Private equity funds have money to spend. US banks need it. But any investors who were licking their lips at the prospect of gobbling up failed US banks may have lost their appetite. The Federal Deposit Insurance Corporation this week issued a raft of proposed rules for groups wishing to scoop up defunct banks. It is rightly wary of being too lenient on private capital. It is also determined to avoid a repeat bank failure, especially if the collapse comes after a quick “flip”. Yet the result is a set of overly stringent requirements.

Asking private investors to capitalise banks up to a tier one leverage ratio of 15 per cent for three years is a particularly tough opening salvo. Under this measure, which does not risk-weight assets, the definition of “well capitalised” is usually about 5 per cent. Yet in the first quarter, no large regional or super-regional bank in the US was anywhere near the 15 per cent level. The highest, First Horizon, was about 12 per cent while most, including the likes of JPMorgan and Citigroup, were in single digits. The industry’s leverage ratio as a whole was slightly more than 8 per cent.