On April 8, FDIC Acting Chairman, Travis Hill, provided an update on the FDIC’s policies since his last speech two and a half months ago (covered by InfoBytes here) and outlined the agency’s future plans on de novo bank formation, digital assets and blockchain, resolution planning, and asset thresholds. Hill discussed the decline in de novo bank formation, noting the number of new banks established annually has significantly decreased since the 2008 financial crisis. He emphasized the importance of encouraging new bank formation to preserve the community bank model and mentioned the FDIC was considering adjustments to capital standards for applicants looking to serve areas lacking community banks.
In addition, Hill noted a possible reevaluation of how the FDIC processes deposit insurance applications, particularly for banks with new or innovative business models, like industrial loan companies. Hill also addressed the FDIC’s approach to digital assets and blockchain, announcing a more open-minded stance towards innovation. He highlighted the recent rescission of the prior notification requirement for banks seeking to engage in crypto-related activities and mentioned ongoing efforts to provide clarity on permissible activities. In addition, the FDIC plans to release updated FAQs related to the IDI Rule resolution plan submissions (covered by InfoBytes here). The FDIC is considering whether to adjust regulatory thresholds to account for inflation following several years of inflation that exceeded the Fed’s two percent target. He outlined the FDIC’s intention to engage with potential acquirers and improve the bidding process to reduce costs to the Deposit Insurance Fund. Additionally, Hill touched on asset thresholds, suggesting that regulatory thresholds should be adjusted to reflect inflation and industry growth.
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