You might have thought the private equity industry wanted nothing to do with banks, given some big losses, notably the bath TPG took on Washington Mutual. But some firms, notably J.C. Flowers and the Carlyle Group, are bent on putting their funds to work in the banking industry. 

Flowers has already bought First National Bank of Cainesville, one of the smallest national banks, reports the New York Times. Using that bank, he aims to build. He had to buy the bank with his own money, however, because the Fed will not allow private equity investors to control banks. There's an effort underway to persuade it to change its mind. The Fed certainly welcomes additional investment, but I doubt it will go so far as to let private equity firms control banks. Some argue that the standard private equity business model doesn't fit the industry well. The Times notes Flowers never even visited Cainesville. We'll see how the Fed responds. 

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- here's the article

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