Private Equity Council comments on Fed Board’s policy statement on equity investments in banks
WASHINGTON, DC, September 23, 2008 — The Private Equity Council today issued the following statement on the Federal Reserve Board’s policy paper on equity investments in banks and bank holding companies, which was released yesterday. The statement should be attributed to Douglas Lowenstein, president of the Private Equity Council.
“The Federal Reserve Board yesterday took an important step to encourage new and much-needed investment in our nation’s banking system. Private equity firms can be important long-term sources of capital for banking institutions.
“The Fed’s action can help protect taxpayers by allowing for more private capital in the banking system, which will reduce the prospect of bank failures and ultimately stimulate lending for all Americans.
“By recognizing that a larger minority ownership interest does not afford equity investors “control” under the statute, the board’s action creates opportunities to strengthen our banks and bank holding companies at a critical moment. In cases where private equity firms make investments, banks and other financial institutions will continue to be subject to the same level of federal oversight, regulation and reporting as they are now.
“Expanding the opportunity for private equity investment in our banking system could help stabilize banks with much needed capital infusions and encourage bank boards to make decisions in the interest of long-term growth. For that reason, we believe the Fed’s decision is a positive step.”
About The Private Equity Council
The Private Equity Council, based in Washington DC, is an advocacy, communications and research organization that develops, analyzes and distributes information about the domestic and international private equity industry. Its members are: Apax Partners; Apollo Global Management LLC; Bain Capital; The Blackstone Group; The Carlyle Group; Hellman & Friedman LLC; Kohlberg Kravis Roberts & Co.; Madison Dearborn Partners; Permira; Providence Equity Partners; Silver Lake; THL Partners and TPG Capital (formerly Texas Pacific Group).
