In the recent sale of the Texas' troubled Guaranty Bank, the FDIC appeared to favor Spain's Banco Bilbao over Blackstone, TPG, and other American private equity investors.
NEW YORK (Fortune) -- One of the fundamental tenets of a free market is that in an auction the rules of the game should not give one bidder a fundamental advantage over another bidder. Sadly, that may not have been the case last month when the FDIC oversaw the sale of Texas-based Guaranty Bank. On August 21, Sheila Bair, the chair of the FDIC, declared Spain's second-largest bank -- Banco Bilbao Vizcaya Argentaria SA -- the winner of a spirited auction to buy Guaranty Bank instead of a consortium of U.S. investors including Blackstone Group and TPG.
NEW YORK (Fortune) -- One of the fundamental tenets of a free market is that in an auction the rules of the game should not give one bidder a fundamental advantage over another bidder. Sadly, that may not have been the case last month when the FDIC oversaw the sale of Texas-based Guaranty Bank. On August 21, Sheila Bair, the chair of the FDIC, declared Spain's second-largest bank -- Banco Bilbao Vizcaya Argentaria SA -- the winner of a spirited auction to buy Guaranty Bank instead of a consortium of U.S. investors including Blackstone Group and TPG.
The deal was yet another reminder of Bair's bias against private equity firms buying failed banks. Certainly, there are cases where private equity investors have made a hash of the banks they have acquired and of course private equity firms may not make the highest bid in a given situation, but it appears Bair is tarring an entire industry with a wide brush. It would seem the FDIC is being less than accommodating to an important potential source of funding for struggling banks at the very moment when the FDIC's own insurance fund is running low given the 94 bank failures so far in 2009.
