OCC Proposes Framework for Placing Uninsured Banks into Receivership

FDIC OCC National Bank Act

On September 13, the OCC published a proposed rule under the authority of the National Bank Act, to provide a framework for receiverships for national banks that are not insured by the FDIC. For years the OCC has not placed uninsured banks into receivership, but the agency claims that establishing a clear and efficient process for handling failed uninsured banks would “contribute to the broader stability of the federal banking system.” Intended to “provide clarity to market participants about how they will be treated in receivership,” the OCC’s proposed framework outlines processes parallel to that of the FDIC’s receivership capacities. The proposal describes, among other things, (i) certain powers the receiver would hold, as well as the receiver’s duties in “winding up” an uninsured bank’s affairs; (ii) the process for submitting claims against the uninsured bank in receivership, and the receiver’s responsibilities to review such claims; (iii) the payment of dividends on claims and the distribution to shareholders of residual proceeds; and (iv) the receiver’s powers and duties related to the status of fiduciary and custodial accounts. Comments on the proposal are due November 14, 2016.