The FDIC board today voted 3-2 to move ahead with a proposed rule to require parties acquiring FDIC-insured institutions to give advanced notice to the agency even if the Federal Reserve plans to review the change in control request.
Currently, no person may acquire control of an insured depository institution without providing at least 60 days prior written notice to the appropriate federal banking agency, according to the FDIC. However, the agency’s regulations exempt transactions from the notice requirement in cases where the Fed reviews a Change in Bank Control notice. Also, in practice, the FDIC has waived the notice requirement when the Fed has accepted “passivity commitments” from an investor. The proposed rule would remove the exemption, override the practice and request further public comment regarding the FDIC’s overall approach to changes in control affecting FDIC-supervised institutions.
The policy change was proposed by board member and Consumer Financial Protection Bureau Director Rohit Chopra, who said it would delete an “odd provision” that eliminates the FDIC’s review of changes in control for many transactions involving insured banks. “I think it’s highly inappropriate for the FDIC to abdicate the responsibility Congress entrusted to us to safeguard the ownership and control of the banks we supervise,” he said.
