Proposed Amendments to Part 354, Parent Companies of Industrial Banks and Industrial Loan Companies

Summary:

The FDIC Board of Directors has issued a Notice of Proposed Rulemaking to seek comments on proposed amendments to its regulation governing parent companies of industrial banks and industrial loan companies (collectively referred to as industrial banks, herein). The proposed amendments would clarify and enhance the supervisory framework that was formalized in Part 354 of the FDIC Rules and Regulations, which was adopted in December 2020.

Statement of Applicability: The contents of, and material referenced in, this FIL apply to any industrial bank that becomes a subsidiary of a company that is not subject to consolidated supervision by the Federal Reserve Board.

Highlights:

The proposed amendments to part 354 would:

• Revise its scope to (a) include conversions involving a proposed industrial bank under section 5 of the Home Owners’ Loan Act, (b) ensure that a parent company of an industrial bank would be subject to Part 354 if there is a change in control at the parent company or a merger in which the parent company is the resultant entity, and (c) include a reservation of authority that would allow the FDIC to apply Part 354 to other transactions as appropriate.
• Clarify the relationship between written commitments and the FDIC’s evaluation of the statutory factors applicable to an industrial bank filing. 
• Set forth additional criteria that the FDIC would consider when assessing the risks presented to a shell or captive industrial bank by its parent organization and evaluating the industrial bank’s ability to operate in a safe and sound manner and function independently of the parent organization, including a rebuttable presumption that the shell or captive nature weighs heavily against favorably resolving one or more applicable statutory factors.

Written comments must be received on or before 60 days after publication in Federal Register.