Monday, September 22, 2008

BANKS ARE IN PLAY: Randal Quarles Gets His Change In Fed Rules

Those who have been following EPJ for sometime know that I have been carefully watching the activities of ultimate insider, Carlyle Group managing director Randal Quarles. One thing Quarles has been aggressively pushing for is to get an increase in the size of stakes that private equity firms, like Carlyle, can acquire before triggering bank holding company regulations. Today, Quarles got his wish.y.

Not only has the Fed granted Goldman Sachs status as a bank holding company, but, today, the Fed announced the approval of a policy statement on equity investments in banks and bank holding companies. The policy statement provides additional guidance on the Board's position on minority equity investments in banks and bank holding companies that generally do not constitute "control" for purposes of the Bank Holding Company Act.

The new policy raises the limit for those with a minority stake to 33% and allows some investors to have as many as two board seats.

Goldman gets bank holding status, Quarles gets the increase in the size of a position the Fed considers a minority stake, it can't be any clearer that the boys are ready to start buying bank stocks at fire sale prices and that bank stocks are in play.

-Robert Wenzel

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