Ex-bankers forming 'blind pools' to bid for failed banks

In August, the FDIC reluctantly made it easier for private-equity groups to buy failed banks after the number of problem banks rose to 416 at the end of June. I say reluctantly because the FDIC prefers to sell failed banks to people with a track record in the banking industry. Now there are some new kids on the block creating stiff competition for the the private equity firms -- former bank executives working with Wall Street firms to form "blind pools" to buy failed banks.

That's good news for everyone but the private-equity firms. Not only will former bankers be more attractive as buyers to the FDIC, the private-equity firms expect the blind pools to drive up prices, making the purchase of failed banks less attractive. Even when the FDIC agreed to make it easier for private-equity firms to buy failed banks, it added a caveat to prevent them from quickly flipping the banks: It required investors to maintain a bank's minimum capital levels for three years.