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Quarterly updates on pending merger applications to be presented to the FDIC board.

Applicable to deals that are 270 days old, the new resolution aims to expedite processing, addressing what the CFPB's Rohit Chopra described as an "ongoing game of chickenfoot."

,   and  Administrator
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Quarterly updates on pending merger applications will be furnished to the FDIC board.
Quarterly updates on pending merger applications will be furnished to the FDIC board.

Quarterly updates on pending merger applications to be presented to the FDIC board.

The Federal Deposit Insurance Corporation (FDIC) has recently approved a resolution aimed at speeding up application processing, particularly in the Customer Identification Program (CIP) onboarding and verification procedures [1][3][5]. This move enables financial institutions to use pre-populated customer data from trusted third-party sources for information like names, addresses, dates of birth, and taxpayer identification numbers (TINs). The customers must review, confirm, and have the opportunity to update this information before account opening, ensuring compliance and security.

This digital-first approach is expected to reduce manual entry, customer friction, and improve operational efficiency. While the resolution does not directly address merger application reviews, the broader trend towards improving procedural efficiency, transparency, and timely decision-making at the FDIC may positively impact the review process for mergers [2].

In light of the resolution, the FDIC board will have "more regular and rigorous oversight" of the merger review process, with applications that have spent 270 days awaiting approval automatically being put on the FDIC board's next meeting agenda [4]. This change is intended to address concerns about the length of time for bank merger transactions to get approved, as Republican lawmakers have introduced legislation to curtail the time banks wait for a regulatory response [6].

FDIC Chair Martin Gruenberg supports the measure, expressing a desire for staff briefings on applications that take longer than normal [7]. Rohit Chopra, Consumer Financial Protection Bureau Director, also backs the resolution, but his reasons for support seem to differ from Vice Chair Travis Hill's. Chopra believes the resolution will help "get us to a place of a policy where we can swiftly deny applications that are facially deficient or not substantially complete" [8].

The resolution also addresses the scrutiny applied to larger banks. For banks with $100 billion or more in assets, the FDIC will apply more scrutiny on the impact of a merger on local communities and focus on anti-money laundering and financial stability concerns [9]. This increased attention is a response to the compelling need for stronger plans, given last year's bank failures [10].

Despite the support from some members of the FDIC board, the vote was 3-2, with Hill and Director Jonathan McKernan, both Republicans, voting against the resolution [2]. The resolution's implementation may bring about a more transparent and efficient application process, but it remains to be seen how it will impact the specific review process for bank mergers.

Key points:

  • FDIC permits use of pre-filled customer data for CIP compliance to speed digital onboarding and account opening.
  • Customers must verify the pre-populated information for identity validation.
  • Banks can now leverage third-party sources for TIN and other personal information.
  • This shift modernizes identity verification with a strong regulatory framework to maintain security, reduce fraud risk, and improve operational efficiency [1][3][5].
  • While not explicitly about mergers, FDIC’s procedural revisions aim to increase transparency and speed in supervisory and regulatory reviews generally [2].
  • The resolution requires merger or deposit insurance applications that have spent 270 days awaiting approval to automatically be put on the FDIC board's next meeting agenda.
  • The FDIC board has approved a final rule to bolster resolution planning for banks with $100 billion or more in assets.
  • Republican lawmakers have introduced legislation that seeks to curtail the amount of time banks wait for a regulatory response on merger applications.
  • The resolution will give the FDIC board "more regular and rigorous oversight" of the merger review process.
  • Chopra believes the resolution will help "get us to a place of a policy where we can swiftly deny applications that are facially deficient or not substantially complete."

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