Private-Equity Investment A proposal by the Federal Deposit Insurance Corp. that would restrict private-equity investment in failed banks. Under the plan, private-equity investors that buy failed banks would have to retain ownership of the bank for at least three years and maintain a minimum 15% Tier 1 leverage ratio during that time.Bidders on failed banks who already own majority stakes in other banks would have to issue cross guarantees and pay for losses to the Deposit Insurance Fund. The plan would also institute new disclosure requirements for bidders and prohibit certain institutions from participating. Expected to be published soon in the Federal Register with comments due in 30 days.
Liquidity Risk Proposed guidance by federal regulators that would require financial institutions to more closely monitor their liquidity risk. The guidances stresses the importance of cash flow projections, diversified funding sources, stress testing, a cushion of liquid assets and a formal, well-developed contingency plan for measuring, monitoring and managing liquidity risk. It mirrors standards released by the Basel Committee on Banking Supervision in September. Published July 6, with comments due Sept. 4.