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September 2010 
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Buyout Firms Can Control US Banks, OTS |
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Claire Spencer, May 2009 |
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(18 May 2009)
The Office of Thrift Supervision (OTS) has allowed a private equity firm to acquire a controlling stake in Flagstar Bancorp Inc., the holding company of the federally charted stock savings bank Flagstar. This is an unprecedented move by the agency, and one which puts it directly at odds with the Federal Reserve, according to a Bloomberg report.
MatlinPatterson Global Advisors LLC’s acquisition of Flagstar Bancorp was announced on 17 December last year, and it is thought that similar deals will follow now that it has been approved. There is clearly plenty of interest, with both The Blackstone Group and Carlyle Group saying in the past that they were interested in acquiring bank stakes.
However, a lawyer from the Federal Reserve told Bloomberg that the move by the OTS directly contradicts their guidelines, which state that private equity firms cannot own a majority stake in a lender because they are not registered as a bank.
But Patricia McCoy, a teacher of banking and securities regulation at the University of Connecticut School of Law, told Bloomberg that the OTS may have had little choice in the matter.
“The OTS has an interest in keeping remaining thrifts alive with fresh capital, and private equity is one of the only options available,” she said.
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