Magazine article American Banker

Fed's New Deadlines Expected to Speed Regulatory Process

Magazine article American Banker

Fed's New Deadlines Expected to Speed Regulatory Process

Article excerpt

WASHINGTON -- The Federal Reserve Board is promising faster service under new regulatory approval deadlines required by Congress.

The central bank last week shortened the time it takes to set up a bank holding company, gain approval for new activities, and clear antitrust hurdles.

The Reigle Community Development and Regulatory Approval Act of 1994 required the Fed to amend its rules immediately.

The rules issued late Thursday will apply retroactively to all applications filed since Sept. 24. But the public has until Dec. 5 to recommend changes to these interim rules. The board will review the comments and then issue final rules, a Fed staffer said.

Gilbert T. Schwartz, a partner with the Skadden, Arps, Slate, Meagher & Flom law firm here, said the central bank did just what the law required to reduce regulatory burden and nothing more.

"Bankers should not expect this to be nirvana," Mr. Schwartz said. He explained the Fed left itself a huge loophole. The agency can extend any of the expedited waiting periods by asking for more information, Mr. Schwartz said.

"They have left themselves a number of outs," he said.

Also, the rules don't address major acquisitions by large banks, he said. Instead, they are limited to acquisitions of nonbanks, and only then if they cost less than $15 million.

"The Fed clearly says that for expansion, all bets are off," Mr. Schwartz said.

Still, the Fed is speeding up some parts of the regulatory approval process.

For example, an application to engage in a nonbanking business used to sit at the nearest Federal Reserve bank for 28 days before the agency even considered it. …

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