FDIC PROPOSES REDUCED REGULATORY BURDENS FOR CERTAIN BANKS
INVESTING IN REAL ESTATE, LIFE INSURANCE AND ANNUITY CONTRACTS
FOR IMMEDIATE RELEASE PR-62-96 (8-13-96)
Media Contact: David Barr (202) 898-6992
The FDIC Board today agreed to seek public comment on a
plan to reduce the time and costs involved when a well-capitalized,
well-managed bank seeks the agency's approval to own real estate or
engage in certain other investments.
At issue is a 1991 law that, in general, prohibits insured
state-chartered banks from engaging in activities not permitted to national
banks unless the FDIC decides that a particular bank's activity will
not pose a significant risk to the insurance funds. The law gave a
state bank five years -- until December 19, 1996 -- to either divest its
prohibited activities or seek FDIC approval to continue or start them.
Currently, the FDIC requires an institution to file an
application including extensive documentation to justify why the
bank should be permitted to engage in one of these impermissible
activities. Today, the FDIC proposed instead to allow a well-capitalized,
well-managed institution to own three such investments -- real estate,
life insurance policies and annuity contracts -- up to set dollar limits,
provided the bank gives its FDIC regional office at least 60 days' notice
and the agency does not object.
By proposing to reduce regulatory burdens in these areas for
banks meeting certain "safe harbor" criteria, the FDIC also would be
providing additional incentives for banks to operate safely and
Comments on the FDIC proposal will be accepted for 60 days
after it appears in the Federal Register.
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Congress created the Federal Deposit Insurance Corporation in 1933 to
restore public confidence in the nation's banking system. The FDIC
insures deposits at the nation's 12,000 banks and savings associations
and it promotes the safety and soundness of these institutions by
identifying, monitoring and addressing risks to which they are exposed.
FDIC press releases and other documents are available on the Internet via
the World Wide Web at www.fdic.gov or through Gopher at gopher.fdic.gov.
They may also be obtained through the FDIC's Public Information Center,
801 17th St. NW, Room 100, Washington, DC, 20434 ((703) 562-2200).