FDIC Proposal: All Stick, No Carrot

The FDIC today held a roundtable discussion with various PE industry players, regarding last week’s proposed guidelines related to private equity investment in banks. The session was closed, but a little birdie tells me that most of the PE representation was attorneys rather than dealmakers [Update: FDIC has sent over a list of invitees — printed down below — and plenty of PE principals were among them].

My guess is that the attorneys delivered a fairly simple message: These proposals are nutty, baselessly punative and totally counterproductive if the goal is to encourage PE investment in banks. I get a bit more in depth during a Reuters Insider spot I did earlier today (on tape from the laundry room adjacent to the home office):

The Role of Private Sector Capital in Bank Resolutions
July 6, 2009
FDIC Board Room
Washington, DC

Invitee ListJulian Abdey, CFA
Capital World Investors

Daryl G. Byrd, President & CEO
IBERIABANK Corporation

Andrew Cecere, CFO and Vice Chairman
US Bank Corp

Bill Clark, Director
State of New Jersey Pension System

Edmund Clark, President & CEO
TD Bank Financial Group

H. Rodgen Cohen
Sullivan & Cromwell

James J. Dunne III, Senior Managing Principal
Sandler O’Neill and Partners

Edward D. Herlihy, Partner
Wachtell Lipton, Rosen & Katz

Bruce Herring, Group Chief
Fidelity Investments

Brian J. Higgins, Managing Member
King Street Capital Management GP, LLC

Juan Inciarte, Executive Board Member – Head of Strategy
Grupo Santander

Kelly King, CEO

Mark Lynch, Senior Vice President & Partner
Wellington Management Company

Patricia McCoy, Director, Insurance Law Center
University of Connecticut School of Law

John Mahoney, Managing Director
Goldman Sachs & Co.

Michael E. Martin, Managing Director
Warburg Pincus LLC

Sir Deryck Maughan, Member
Kohlberg Kravis Roberts & Co.

Lee Meyerson, Partner
Simpson Thatcher & Bartlett LLP     

Steven Mnuchin, Chairman & CEO
One West Bank Group LLC

Aubrey Patterson, Chairman & CEO
Bancorp South Inc

John Paulson, President
Paulson & Co., Inc

Marty Rosenblatt, Partner
Deloitte & Touche LLP

Wilbur Ross, Chairman & CEO
WL Ross & Co, LLC

Charlie Scharf, CEO – Retail Financial Services
JP Morgan Chase

Dory A.Wiley, Chair of the Investment Committee
Teacher Retirement System of Texas

Arthur E. Wilmarth, Jr., Professor of Law
George Washington University Law School