With its deposit insurance fund running low, the FDIC is looking for new buyers to take over failed banks. The government agency has shown increasing willingness to work with foreign buyers and participate in loss sharing agreements. Banco Bilbao Vizcaya Argentaria SA recently won the bidding for struggling Guaranty Financial Group, and other foreign banks have shown an interest in taking a stake in the U.S.'s troubled banking industry.
The FDIC is also reportedly trying to entice more private equity funds to the table by softening the rules for private equity takeovers. The proposed rules call for banks acquired by private equity groups to maintain tier one capital ratios of at least 15 percent, three times the level of other banks. The rules also require funds to hold on to the lenders for at least three years. The private equity industry and some of its biggest funders, pension funds, say the rules are too strict and will deter funds from investing in the banks.
So far this year, 77 banks have failed. The FDIC insurance fund has dipped from 35 billion in April down to 13 billion today -- a year ago it was at almost 53 billion.