This bill, if passed, would impact the rules governing the acquisition and merger of failing banks and insured depository institutions. It outlines exceptions for concentration limits with respect to deposits and consolidated liabilities to prevent significant economic disruption or adverse financial effects. The bill also requires a written report and public disclosure when waivers of concentration limits are granted, with the aim of improving competition in future bank resolutions. In addition, the bill limits consideration of bids that would violate specified sections of the Bank Holding Company Act in determining the least costly method for the Deposit Insurance Fund, and reduces the dollar amount specified in the Federal Reserve Act.
Failing Bank Acquisition Fairness Act
This bill tightens restrictions on certain waivers granted by federal financial regulators to companies that acquire insured depository institutions. Under current law, a regulator may not approve an acquisition if it would result in an institution exceeding a set concentration limit (i.e., controlling more than 10% of total insured U.S. deposits). This may be waived if one or more of the institutions involved is in default or in danger of default or if the Federal Deposit Insurance Corporation (FDIC) is providing certain assistance.
In addition to these requirements, the bill requires the regulator to determine that (1) the merger is necessary to prevent significant economic disruption or financial instability, and (2) FDIC has not received a qualified bid from a company not subject to this concentration limit.
The bill also provides capitalization and management standards for qualified bids.
Regulators that waive these concentration limits must report to Congress on the circumstances and justification of the waiver.