OCC Proposes Receivership Framework for Uninsured National Banks

In an effort to enhance its ability to grant new limited purpose charters, the OCC is issuing a proposed rule that would address how the agency will handle receiverships for national banks not insured by the FDIC, such as trust banks and other special purpose charters. The rule would implement provisions of the National Bank Act governing such receiverships.

Although there are few uninsured national banks — only 52 and all trust banks — and the OCC has not put an uninsured bank into receivership since the Great Depression, the agency said that articulating the framework now would contribute to worldwide efforts to coordinate responses to financial crises and to “provide clarity to market participants.”

Also, as part of its “responsible innovation” initiative, the OCC is exploring whether to grant special purpose charters to nonbank fintech firms. “For this reason, the OCC requests comment on the utility of the receivership structure in the proposed rule for receivership of such a special purpose bank,” the agency said.

The proposed framework, which parallels the FDIC’s well-established approach, covers the appointment of a receiver, resources available to the receiver, public notice, handling and prioritization of claims, receiver powers related to fiduciary and custodial accounts, distribution to shareholders and termination of receivership. Comments are due 60 days after publication in the Federal Register. For more information, contact ABA’s Phoebe Papageorgiou.