"US federal banking regulators have created a national charter system"

Here's an interesting FDIC program on FT. It's a bit like a pre-approved loan:

"US federal banking regulators have created a national charter system to allow private equity groups and other investors to buy troubled or failed institutions.

The move comes as regulators brace for a growing number of bank collapses following 20 failures so far this year.

The Federal Deposit Insurance Corporation, which insures customer deposits, brokers the sale of failed banks to other banks or savings and loan institutions.

Under a “shelf charter” system, the Office of the Comptroller of the Currency would grant conditional preliminary approval of a national bank charter to non-bank investors, thereby expanding the pool of potential qualified buyers available.

The 18-month conditional charter would remain inactive or “on the shelf” until an investor group is in a position to acquire a troubled bank. It would allow the group access to the FDIC’s list of failed or troubled banks and let it bid for them. A final charter approval can be granted once a bid is accepted.

Julie Williams, OCC’s chief counsel, said: “The big picture here is that we have taken a look at the situation and decided that this new charter system will enable transactions that get new capital into the banking industry.”

“But not just anybody can come in and get a charter ... We are looking for management that has the capacity and experience to manage a bank safely and soundly, has the ability to inject a substantial amount of capital into the troubled institution and will be subject to significant regulatory oversight.”

I guess that I just can't walk in and say, "I'd like to get a charter".

"The OCC said on Friday that it had granted the first such preliminary approval to a management and investor group led by a 30-year banking veteran, Gerald Ford.

The group, backed by investors including three private equity funds, has about $1.38bn in capital to invest in troubled institutions, according to a letter from the OCC. The banking regulator is considering other applications for preliminary approvals."

This seems to make sense. It's a good idea to have buyers ready who can step right in and facilitate and make easier a rather dicey financial transition. Surely it should help things move faster for investors.

"Separately, the FDIC on Friday strengthened its guarantee programme for bank-issued debt to address concerns the scheme would fall short of restoring confidence in bank lending markets unless further safeguards were in place.

The revised terms of the programmes, finalised on Friday, will allow financial institutions to tap debt investors for funds backed by the “full faith and credit” of the US government.

The FDIC will insure that if a bank defaults, investors will receive timely payment of interest and principal on senior unsecured debt issued by the bank.

The FDIC also replaced a flat 75 basis point fee on each debt issue with a tiered pricing system that would charge different fees for the insurance depending on the maturity of the bond issued.

Banks had argued that the original system was prohibitively expensive for short-term debt in particular and could undermine the market for overnight interbank loans. Loans with maturities of less than 30 days are now excluded."

The problem of investors getting their money in a timely fashion during an economic downturn is important to address.