Thursday, July 2, 2009

The Federal Deposit Insurance Corp. is proposing rules that it hopes will attract more private equity investors as buyers of failed banks.

Regulators already have shut down 45 banks this year. But some recent auctions have been lackluster, with many investors taking a pass because the banks for sale are too small, or because they have their own financial troubles.

The FDIC hopes the auctions can command higher prices if there are more bidders. It also wants to set standards for potential investors to ensure they are committed to the banks they buy.

More bank closures are expected as the longest recession since World War II has hobbled financial institutions of all sizes.