The Federal Deposit Insurance Corporation (FDIC) Board of Directors approved the rescission of its Statement of Policy on the Qualifications for Failed Bank Acquisitions on Mar. 19. The decision also includes the withdrawal of related questions and answers that were issued in 2010.
This move is intended to remove regulatory barriers that have previously deterred nonbank entities from participating in bids for failed banks. By doing so, the FDIC aims to encourage more participation in the acquisition process and reduce costs associated with bank failures for the Deposit Insurance Fund.
The Statement of Policy, first issued in 2009, applied to private investments in companies seeking to assume deposit liabilities from failed institutions or acquire a failed bank through a shelf charter. It imposed restrictions and conditions beyond existing regulatory requirements, which limited nonbank involvement in these transactions.
According to the FDIC, eliminating these additional requirements is expected to make it easier for nonbanks to participate in resolving failed banks. The agency said this change will take effect upon publication in the Federal Register.
The broader implication of this action is an anticipated increase in competition among potential buyers when banks fail, which could help minimize losses covered by federal deposit insurance.
