ANALYSIS: Can Private Equity Firms Win at Failed-Bank Auctions? (1)

As the FDIC resolves recent bank failures by auctioning the banks’ assets, some in the private investment industry view the federal policies as creating an uneven playing field, preventing them from submitting competitive bids.

PE firms have raised this concern in part based on their experience participating in mitigating FDIC losses during past bank failures. Given the goal to maximize proceeds through auctions, the financial system would likely benefit from the additional competition PE firms would bring.

Should the FDIC offer enhanced transactional terms like loss-sharing agreements (LSAs) to a broader array of institutions, private equity investors might just structure ...