The board chairman of the federal bank deposit insurer on Tuesday ruled “out of order” another board member’s effort to bring issuance of a request for information (RFI) on bank merger policy before the board for discussion, reports said.
The draft RFI, which first emerged last Thursday through a joint statement of two of the three Democrats on the board, would respond to a July 2021 executive order by President Joe Biden (D) on competition that calls for, among other things, a specific look at current practices and submission of a plan – within 180 days of the July 9 order – for the “revitalization of merger oversight” under the Bank Merger Act (BMA) and the Bank Holding Company Act (BHCA).
Jelena McWilliams, chairman of the Federal Deposit Insurance Corp. (FDIC), is currently the lone Republican on the four-member FDIC Board. The Democrats on the board are Martin Gruenberg (formerly an FDIC chairman and serving in a holdover capacity since 2018), Comptroller of the Currency Michael Hsu, and Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra.
Chopra and Gruenberg issued a statement last week that the board had voted to release for public comment an RFI on the FDIC’s merger rules, policies, and procedures. The FDIC later that day issued a statement (attributed to no individual in particular) that there had not been a “legitimate” vote to issue the request.
That FDIC statement, which was posted online and emailed to subscribers, is no longer linked on the agency’s website.
During Tuesday’s open FDIC Board meeting, Chopra moved to address the issue, but McWilliams reportedly ruled that effort out of order.
Hsu, not part of last week’s statement on the RFI, issued his own statement Tuesday in support of issuing an RFI on the BMA and noted he was among the three members voting in favor of its release. Chopra also issued a statement that, among other things, tied board members’ difficulty bringing this issue up for board discussion to the view of the FDIC general counsel – a view Chopra described variously as “extreme,” “unusual,” and “legally dubious” – that only the FDIC chair is empowered to raise matters for discussion in board meetings.
“Directors Gruenberg, Hsu, and I cast our votes in the affirmative, but the Chair did not exercise her right to move the matter to a board meeting for discussion,” said Chopra, referring to last week’s action. “Astoundingly, the General Counsel asserted, without any legal justification, that the vote of the supermajority of the Board was invalid. We have provided extensive legal support for why this vote was valid but have received no reply at all from the General Counsel to defend his extreme view. We have essentially been instructed to accept an edict, but doing so would breach our fiduciary duties.
“This approach to governance is unsafe and unsound. It is also an attack on the rule of law,” Chopra stated.
The FDIC Board majority’s inability to bring an issue up for discussion seems counter to how things are working at the National Credit Union Administration (NCUA) Board, with the NCUA Board’s two Republican members having essentially forced the consideration of three final rules this year (one slated for action this week) that were proposed over the objections of the agency’s now-board chairman.