This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Bank Buyout Boom Stalls Before It Starts

Stocks in this article: BX FIG

NEW YORK ( TheStreet) -- In January, when the Federal Deposit Insurance Corp. announced it had sold IndyMac Bancorp to a group of buyout firms, it looked like it could be the start of something big.

"The government has all the downside and we have all the upside," said J. Christopher Flowers, one of the investors in the deal, at an industry conference a few days later.

In May, some of the biggest names in private equity, including The Blackstone Group (BX), The Carlyle Group and W.L. Ross & Co., got into the act, teaming up on a similar bid for BankUnited in Florida, which is to be run by former North Fork boss John Kanas .

Now, however, things appear considerably more difficult for the buyout firms. A private equity-led deal to buy another failed Florida bank, First Southern Bancorp, now appears dead in the face of regulatory resistance, according to a report in The buyout shops involved in the planned deal, including Fortress Investment Group (FIG), Crestview Partners and Lightyear Capital, all either declined comment or did not return calls.

Blackstone, whose president and COO Hamilton Tony James, had told reporters in May that "we like that play a lot," referring to buying failed banks from the FDIC, now appears to be rethinking things.

"Still looking at this issue internally. Not really ready to talk right now," wrote spokesman Peter Rose via email, in response to an interview request.

One big reason for the diminished interest is new rules from the FDIC, announced in August. The rules subject private buyers of banks to strict capital requirements and lengthy holding periods.

1 of 4

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,039.62 -14.09 -0.08%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs