Three rule proposals, all on split votes along partisan lines, were issued by the board of the federal bank deposit insurance agency Tuesday in a meeting that also featured adoption of a request for information (RFI) and final guidance, among other things.
The proposed rulemakings by the board of the Federal Deposit Insurance Corp. (FDIC) – each adopted on a 3-2 vote (with Democrat appointees voting in favor and the two Republican appointees voting against) – are on restrictions of brokered deposits and parent companies of industrial banks and industrial loan companies. A third proposal focuses on amendments to the Change in Bank Control Act regulations and procedures.
All three proposals will have 60-day comment periods commence once they have been published in the Federal Register.
The two items winning unanimous approval were: the RFI on deposits and final guidance for Title I resolution plan submissions of triennial full filers and extension of submission deadline.
On the proposals, FDIC Chairman Martin Gruenberg, Comptroller of the Currency Michael Hsu and Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra voted in favor. All three are Democrat appointees. Voting against the proposals were FDIC Vice Chairman Travis Hill and Board Member Jonathan McKernan, both Republican appointees.
The brokered deposits proposal would restrict the practice by simplifying the definition of “deposit broker,” according to the FDIC. In a letter to banks (FIL-47-2024) issued Tuesday, the FDIC said the simplified definition would remove the “matchmaking activities” definition and replace it with a broader definition related to deposit allocation services and add a new factor related to fees.
The proposal would also eliminate the “exclusive deposit placement arrangement” exception and revise the interpretation of the primary purpose exception (PPE) to consider the third party’s intent in placing customer funds at a particular bank or other insured depository institution (IDI).
On the industrial bank proposal, the FDIC said it would establish additional criteria that the agency would consider when assessing risks presented to an industrial bank by its parent organization. That is aimed at evaluating the bank’s ability to function independently of the parent organization, including the shell or captive nature of an industrial bank, and its ability to meet the convenience and needs of the communities in which it does business, the agency said.
“The proposed amendments would also clarify the relationship between written commitments and the FDIC’s evaluation of the statutory factors applicable to an industrial bank filing,” the agency said.
On the proposal for the Change in Bank Control Act (CBCA) rules, which was presented by CFPB’s Chopra, the agency is aiming to remove the exemption from the notice requirement for acquisitions of voting securities of a bank holding company with an FDIC-supervised subsidiary institution for which the Federal Reserve reviews a notice under the CBCA and by making conforming definitional changes.
Doing so, according to the proposal, would “ensure that the FDIC has the ability to appropriately assess all change in control transactions that may potentially affect the management and policies of an FDIC-supervised institution.”
Another item issued for proposal by the board at its Tuesday meeting was one focusing on the Financial Data Transparency Act (FDTA), also for a 60-day comment period.
According to the FDIC, an interagency FDTA working group has developed a joint rule proposal which establishes core standards to promote greater use, sharing, and interoperability of data. The group, the FDIC said, expects the proposal “will provide value while allowing for flexibility in implementation given the diverse needs of, and statutory constraints applicable to, the agencies involved.”
Notice of Proposed Rulemaking on Brokered Deposit Restrictions
Notice of Proposed Rulemaking on Parent Companies of Industrial Banks and Industrial Loan Companies
Request for Information on Deposits
Chopra proposal regarding Change in Bank Control Act Regulations and Procedures
Notice of Proposed Rulemaking regarding the Financial Data Transparency Act