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Financial Services Law Insights and Observations

CSBS reminds Senate that FDIC Board must include a member with state bank supervisory experience

Federal Issues Bank Regulatory FDIC CSBS State Issues FDI Act Bank Supervision

Federal Issues

On January 31, the Conference of State Bank Supervisors (CSBS) sent a letter to Senators Charles Schumer (D-NY) and Mitch McConnell (R-KY), asking Congress to “uphold its commitment to the dual banking system” and confirm a member of the FDIC Board with state bank supervisory experience as required by Congress’ 1996 amendment to the Federal Deposit Insurance Act (FDI Act). CSBS explained that “the spirit of the law” and legislative history “indicate that this requirement is only met by a person who has worked in state government as a supervisor of state-chartered banks.” This requirement, CSBS pointed out, has not been met since former Massachusetts State Bank Commissioner Thomas Curry finished his term in 2012, thus leading to a nine-year period in which no one on the Board has had the legally mandated state regulatory experience. CSBS published a blog post the same day outlining three points for consideration: (i) the FDI Act’s legislative history shows Congress’s clear intent to include on the Board an individual (not including the Comptroller of the Currency or the CFPB director) with state government experience supervising state banks; (ii) an individual with “[e]xperience working for the FDIC or the Federal Reserve System does not meet the FDI Act’s requirement of an independent director with ‘state bank supervisory experience’”; and (iii) additional FDI Act provisions concerning state bank supervision reinforce that “‘state bank supervisory experience’ clearly refers only to service as a state government official with bank supervisory responsibilities.’” The letter added that “[a]s regulators of both banks and fintechs, state regulators have unique insight into emerging technologies and their impact on the financial services ecosystem. The FDIC Board would benefit tremendously from state regulators’ practical, real-life experience with innovation.”