FDIC Approves Final Rule Related to Resolution of Nonbanks

FDIC Nonbank Supervision Bank Resolution

On June 4, during a board meeting, the FDIC approved a final rule to establish criteria for determining if a nonbank is predominantly engaged in “activities that are financial in nature or incidental thereto” and, as such, can be subject to the Orderly Liquidation Authority granted to the FDIC under Dodd-Frank Act Title II. Under the rule, a company is predominantly engaged in financial activities if at least 85 percent of a company’s revenues are derived from financial activities under either of two revenue tests (i.e., the two-year test or the facts and circumstances analysis). The rule adopts for Title II the same definitions of activities that are financial in nature that the Federal Reserve Board adopted for purposes of Title I, except that the FDIC’s rule also includes finder activities that the Federal Reserve Board determined in its rulemaking are incidental to financial activities. The rule will take effect 30 days after its publication in the Federal Register.