FDIC Sketches Rules for Bank Deals

While Washington Mutual -- the largest thrift to fail in history -- was taken over by JPMorgan Chase (JPM Quote), private equity groups have shown great interest in the smaller entities and sealed some high-profile deals. A consortium including prominent bank investor J. Christopher Flowers acquired IndyMac. BankUnited, which failed in late-May, was taken over by a consortium headed by banking veteran John Kanas, the former head of North Fork .

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Those deals were engineered after careful discussions with the FDIC, with banking veterans whose reputation preceded them to the negotiating table. Bair on Thursday expressed concern about proposals received from other investors that were not approved. She made it clear that future deals would have to be along the same lines as earlier ones, noting that she is "troubled by the opacity of some of the ownership structures" of entities that have made unsuccessful bids.

Investors will have to prove that they intended to operate banks prudently and efficiently, with adequate capital levels. Shady backdoor deals with other businesses they own will not be tolerated and those acquiring banks must be willing to stick around through the crisis and make sure the firms are on solid footing before they fly the coop.

"I am particularly concerned with new owners' ability to support depository institutions with adequate capital, management expertise, and a long-term commitment to provide banking services in a safe and sound manner," said Bair. "Obviously, we want to maximize investor interest in failed bank resolutions. On the other hand, we don't want to see these institutions coming back."