FDIC Sets Private Equity Investment Rules

Yesterday, FDIC adopted weaker rules than initially proposed (Here is the story on the initial proposal and Here is the FDIC's Final Statement(pdf)). FDIC decided to lower the required Tier 1 Capital Ratio from 15 to 10. It is still higher than industry norms.

FDIC probably didn't have much of a choice with prediction of 150-500 banks in trouble and Distressed Insurance Fund in trouble. I guess one good sign is that the private equity firms are still not happy. They are whining that the final rule will lower bids for failed banks. Oh, yeah, the sky is falling.

Nothing ever changes. It happened during the Saving & Loan crisis and it will happen again - financial oligarchy with help of taxpayer subsidies will either financial gain from this or walk away from the mess. The situation kind of reminds me of Naomi Klein's Disaster Capitalism.

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what if?

There is one thing I'd like to see is what if scenarios...what if Citigroup for example had been allowed to fail, what if....

because it seems to me while the Zombies are kept alive...they are just sending smaller banks to the dogs and none of these banks were into toxic assets, CDOs, CDSes and all of this stuff....people cannot pay their bills is the problem.

What happened to competition and leveling the playing field...

but I just have never bought in my head this was the doom so supposed and all things rested on these few Zombies. What really would have happened long term was just this huge Economic Armageddon, if some of the more egregious offenders, say Citigroup had simply been allowed to go under.

Now they are gobbling up all of these smaller banks....what does that mean longer term for regional economies, the consumer, small business?

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There will be a lot less competition and consolidation

That is a major problem w/accepting TBTF theory. It is obvious now - look at Goldman Sachs - with Lehman and Bear Stearns out of the way look what happens. It is happening w/credit cards - BofA and Chase are doing what they want and charging whatever they want.

It will be very hard for small businesses to obtain credit because the bigger institutions ignored small businesses.

Interestingly, Lord Turner (I don't know if that is his title or name), chairman the Financial Services Authority in UK said that Britain's "swollen" financial services sector has become too big for the economy and needs to be cut down to size. The same could be said about the U.S. but you won't hear that from any of our numerous regulators.

RebelCapitalist.com - Financial Information for the Rest of Us.

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And the answer is...

...One World Corporation --- easily predictable since we have that one world government thing going on (WTO, anyone?).

(No longer attending those Tin Foil Hats Anonymous meetings.)

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