Magazine article American Banker

FDIC Expands Authority for Mergers

Magazine article American Banker

FDIC Expands Authority for Mergers

Article excerpt

WASHINGTON -- The Federal Deposit Insurance Corp. has broadened the authority of its director of bank supervision and its regional office directors to include the power to decide on certain merger applications.

The expanded powers, according to FDIC Chairman William M. Isaac, would result in approval or denial of 80% of applications before reaching the agency's three-member board. Currently, he said, about 50% of standard merger applications are approved by the directors.

The FDIC has found that, under its current rules, too many noncontroversial cases must be acted upon by the board, partly because the directors had the power to approve applications but not deny them.

Under the new rules, however, the FDIC granted the directors the power of denial. The agency also trimmed from 10 to 4 the number of exceptions that would excuse the director of bank supervision or the regional office directors from considering a case. The amended regulation becomes effective upon publication in the Federal Register.

The director of bank supervision and the appropriate regional director will have the authority to decide on a merger application except in the following situations:

*Where the application must be acted on immediately to prevent a probable failure of one of the banks involved; or where the proposed transaction must be handled quickly due to an emergency in which a company other than an insured bank is party to the merger.

*Where a bank's tangible adjusted equity capital and reserves, after the merger, are determined to be inadequate or, specifically, less than 5% of adjusted assets. …

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