FDIC Issues Financial Institution Letter on Filing and Documentation Procedures for State Banks
Commentary by Scott Cammarn
The Federal Deposit Insurance Corporation ("FDIC") issued a financial institution letter regarding the filing and documentation procedures for state banks engaging, directly or indirectly, in activities or investments that are permissible for national banks.
According to the letter, a state bank (or its subsidiary) engaging in activities or investments permissible for a national bank (or its subsidiary) should establish and maintain files documenting that those activities are permissible for a national bank. A state bank is not required to file an application or notice to engage in activities that are permissible for a national bank if the state bank maintains certain documentation.
Commentary
The FDIC is abandoning a longstanding informal requirement that an FDIC-insured state bank obtain FDIC approval before establishing a controlled subsidiary that is organized as a limited liability company rather than as a corporation.