Sept. 22 (Bloomberg) -- The Federal Reserve issued revised guidance today for investors in bank-holding companies after consulting with groups including private equity firms seeking to make more investments in struggling financial institutions.

The new policy outlines a 33 percent limit for those with a minority stake and allows some investors to have as many as two board seats. The announcement came in a 16-page policy statement issued by the Federal Reserve Board.

The central bank, trying to stem the yearlong credit crisis, has reduced interest rates at the fastest pace in 20 years and increased lending to commercial banks. Fed officials are studying how a private equity firm could put more capital in the system without becoming a bank holding company.

``That's a smart step in a world where banks need more capital,'' said Thomas Vartanian, a partner at Fried Frank Harris Shriver & Jacobson LLP in Washington. The new policy moves from absolute thresholds ``to identifying specific kinds of control that are inappropriate without being a bank holding company.''

Banks have had more than $520 billion in writedowns and credit losses since subprime-mortgage defaults infected credit markets last year. Yesterday the Fed approved the applications of Morgan Stanley and Goldman Sachs Group Inc. to become bank holding companies, after a week that saw Lehman Brothers Holdings Inc. collapse and Merrill Lynch & Co. sell itself to Bank of America Corp.

Private-equity firms, which have called for looser restrictions on investing in banks, raised a record $324.4 billion in the first half of the year as investments in funds that buy distressed assets increased, according to data compiled by London-based Preqin Ltd.

----With reporting by Jason Kelly in New York. Editors: James Tyson, Carlos Torres

To contact the reporter on this story: Craig Torres in Washington at ctorres3@bloomberg.net; Jonathan Keehner in New York at jkeehner@bloomberg.net

Last Updated: September 22, 2008 18:33 EDT