The Fed may make it easier for firms to invest in struggling banks, according to a report by the Wall Street Journal. 

Officials at the Fed have met with buyout firms J.C. Flowers & Co., the Carlyle Group, Kohlberg Kravis Roberts & Co. and Warburg Pincus to discuss the hurdles they face for investing in banks, according to the Journal.

A loosening of investment rules could bring lenders besieged with credit woes closer to the capital they need. Particularly smaller lenders have struggled to find new investors, but federal regulations have prevented private equity firms from infusing too much cash into banks.
 
Since the credit crunch hit, banks have found money in a variety of places, including government investment funds, mutual funds or public offerings of stock or other securities, the report said.
 
Banks have turned to such places for funds because of heavy regulations that say any entity (such as a private equity fund) that may own 9.9% of a bank, must subject itself to regulatory scrutiny. Furthermore, only entities registered as a “bank holding company” can own more than 24.9% of a bank, and must serve as a "source of strength" for the bank, according to the Journal, which cited federal regulations.
 
If the Fed wants to make it easier for private equity firms to invest, they will need to interpret these laws differently, and determine if the firms should be allowed to have more than one seat on a given bank’s board, according to the Journal.
 
However, even if private equity firms are allowed to have a more active role with banks, it’s still unclear if they will invest.