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Financial Services Law Insights and Observations


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  • OCC issues final rule allowing certain federal savings associations to operate with national bank powers

    Agency Rule-Making & Guidance

    On May 24, the OCC issuedfinal rule, which establishes standards permitting federal savings associations with total consolidated assets of $20 billion or less as of December 31, 2017, to elect to operate as “covered savings associations,” with the rights and privileges of national banks. The final rule—issued pursuant to section 206 of the Economic Growth, Regulatory Relief, and Consumer Protection Act, which amended the Home Owners’ Loan Act (HOLA)—provides that associations who choose this election will retain their federal savings association charters and existing governance frameworks, and will generally be subject to the same duties, restrictions, penalties, liabilities, conditions, and limitations that apply to national banks. Among other things, the final rule also states that “a covered savings association may continue to operate as a covered savings association if, after the effective date of the election, it has total consolidated assets greater than $20 billion.” The final rule takes effect July 1.

    Agency Rule-Making & Guidance OCC Home Owners' Loan Act Bank Compliance EGRRCPA

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  • Federal Reserve proposes new structure for determining bank control

    Agency Rule-Making & Guidance

    On April 23, the Federal Reserve Board issued a notice of proposed rulemaking (NPRM) and request for comment to simplify and increase transparency of existing rules for determining if a company has control over a banking organization under the Bank Holding Company Act and the Home Owners’ Loan Act. Among other things, the NPRM will “provide a series of presumptions of control for use by the Board in control proceedings and other control determinations,” and will create a tiered structure premised on the level of voting ownership—5 percent, 10 percent, and 15 percent—of one company in another company. The Board noted it will also consider several additional factors, such as (i) the size of a company’s voting and total equity investment; (ii) rights to director and committee representation; (iii) use of proxy solicitations; (iv) individuals serving as management, employees, and directors at both companies; (v) agreements permitting influence or restrictions on management or operational decisions; and (vi) the scope of business relationships between the companies. The NPRM also contains a new proposed presumption of “noncontrol,” which will apply in instances where a company owns less than 10 percent of the voting securities of a second company and does not trigger any of the presumptions of control. According to a statement issued by Vice Chairman for Supervision Randal Quarles, the NPRM is designed to address concerns that “it has been difficult for banking firms and investors in banking firms to determine whether a particular proposed investment could give rise to control.” Comments on the NPRM are due 60 days after publication in the Federal Register.

    Agency Rule-Making & Guidance Federal Reserve Bank Holding Company Act Home Owners' Loan Act

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