Federal Deposit Insurance Corporation (FDIC) regulators are cracking down on industrial bank parent companies, approving a notice of proposed rulemaking to amend part 354 of the FDIC Rules and Regulations.
The proposed rule would revise part 354 to clarify and enhance the agency’s framework to supervise industrial banks, mitigate risks to the Deposit Insurance Fund, and provide necessary transparency for market participants.
Industrial banks, also known as industrial loan companies, have long been criticized for their opaque ownership structures and lack of transparency.
Under the proposed rule, the FDIC would consider additional criteria when assessing the risks presented to an industrial bank by its parent organization, including the shell or captive nature of an industrial bank and its ability to meet the convenience and needs of the communities in which it does business.
The proposed rule would also clarify the relationship between written commitments and the FDIC’s evaluation of the statutory factors applicable to an industrial bank filing.
The FDIC is seeking public comments on the proposal, which would be due 60 days after publication in the Federal Register. The proposed rule would apply to industrial banks that convert to a national bank or federal savings association under section 5 of the Home Owners’ Loan Act or other transactions as determined by the FDIC.
The FDIC’s move comes as regulators continue to grapple with the risks posed by industrial banks, which have been linked to various financial crises and scandals over the years.
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Key Facts
- Agency: FDIC
- Category: Fraud & Financial Crimes
- Source: Official Source â†â€â€ÂÂ
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