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Speeches, Statements & Testimonies
Statement by Martin J. Gruenberg Chairman, FDIC Notice of Proposed Rulemaking Amending Regulations Implementing the Change in Bank Control Act

I am supportive of the Notice of Proposed Rulemaking put forward by Director Chopra today to amend the FDIC’s Rules and Regulations implementing the Change in Bank Control Act.1

Generally, under the Change in Bank Control Act, no person, acting directly or indirectly, or in concert with other persons, may acquire control of an insured depository institution without providing at least 60 days prior written notice to the appropriate federal banking agency.  The FDIC’s current regulations exempt change in control transactions from the FDIC notice requirement when the Federal Reserve Board reviews a notice for acquisition of control of the holding company of an FDIC-supervised institution.2  I am not aware of another provision by which the FDIC defers by rule to another agency on a matter affecting an FDIC-supervised institution. 

This regulatory provision is in contrast to situations where the Federal Reserve Board has accepted passivity commitments from an investor in lieu of receiving a notice under the Change in Bank Control Act.  In such cases, the FDIC previously has expressed that the agency would evaluate the facts and circumstances in order to determine whether a notice should also be filed with the FDIC.3  In practice, however, the FDIC typically has not required such notices when the Federal Reserve Board accepts passivity commitments.

While the FDIC values and will continue its close collaboration with the Federal Reserve Board on matters related to changes in control affecting FDIC-supervised institutions and their respective holding companies, it is important that the FDIC, as the primary federal regulator of state non-member banks, carry out its independent authority to review who is exercising direct or indirect control over its supervised institutions.  As a result, the proposed regulatory change by Director Chopra would remove the existing exemption and harmonize the FDIC’s approach, giving the FDIC the ability to request a notice of change in control or negotiate passivity commitments with a proposed acquirer, notwithstanding whether the Federal Reserve Board reviews a notice or accepts passivity commitments pursuant to its legal authority with respect to depository institution holding companies. 

The proposed rule also includes a request for public comment on numerous aspects of the existing regulatory framework.  Public comment on the questions raised in the NPR will inform the FDIC’s review of its overall approach to issues that arise under the Change in Bank Control Act and will greatly benefit our future work in this area.

Director McKernan’s proposed resolution would require the Director of the FDIC’s Division of Risk Management Supervision to submit a plan for review and approval by the FDIC Board to monitor compliance with passivity commitments of any FDIC control comfort provided to a covered fund complex and determine annually whether covered fund complexes control FDIC-supervised institutions. The resolution would also require a prescriptive set of monitoring procedures. This strikes me as a premature step to take prior to seeking notice and comment on a significant change in FDIC rule and practice.

I would like to acknowledge Director McKernan’s leadership in drawing attention to this important issue, but I cannot support the proposal he is putting forward today. I would also like to acknowledge Director Chopra’s efforts to address this important issue, and as I indicated, I will support the notice of proposed rulemaking he has brought forward.

  • 1

    Section 7(j) of the Federal Deposit Insurance Act, 12 U.S.C. 1817(j); 12 CFR Part 303, subpart E.

  • 2

    12 CFR 303.84(a)(8).

  • 3

    80 FR 65889, 65897 (Oct. 28, 2015).

Last Updated: April 25, 2024