Introduction
Today, the FDIC Board is considering a Notice of Proposed Rulemaking, as proposed by Director Chopra, amending the FDIC’s Rules and Regulations implementing the Change in Bank Control Act.1
Changes in bank control typically require a notice to be filed with the primary federal regulator. In certain situations, however, the FDIC has not required a notice. The proposed rule would remove that exemption and request further public comment regarding the FDIC’s overall approach to changes in control affecting FDIC-supervised institutions.
Director Chopra’s proposal makes it clear, however, that the FDIC recognizes the importance of interagency collaboration and consistency with respect to the review of these notices, and is committed to engaging in dialogue and coordination with the Federal Reserve and the Office of the Comptroller of the Currency to develop an interagency approach to these issues.
Statutory and Regulatory Background
Generally, under the Change in Bank Control Act, no person, acting directly or indirectly, or in concert with other persons, may acquire control of an insured depository institution without providing at least 60 days prior written notice to the appropriate federal banking agency. The FDIC’s current regulations exempt change in control transactions from the FDIC notice requirement when the Federal Reserve Board reviews a notice for acquisition of control of the holding company of an FDIC-supervised institution.2
This regulatory provision is in contrast to situations where the Federal Reserve Board has accepted passivity commitments from an investor in lieu of receiving a notice under the Change in Bank Control Act. In such cases, the FDIC previously has expressed that the agency would evaluate the facts and circumstances in order to determine whether a notice should also be filed with the FDIC.3 In practice, however, the FDIC typically has not required such notices when the Federal Reserve Board accepts passivity commitments.
I believe it is important that the FDIC, as the primary federal regulator of state non-member banks, closely review who is exercising direct or indirect control over its supervised institutions. The proposed regulatory change would remove the existing exemption and harmonize the FDIC’s approach, giving the FDIC the ability to request a notice of change in control or negotiate passivity commitments with a proposed acquirer, notwithstanding whether the Federal Reserve Board reviews a notice or accepts passivity commitments pursuant to its legal authority with respect to depository institution holding companies.
The FDIC also intends to strengthen its passivity commitments with investors, by ending reliance on self-certifications by investors and ensuring that the FDIC has the ability to obtain the information necessary for examination staff to analyze the ongoing interaction between an investor and the institution.
However, as I emphasized at the outset, the FDIC values and expects to continue its close collaboration with the Federal Reserve Board and the Office of the Comptroller of the Currency on matters related to changes in control affecting FDIC-supervised institutions and their respective holding companies. To that end, the NPR asks a number of questions and seeks comment on ways to potentially move forward on an interagency basis to ensure consistency and coordination in the review of notices under the Change in Bank Control Act.
Conclusion
In conclusion, the Notice of Proposed Rulemaking under consideration today represents a meaningful shift in the FDIC’s approach to proposed acquisitions under the Change in Bank Control Act. It would amend the FDIC’s Change in Bank Control Act regulations to enable the FDIC to consider the full range of options available to it under the statute. Accordingly, I strongly support the proposed rule and look forward to the public comment we will receive.
Finally, I would like to thank the FDIC Directors and staff who have worked thoughtfully and diligently on policy proposals addressing these issues for the Board’s consideration.