OCC's Dugan sees less strict private equity rules

WASHINGTON (Reuters) - U.S. bank regulators will probably back down from stringent guidelines for private equity investments in failed banks when they meet later on Wednesday, Comptroller of the Currency John Dugan said.

"The proposed rule went too far, was too stringent," Dugan said during an interview with CNBC. "The new rule, I think, will move in the other direction."

The Federal Deposit Insurance Corp, which includes Dugan among its board members, is expected to soften the private equity guidelines first proposed in July, in an attempt to attract more investors to the assets of distressed banks.

Dugan also said the FDIC might have to let the balance of the insurance fund used to back bank deposits drop below zero. But he said the agency could tap its line of credit with the Treasury Department, leaving bank depositors protected.

(Reporting by Karey Wutkowski; Editing by Lisa Von Ahn)