FDIC seeks more notice over change in bank control requests

The Federal Deposit Insurance Corporation Board has voted 3-2 to go ahead with a proposed rule that requires parties acquiring FDIC-insured institutions to give advanced notice, even if the Federal Reserve plans to review the change in control request.

As the requirements currently stand, no individual can acquire control of an insured depository institution without providing at least 60 days prior written notice to the appropriate federal banking agency.

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 gives the FDIC’s no 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.

However, the FDIC’s regulations exempt transactions from the notice requirement in cases where the Fed reviews a Change in Bank Control notice.

In exemption cases where the Fed has accepted passive commitments from an investor, the FDIC has overruled the notice requirements.

The new rule would remove the exemption and request public comment regarding the FDIC’s overall approach to changes in control affecting FDIC-supervised institutions.