Banking regulators are proposing to raise to $10 billion the major assets prohibition thresholds used to determine restrictions on management official interlocks among depository institutions and depository holding companies, the agencies said Thursday – the first time in more than two decades an increase has been proposed.
The federal banking agencies – the Federal Reserve Board, Federal Deposit Insurance Corp. (FDIC), and Office of the Comptroller of the Currency (OCC) — are proposing to raise these thresholds for the first time since they were established in 1996.
The rules implement requirements of the Depository Institution Management Interlocks Act (DIMIA). The DIMIA major assets prohibition bars a management official of a depository organization with total assets exceeding $2.5 billion (or any affiliate of such an organization) from serving at the same time as a management official of an unaffiliated depository organization with total assets exceeding $1.5 billion (or any affiliate of such an organization). However, the statute also permits the agencies to adjust, by regulation, the major assets prohibition thresholds in order to allow for inflation or market changes.
The agencies are proposing to raise the major assets prohibition thresholds from $1.5 billion and $2.5 billion to $10 billion each. As proposed, the major assets prohibition would restrict management interlocks between unaffiliated depository organizations with total assets exceeding $10 billion (or any affiliates of such organizations). They also propose three alternative approaches for increasing the thresholds based on market changes or inflation.
Institutions above these thresholds are required to ask regulators for an exemption before they can Increasing the major assets prohibition thresholds would relieve certain depository organizations – in particular, community banks – below the adjusted thresholds from having to ask the agencies for an exemption from the major assets prohibition. “The agencies do not expect the proposal to materially increase anticompetitive risk,” they said in the notice for comment.
The proposed rule is out for public comment for 60 days following its publication in the Federal Register.