A proposed rule aimed at ensuring “appropriate review” of transactions that would result in control over institutions supervised by the Federal Deposit Insurance Corp. (FDIC) is out for comment until Oct. 18, according to a notice in the Federal Register.
The FDIC proposed rule would permit the FDIC to disapprove of a proposed acquisition if that acquisition would fail to satisfy any of the statutory factors enumerated in the Change in Bank Control Act (CBCA), according to the notice, published Monday.
“Under the FDIC’s current regulations, an entity is exempt from a notification requirement when the [Federal Reserve Board] reviews a notice under the CBCA. However, recent developments in equity markets may be contributing to elevated risk of excessive indirect control or concentration of ownership in FDIC-supervised institutions,” the notice states. “Therefore, the FDIC is proposing to amend its regulations governing change in control notifications to remove the current exemption in order to ensure appropriate review of certain transactions, increasing the likelihood that all the statutory factors in the CBCA are met, and reducing the likelihood that certain transactions would result in an adverse effect on the Deposit Insurance Fund (DIF).”
Removing the exemption, the proposal states, 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.”
The proposed rule was released during the FDIC Board’s July 30 open meeting on a split vote along party lines.