Are Bank Buyouts Signs of Strategy Drift?
The recent rash of PE-backed bank buyouts has prompted scores of questions, but I haven't yet heard anyone ask about strategy drift. Are investors okay with their buyout fund managers delving into the world of distressed bank assets? Or, let's look at it this way: Are general partners stepping outside of their bounds to do these deals? Ever since the prospect of private equity investing in banks arose, we've heard of the extreme difficulties posed by such an endeavor. Aside from the burns on deals like WaMu and several J.C. Flowers investments, it's been said that private equity firms don't understand the extensive federal regulation that comes with owning a bank. Aside from that, investors have expressed worries that the government is an unreliable partner, and that the numerous regulatory bodies overseeing banks have no standard policy for private equity investments.
