A longstanding policy providing relief for individuals with convictions for certain low-risk crimes from seeking waivers in order to get a job at a bank would be converted into regulation under a proposal issued Tuesday.
The Federal Deposit Insurance Corp. (FDIC) published the proposal to codify in regulation Section 19 requirements of the Federal Deposit Insurance Act (FDIA), which prohibits – without the prior written consent of the FDIC – anyone from participating in banking who has been convicted of a crime of dishonesty or breach of trust or money laundering, or who has entered a pretrial diversion or similar program in connection with the prosecution for such an offense, according to the agency.
Tuesday’s proposal would set in regulation a policy adopted in 1998 by the agency which set the criteria for providing relief for individuals with convictions for certain low-risk (“de minimus”) crimes, forgoing the need for an application for a waiver of Section 19.
In a statement, FDIC Chairman Jelena McWilliams said the agency would strive to protect the integrity of the banking system. “But section 19 should not be a barrier to entry for individuals who have committed minor crimes in the past, paid their debt to society, and reformed their conduct, and are now seeking to gain employment with a financial institution,” she said.
In a related move, the National Credit Union Administration (NCUA) on Thursday is scheduled to consider finalizing a similar action. Called the “second chance initiative,” the interpretive ruling and policy statement (IRPS) would update the agency’s interpretive ruling which implements section 205(d) of the Federal Credit Act by reducing the scope and number of offenses that would require an individual to apply to the agency board for permission to work (and participate in the affairs) of a federally insured credit union.
The FDIC proposal was issued with a 60-day comment period.
FDIC Proposes New Rule Codifying Policy on Section 19 Hiring