US Treasury open to more private equity in banks

WASHINGTON, April 25 (Reuters) - The U.S. government should consider lifting limits on investments in banks by private equity firms, a U.S. Treasury official said on Friday, noting such firms played a key role in recent bank recapitalizations.

Robert Steel, Treasury undersecretary for domestic finance, said his department had been discussing the issue with the U.S. Federal Reserve Board.

He noted that Treasury Secretary Henry Paulson had recently called for more capital for banks, and private equity firms were one potential source.

"It's been interesting to see in the last few recapitalizations where balance sheets have been strengthened for financial institutions that private equity has played an important role," Steel told Bloomberg Television.

"So it's certainly something worth considering and looking at," he said. (Reporting by Andrea Shalal-Esa; editing by Carol Bishopric)