New FDIC regulation for private equities is coming

Private-equity investors, seeking to buy failed banks, expect new guidelines from the Federal Deposit Insurance Corp. According to a meeting agenda posted on Friday, the agency will hold a board meeting to discuss its policy on investments in failed banks.

Thus, potential guidelines are expected around transparency and cross-guarantees -- meaning that if one firm owns two banks, the healthier institution could provide support to the weaker.

According to the Wall Street Journal, the guidelines are expected to deter private-equity investors from buying and flipping failed banks and could include a mandatory investment period. Besides, the proposal is expected to require private-equity investors to hold higher capital reserves than traditional banks would be required to hold, it said.

The changes come as private equity firms have been increasingly active in the banking sector.