FDIC Withdraws Proposed Banking Rules

The FDIC withdrew proposed rules on brokered deposits, corporate governance and implementing regulations for the Change in Bank Control Act ("CBCA"). 

On proposed implementing regulations for the CBCA, which would have "removed an exemption from the requirement to submit a notice to the FDIC for an acquisition of voting securities of a depository institution holding company," the FDIC said that "[r]emoving this exemption would have required a wide range of bank investors to file duplicative notices with both the FDIC and the Federal Reserve System and could have discouraged capital investments in FDIC-supervised banks."

On brokered deposits, the FDIC stated that the proposal, which would have revised the "deposit broker" definition and amended the analysis of the "primary purpose" exception to the "deposit broker" definition, would have significantly disrupted many aspects of the deposit landscape." (See related coverage.) The FDIC said the proposed narrow interpretation of the primary purpose exception was "inconsistent with the plain meaning of the law," and the provisions on fees and remuneration were "broad" and "sweeping." The FDIC also claimed that the proposal "failed to account for the myriad of ways in which deposit arrangements have evolved over the years."

On corporate governance and risk management, the FDIC stated that the proposed rule, which would have established new, enforceable safety and soundness standards for FDIC-supervised institutions with $10 billion or more in total consolidated assets, (see related coverage), would create "overly prescriptive and process-oriented expectations rather than focusing on core safety and soundness risks."  The FDIC also said that the proposed rule "would have conflated the roles of management and the board of directors, created unworkable expectations, and, in certain areas, would have conflicted with applicable state law."