The sale of the failed BankUnited to an investor group may be a turning point for private equity's involvement in the banking sector.

Disagreement exists about what has kept such investors from pouncing during the crisis. Some industry insiders say that, in many ways, all the talk from government officials about trying to get more private equity into the sector has been just that — talk. These people say that, despite the official line, a general sense of uneasiness existed among regulators toward deals proposed by private equity.

Others insist plenty of evidence, including the sale of the failed IndyMac to an investor group this year, supports the contrary interpretation. They suggest it is private-equity firms that have been the most uneasy, wanting to feel assured of not triggering holding-company rules.

But both sides agree that the Federal Deposit Insurance Corp.'s sale, announced late last week, of the $13 billion-asset BankUnited in Coral Gables, Fla., suggests a new comfort zone.

"This is the first time that a private-equity group has been able to come into a bank immediately upon its seizure," said Wilbur Ross, the chairman and chief executive of W.L. Ross & Co., which was part of the team that bought the Florida thrift. (IndyMac was operated by the FDIC for six months before going to a private-equity buyer.)

Ross said he hopes the BankUnited deal will set a precedent for other private-equity firms to invest in the banking industry.

"We found the regulators very easy to work with and very cooperative in this transaction," he said.

Regulators seized BankUnited late Thursday and immediately sold it to the investor group, which included John Kanas, the former chairman and chief executive officer of North Fork Bancorp. The group agreed to assume $12.7 billion of assets and $8.3 billion in nonbrokered deposits from the failed thrift and start a new bank, also called BankUnited (see related story).

Kanas became the new BankUnited's chairman and CEO.

On a conference call Thursday, Kanas called the bidding process "rather lengthy" and said he had been interested in BankUnited for more than a year.

When it announced the sale, the FDIC said that it planned to issue guidance to private-equity firms that are interested in buying failed depositories.

"That line has caught a lot of people's attention," said Brian R. Sterling, a principal and co-head of investment banking at Sandler O'Neill & Partners LP.

Neal J. Curtin, a co-head of the financial institutions and regulatory practice at the law firm Bingham McCutchen LLP, said rules could go a long way toward helping private equity get more comfortable.

"There's a public interest in trying to open this door," he said. "There's a lot of capital penned up here, and they would like to do something."

Some observers said they believe the FDIC had previously been reluctant to sell a failed bank to a private-equity firm because doing so would set a precedent: Other private-equity firms would be less interested in investing in a struggling bank if they could wait until after it fails and get a better deal.

Veteran banker Richard S. Cupp, a turnaround specialist, said he believes that is exactly what will happen.

"What still needs to happen in the marketplace is a recapitalization of a troubled bank where there is some residual level of recovery for the common shareholders," Cupp said in an interview Friday. "And that appears not to have happened yet."

At struggling banks, "you have that continual dilemma of the threat of seizure making it almost impossible for private equity to come in, and they will not invest knowing they can come in cheaper after a takeover by the FDIC and get loss-sharing and all kinds of support and help," he said.

The BankUnited group also includes Carlyle Investment Management, Blackstone Capital Partners, Centerbridge Capital Partners, LeFrak Organization Inc, Wellcome Trust, Greenaap Investments Ltd. and East Rock Endowment Fund.

None of the investors will own more than a 24.9% stake, so none would be regulated as a bank holding company.

Some also argue that regulators generally had a bias toward banking companies.

But others said banks simply have a strategic advantage because they are already operating in the sector and can show they have the skills needed.

David Barr, an FDIC spokesman, said the agency's only other sale to an entity without an existing bank during this downcycle had been IndyMac.

But he said no bias against private equity exists. "We have to take the least-cost bid." He said the FDIC said late last year that it would look into expanding its bidding list to nonbanks.

Tom Vartanian, a lawyer at Fried, Frank, Harris, Shriver & Jacobson LLP, said each regulatory agency has its own interpretation of what represents "control" over a bank — a tripwire that private-equity firms want to avoid.

"There's a range of interpretative issues," said Vartanian, who works with private-equity firms eager to get into the banking sector. Clarity on these issues would facilitate "massive" infusions, he said.

Dory Wiley, the president and CEO of Commerce Street Capital, said his company has been in talks with regulators about assisted deals. He said it manages private-equity funds that could be structured as a bank holding company if the right deal comes along. It is also willing to partner with other private-equity firms.

Regulators are beginning to let more outsiders invest because the bank system needs more money brought in, Wiley said.

"I think there is a willingness not only by the Fed and Treasury but the FDIC, too, to work with these people because they know they have a lot of bank failures coming and they only have so much money, and they have to figure out how to lever that money," he said. "It's more bang for the taxpayer's buck."

Kelly Holman, Kate Berry, Marissa Fajt and Robert Barba contributed to this story.

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