The Federal Deposit Insurance Corp. (FDIC) announced its rescission of a 2009 policy statement to make it easier for private equity firms and other nonbanks to bid on failed banks.
In a memo explaining the decision, the agency referred to measures included in the policy statement as “onerous and highly prescriptive,” noting that its heightened capital standards and lengthy continuity of ownership requirements extended beyond requirements described in Sections 23A and 23B of the Federal Reserve Act.
“The statement of policy was issued to provide guidance to private capital investors interested in acquiring the deposit liabilities, or both the liabilities and assets, of failed insured depository institutions, regarding the terms and conditions for such investments or acquisitions,” the memo reads. “In so doing, it established extensive terms and conditions that private capital investors were expected to satisfy before they could become eligible to bid on a failing institution.”
Since its publication, the standards described in the policy statement have been applied to:
- Private investors in certain companies interested in assuming deposit liabilities and/or assets from the resolution of a failed insured depository institution; and
- Private capital investors connected to applications for deposit insurance in conjunction with de novo charters issued with respect to the resolution of failed insured depository institutions.
“The FDIC recognizes that nonbank entities such as private equity firms can play a significant role in the resolution process, given their ability to access and deploy significant pools of capital,” the memo adds. “Given the increased speed with which a bank failure may occur, in part driven by the advancement of technology and ongoing evolution of the financial system, these impacts could, in turn, result in considerably increased costs of resolution and risk to the Deposit Insurance Fund.”
In a corresponding move, the agency rescinded a Q&A, which served as guidance for entities covered by the policy.
During a speaking engagement in October 2025, FDIC Chairman Travis Hill spoke about the potential benefits he saw in clearing hurdles keeping nonbanks from purchasing failed IDIs.
“Today, nonbanks control substantial pools of capital that can be deployed to bid on assets of failed institutions and can be used in partnership with banks to bid on entire institutions,” Hill said at the Single Resolution Mechanism’s 10th Anniversary Conference in Brussels, Belgium. “As an example of our work in this area, the FDIC has developed a seller-financing program for nonbank bidders, to increase competition by including private equity firms and other nonbank entities in the marketing process, and thereby ultimately reduce costs to the DIF.”
Hill noted at the time that the agency was pursuing the policy change, arguing that opening up the bidding process could potentially “soften the blow to the DIF” following a bank closure.
During the American Bankers Association’s 2026 Washington Summit earlier this month, Hill said the agency was working with other banking agencies to possibly create an emergency exception to enable nonbanks to quickly set up shelf charters to bid on failed institutions.