Posted on 08/26/2009 6:49:06 PM PDT by Cheap_Hessian
WASHINGTON (Reuters) - U.S. banking regulators partially retreated from a much-criticized proposal to impose new rules on private equity investment in troubled banks, aiming to encourage responsible investment in distressed banks.
The 4-1 vote by the Federal Deposit Insurance Corp board was a partial victory for potential investors and some regulators who had warned that an initial proposal unveiled in July threatened to scare away much-needed capital.
The regulators lowered capital requirements and dropped or modified measures that could have required investors to kick in more capital after their initial investment. The rules will be further reviewed in six months.
Even so, FDIC Chairman Sheila Bair said the modified rules could depress investor interest in failed banks, a view shared by a private equity industry group.
"The FDIC recognizes the need for additional capital in the banking system," Bair said, but added: "We do want people very serious about running banks."
(Excerpt) Read more at reuters.com ...
Ever wonder why there are so many banks in big fancy buildings? On reason is something called “fractional lending”. This is a policy which allows banks to loan ten time more money than they actually have. As a result, 8 percent actually interest becomes 80 percent.
here we go
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.