Strangely, that group only included three private equity pros out of 20 attendees. The rest represented pension funds, private investors, investment managers, advisors, hedge fund managers and “others,” all gathered to conduct the much-clamored about six-month review. The GPs include David Coulter of Warburg Pincus, Charles Davis of Stone Point Capital and Randal Quarles of Carlyle Group.
The lack of GPs, or perhaps the lack of sympathy to their concerns, likely contributed to the failure to get any of the FDIC’s stringent rules relaxed, at least so far. There could be a further announcement as to any policy changes, but the FDIC’s press release today doesn’t leave much room for optimism.
It stated: “By providing an opportunity for open dialogue with interested parties, the roundtable will help support improved application of the requirements.” I read “improved application” of existing rules to mean, “Don’t hold your breath, guys.”
Furthermore, Bair maintains that since August, investors have successfully bid on and acquired failed institutions. I’m not sure exactly which investors and which institutions she’s referring to. GPs, those representing them have been clamoring for some time to revisit and loosen the rules. As of today, that doesn’t appear to be in the cards.
That’s not surprising, considering earlier this month she dismissed the concerns of buyout pros as “howling.” Reuters reported:
“I know there’s still a lot of howling about it,” Bair said about the rules, while noting that private equity groups often do not have a track record of bank investment, creating the need for the safeguards.
I’m betting that private equity pros are finding this all especially frustrating when they read stories like Heidi Moore’s piece at Big Money today, which explains how the FDIC is basically running out of buyers for banks, while the number of bank failures continues to rise.
Here’s the list of attendees:
John L. Douglas
Partner, Davis Polk & Wardwell
Senior Managing Principal, Sandler O’Neill + Partners
Partner, Cleary Gottlieb Steen & Hamilton
Partner, FBR Capital Markets & Co.
Senior VP, Partner and Equity Portfolio Manager, Wellington Management
Senior Vice President and Senior Counsel of the Fund Business Management
Group, Capital Research and Management Company
Director of Private Markets, NYC Pension System
Managing Director and Senior Advisor, Warburg Pincus
Chief Executive Officer, Stone Point Capital
Portfolio Manager, CalPERS
Senior Vice President, Paulson & Co.
Randal K. Quarles
Managing Director, The Carlyle Group
Senior Investment Manager, Texas Retirement System of Teachers
Jeff T. Blau
Co-Founder and President, SJB Escrow Corporation
Walter L. Davis
Vice Chairman, Chief Credit Officer, and Director, Blue Ridge Holdings
Chief Executive Officer, NBH Holdings Corp.
Director, Community Bancorp
President, Center for Responsible Lending
Mary Frances Monroe
Vice President, Office of Regulatory Policy, American Bankers Association
Damon A. Silvers
Director of Policy and Special Counsel, AFL-CIO
Senior Executive Vice President, Independent Community Bankers of America