - Get Report) Chairman Hank Greenberg, who sat with Flowers at the breakfast panel discussion, told he invested with Flowers and would do so again.

"He's very bright. He's got courage, he's got smarts. He'll play an important role in the restructuring of the financial system," Greenberg says.

Backers on Flowers' Shinsei deal included JPMorgan Chase (JPM - Get Report) CEO Jamie Dimon, who was then CEO of BankOne; Emilio Botin, Chairman of Banco Santander (STD); former Fed Chairman Paul Volcker; former Citigroup (C - Get Report) Co-CEO John Reed; and Michael Boskind, a former top economic adviser to President George H.W. Bush.

Some invested personal money, some invested institutional money alongside Deutsche Bank (DB), General Electric (GE - Get Report) and AIG, some agreed to take board positions at the restructured bank.

Will they come back to invest with Flowers? It may not be critical. He raised $4 billion from the Chinese government's investment arm, and he is said to have raised an additional $2 billion or so for a third fund.

Nonetheless, he is well short of a $7 billion target set in brighter times, and a person who works with Flowers describes him as "really struggling" to raise money. One private equity investor says it is a troubling conflict that several institutions Flowers controls, such as Shinsei, invest in his funds. This could not be confirmed, except in the case of Shinsei, where Flowers told Bloomberg News that despite his position on the bank's board, he recuses himself from board votes that involve his funds. He declined to discuss the issue further with

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