FDIC Shuts Down Silverton Rather than Sell It

The Federal Deposit Insurance Corp. has shut down Silverton Bank, the failed Atlanta "bank of banks," instead of selling it to private equity investors, according to a person familiar with the situation.

An FDIC spokesman didn't immediately return a call and email for comment.

A consortium including Carlyle Group had been in discussions with federal regulators about a deal. Its failure to reach one illustrates the perils of distressed bank investing.

Last month, Carlyle along with three other private-equity firms acquired the banking operations of Florida's BankUnited Financial Corp. from federal regulators. That transaction seemed to demonstrate the government's willingness to sell banks to private-equity firms. But regulatory hurdles and restrictions on ownership are still making it difficult to get these deals done.

In addition to Carlyle, the group included private-equity investors Lightyear Capital, Harvest Partners and Colony Capital.

Silverton provides services to other banks and does not take consumer deposits. After seizing the bank May 1, regulators had created a "bridge bank" to operate Silverton while it looked for a buyer. The same happened with IndyMac Bank, Pasadena, Calif., which the FDIC sold to a group of investors earlier this year.

Because Silverton doesn't have retail deposits, its closure doesn't present the same problems that the shuttering of a more traditional bank would. Small community banks, which are Silverton's main customers, can take their business elsewhere.

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