by Calculated Risk on 9/22/2008 10:05:00 PM

From Reuters: Fed eases minority bank investor guidelines

Key changes in the guidelines include allowing an investor to buy up to a 15 percent voting stake instead of the previous 9.9 percent limit. Investors can also buy up to 33 percent total equity interest, including voting and non-voting shares, instead of the 25 percent prior limit.

This will allow private equity companies to own a larger share of a bank without being designated a "bank holding company" and falling under the supervision of the Federal Reserve.

This is not a huge change, but those that remember the S&L crisis are a little nervous. In 1982, the Garn-St Germian bill allowed S&Ls to have just one owner, and this led to developers buying S&L and lending to their development companies at attractive rates (note: there were many other provisions to the bill that probably contributed to the S&L crisis). There is the same concern here with the new Fed guidelines - that private equity firms will lend to their other businesses excessively.