Private equity firms are likely to invest in more bank deals as they look to take advantage of depressed share prices and if the government steps up to help, a new study predicts.

The U.S. Federal Reserve made it easier for buyout shops and others to invest in banks on Monday, relaxing some rules regarding minority shareholder investments. Many investors have been wary of getting subjected to banking regulations, which can be onerous and restrict their business activities.

But what really gets potential private equity bank investors exicted is the U.S. government’s proposed a $700 billion bailout fund.

A more active role for private equity would be welcome to capital-starved banks and would reverse a recent downward trend.

Private equity investment in financial institutions has declined this year after more than tripling to $71.4 billion in 2007 from $23.7 billion in 2004, according to the report by Freeman & Co, an independent financial services adviser.

The first half of this year saw deals with a combined transaction value of $12.4 billion compared with $19.7 billion over the same period last year, it said.

“Recent private equity investments in capital-deficient global broker-dealers and large money-center and regional banks have proven difficult in the short-term,” said Peter Majar, a managing director at Freeman. “But we feel many new opportunities will emerge in the post-U.S. Government bailout period, provided a sufficient plan is finalized.”

Some AIG employees want former chief executive Maurice “Hank” Greenberg back at the insurer’s helm — at least based on comments scribbled on a portrait painted by artist Geoffrey Raymond.

Dozens of AIG employees signed the portrait — set up across the street from AIG’s Pine Street headquarters on Monday. Among the annotations: “Please, please come back,” and “Trust in Hank.”

Greenberg over a 38-year reign grew AIG from a small, foreign insurer into the world’s largest insurer by market value. He stepped down in 2005 after regulators laid allegations of accounting fraud against him and the company.

Over the last year, massive mortgage losses crippled AIG. It narrowly escaped having to file for bankruptcy last week by accepting a costly government bailout.

The portrait of Greenberg — annotated in blue by AIG employees, and in red by all others — will be sold on eBay.

Raymond’s portraits have become a fixture on the sidelines of the credit crisis. In the midst of Bear Stearns’ 11th-hour takeover by JPMorgan, the artist invited passers-by to scribble comments on a portrait of James Cayne, the bank’s former chairman. And he re-appeared again outside of Lehman Brothers with a portrait of CEO Richard Fuld after the company sought bankruptcy protection.

Financial blogger Barry Ritzholtz of The Big Picture has some questions for Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke ahead of their appearance on Capitol Hill on Tuesday, starting with a biggie:

You two gentlemen have been wrong about the Housing crisis, missed the leverage problem, and understated the derivative issue. Recall the overuse of the word “Contained.” Indeed, you two have been wrong about nearly everything financially related since this crisis began years ago. Question: Why should we trust your judgment on the largest bailout in American history?

There are 13 more in that vein, plus a “bonus comedy question” — or at least what would have been comedic if the leading lights of American capitalism were not carrying out an unprecedented governmental intervention in the free market:

Are you now, or have you ever been, a Socialist? Do you know, or associate, with other Socialists?

What questions would you like to ask Paulson and Bernanke? Put your best nominees in the comments section.

Like a leaky boat, Wall Street just keeps sinking amid controversy over the proposed government bailout. And Fed chief Ben Bernanke has poured more cold water on the investing mood by saying global markets remain under extraordinary stress.

Stock futures are pointing lower as Congress has shown some reluctance to rubber-stamp the $700 billion bank rescue plan, which some say could create more problems because of the ballooning deficit while not resolving the credit crisis.

But while not everyone loves this bailout, it appears to be all we’ve got.

The good news is that oil prices, whose huge gains also wigged out the stock market yesterday, have also fallen.

U.S. Treasuries are mostly higher, while the dollar is steady against an index of major currencies.

Home builder Lennar reported a smaller-than-expected quarterly loss, although revenue plunged 53 percent.

Kohlberg Kravis Roberts – a private equity firm that is planning on going public – posted a net loss for the first half of 2008, compared with a year-earlier profit.

– Lisa Von Ahn

Excluding the value of Lehman Brothers’ Seventh Avenue headquarters, Barclays is only shelling out $250 million for the other Lehman assets it snapped up last week when it bought the bankrupt investment bank.

That’s a bargain next to the $400 million the British bank agreed to pay in early 2007 for the right for 20 years to have the soon-to-open home of the Brooklyn Nets named the “Barclays Center” and create brand recognition.

When Barclays signed the deal, it raised the question why a foreign bank like Barclays, widely unknown to U.S. consumers, would spend a small fortune on naming rights, especially since it doesn’t operate retail branches.

But in the past few years, financial firms have been all over arena and stadium rights.

In November 2006, Citigroup agreed to pay $400 million for the naming right to the New York Mets’ stadium, where they start playing next year. And in January 2007, Prudential Financial paid more than $100 million for the right to name the new home of the National Hockey League’s New Jersey Devils, which they moved into last year. The New York Post also recently reported that Bank of America, another bank that profited from the current crisis when it snagged Merrill Lynch last week.

But one marketing expert thinks right now, the public may take a dim view of all these stadium and arena sponsorships.

“People want to see companies be prudent,” said Bob Passikoff, president of Brand Keys. Not spend millions of dollars to slap their names on an arena while so many financial institutions are asking for a bailout.

Financial blogger Barry Ritzholtz of The Big Picture has some questions for Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke ahead of their appearance on Capitol Hill on Tuesday, starting with a biggie:

You two gentlemen have been wrong about the Housing crisis, missed the leverage problem, and understated the derivative issue. Recall the overuse of the word “Contained.” Indeed, you two have been wrong about nearly everything financially related since this crisis began years ago. Question: Why should we trust your judgment on the largest bailout in American history?

There are 13 more in that vein, plus a “bonus comedy question” — or at least what would have been comedic if the leading lights of American capitalism were not carrying out an unprecedented governmental intervention in the free market:

Are you now, or have you ever been, a Socialist? Do you know, or associate, with other Socialists?

What questions would you like to ask Paulson and Bernanke? Put your best nominees in the comments section.