The FDIC Board of Directors voted today to seek public comment on
a proposal that would substantially expedite the processing of
applications filed by well-managed, well-capitalized
institutions. The agency also proposed to simplify and streamline
its application rules.
"We believe it makes sense, for the industry and for the FDIC, to
minimize regulatory burden associated with routine business
decisions by well-managed institutions," said FDIC Chairman
Andrew C. Hove, Jr. "This plan would allow the FDIC to focus its
resources on applications that raise supervisory concerns or
unique legal or policy issues."
The proposed rule would apply expedited processing procedures to
applications for deposit insurance, mergers, branches, trust
powers, stock buy-backs, and certain foreign banking activities.
Some applications would be treated like notices. For example,
applications to establish a branch or relocate an office
represent approximately 50 percent of the filings received by the
FDIC and typically take 30 days to process. Under the proposed
rule, however, an eligible institution's branch application
generally would be automatically approved 21 days after the FDIC
receives a substantially complete application. That would mean a
30 percent reduction in the average processing time of branch
During the first eight months of 1997, the FDIC acted on 2,155
applications, notices and other filings. It is estimated that
about 1,975 of these requests (92 percent) were of types that
would have expedited processing or notice procedures under the
"This proposal would assure banks and thrifts that their
applications would be decided in a timely manner," said FDIC
Director Joseph H. Neely, who has coordinated the Corporation's
efforts to eliminate excess regulatory burden. "We want
well-managed institutions to know that their plans to conduct
traditional activities will be acted on expeditiously by the
The proposed revisions to Part 303 of the FDIC's rules would
reduce regulatory burden for all FDIC-insured banks and savings
associations, but particularly the approximately 6,200
state-chartered institutions that are supervised by the FDIC.
To qualify for the expedited application procedures under the
proposal, an insured bank or thrift must have:
- A composite rating of 1 or 2 on the interagency five-point
scale for safety and soundness;
- A satisfactory or better rating for compliance with the
Community Reinvestment Act;
- A rating of 1 or 2 for compliance with consumer laws and
regulations based on a five-point scale used by examiners;
- A designation as being well-capitalized; and
- No formal or informal administrative action pending against it.
The FDIC estimates that more than 90 percent of all
FDIC-supervised banks would meet these eligibility standards.
Other aspects of the FDIC proposal would delete duplicative or
outdated material, and update delegations of authority from the
Board that permit designated FDIC staff to take final action on
various applications, notices, requests and enforcement matters.
The Board also proposed to remove inconsistencies or outdated
procedures in policy statements involving applications. In
particular, the Board proposed to substantially revise its policy
on deposit insurance applications. The proposal would give
regional FDIC officials more flexibility to approve insurance
applications. It also would recognize the strength of a holding
company when reviewing the capital of a proposed new depository
institution, minimize duplication of efforts with the chartering
authority when an institution applies for deposit insurance, and
update the FDIC's policy on stock option plans proposed in
conjunction with the establishment of a new bank.
The agency's policy statement on bank merger transactions also
would be significantly revised to reflect statutory changes and
other related matters. The FDIC also is proposing to rescind two
policy statements on establishing or relocating bank offices.
"FDIC staff, under Joe Neely's direction, has reviewed our
applications procedures from top to bottom," Chairman Hove said.
"We believe these proposed changes would meet our objectives of
reducing complexity and cutting costs while still maintaining
high standards for safe and sound banking practices."
Hove also said the proposals would bring the FDIC's
applications rules more closely in line with those of the other
federal banking agencies.
Written comments on the proposed changes are due within 90
days after they are published in the Federal Register.
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 11,191 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.