Regulators may ease a provision that would require private- equity investors to maintain Tier 1 capital ratios of at least 15 percent for lenders they purchase, said the people, who declined to be named because the talks are private. Tier 1 ratios, which measure a lender’s ability to withstand losses, currently must be at least 8 percent for new banks.
Instead of equity cramdowns and bondholder writeoffs, our financial system regulators propose to continue abandoning all pretense of adult supervision of the banking system. See, private equity investors are some of the savviest dealmakers around, so they'd understandably balk at trying to buy troubled banks at the inflated prices regulators would need to maintain the fiction of a healthy system.
Any bank stock makes me nervous right now. I'm saying no thanks.
Nota bene: Anthony J. Alfidi holds no position in any bank stock at this time.
