At a meeting on August 26, 2009, the Board of Directors of the Federal Deposit Insurance Corporation (the "FDIC") adopted a final Statement of Policy on the Acquisition of Failed Insured Depository Institutions (the "Policy Statement"). The Policy Statement is targeted at, and establishes standards for bidder eligibility for, private equity investors and similar nonbank investors seeking to acquire or invest in the deposit liabilities and operations of failed insured depository institutions through the FDIC resolution process. The Policy Statement as adopted reflects a number of liberalizations and clarifications to certain of the key provisions of the original proposal (the "Proposal"), which was issued by the FDIC for public comment on July 2, 2009. Various provisions of the Proposal – which sought to impose requirements and standards for private equity investors seeking to acquire or invest in failed depository institutions that would have been far more burdensome than those applicable to depository institutions owned by traditional holding companies and that would have gone well beyond the requirements imposed by applicable law – threatened to cause many private equity investors to reconsider their strategy of investing in failed insured depository institutions. Even with the changes from the Proposal, however, the Policy Statement still subjects private equity investors seeking to acquire or invest in failed depository institutions to more burdensome requirements and standards than are applicable to depository institutions owned by traditional holding companies. It remains to be seen whether the liberalizations reflected in the final version of the Policy Statement will be sufficient to avoid deterring private equity interest in acquiring failed depository institutions from the FDIC, which is a matter of considerable importance to the FDIC in light of the ever-increasing number of failed or failing depository institutions. Our client alert sets forth a full analysis of the Policy Statement and the issues involved.

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