The Dodd-Frank Wall Street Reform and Consumer Protection Act ("DFA")1 is having a significant impact throughout the financial services industry, but its effects are particularly acute for the U.S. thrift industry. In particular, significant changes in the regulation of thrifts and their holding companies pose unique considerations with respect to how the law affects their future business operations. In light of these changes, the most important question for thrifts and their parent holding companies ("SLHCs") is whether it makes business sense to continue to operate as a thrift in light of the few remaining advantages – and mounting disadvantages – of the thrift charter relative to a commercial bank charter. This article examines the business and legal considerations applicable to thrifts and SLHCs, as well as issues regarding the longer-term viability and retention of the thrift charter.
DFA Impact on the Thrift Charter
The federal thrift charter was created in 1933 pursuant to the Home Owners' Loan Act ("HOLA")2 primarily to provide for the channeling of depositor funds to the provision of credit for residential mortgage loans.3 Until recently, the thrift industry typically accounted for between 20-25% of annual U.S. mortgage loan originations, and in some years closer to one-third of all mortgage loans originated in the U.S. This residential lending focus and mandate of the thrift charter has long served as the basis for the differences between federal thrifts and national banks. Historically, there were a number of statutory advantages of the thrift charter that served to support the charter's primary residential lending focus. Over the years, however, these unique advantages have been eliminated and differences between federal thrifts and national banks have slowly eroded through regulation and legislation, culminating most recently in the DFA.
Prior to the DFA, the key remaining advantages of the federal thrift charter included: (1) consolidated supervision by the Office of Thrift Supervision ("OTS") of both a thrift and its parent SLHC; (2) broad interstate branching authority; (3) "field preemption" under OTS regulations for thrift lending and deposit-taking activities; and (4) the absence of uniform regulatory holding company capital and "source of strength" requirements. The "trade-offs" for these benefits included statutory commercial lending limits and restrictions under the so-called qualified thrift lender, or "QTL," test.
Pursuant to the DFA, however, most of the remaining benefits of the thrift charter have been eliminated, calling into question the continued viability of the charter and, particularly, the federal thrift charter. The key areas impacted by the DFA include:
- Elimination of the OTS and Consolidated
Supervision. The DFA abolishes the OTS and transfers
regulatory jurisdiction of approximately 670 federal thrifts and 60
state-chartered thrifts, and their parent SLHCs, to the other
Federal Banking Agencies ("FBAs") – the Office
of the Comptroller of the Currency ("OCC"), the Federal
Reserve Board ("FRB"), and the Federal Deposit Insurance
Corporation ("FDIC"). Under the law, effective July 21,
2011,4 except for consumer protection
functions,5 OTS supervision and rulemaking functions
relating to federal thrifts will transfer to the OCC, supervision
and rulemaking functions relating to SLHCs will transfer to the
FRB, and supervision of state-chartered thrifts will transfer to
the FDIC. Although the transfer date is more than five months away,
thrifts and SLHCs are already experiencing changes in the way they
are supervised and examined. In particular, examiners from each of
the successor agencies are coordinating with OTS examination and
supervisory staff, as well as participating with OTS examiners in
thrift and SLHC examinations.
The FBAs' recently issued Joint Implementation Plan ("JIP") provides a specific roadmap for merging the OTS out of existence and transferring its regulatory oversight of thrifts and SLHCs to the other FBAs. Based on the JIP and subsequent interagency proposals on February 3, 2011, it is evident that the transition of supervisory functions from the OTS to the OCC, FDIC, and FRB is altering oversight of thrift and SLHC operations to more closely align with the supervisory policies and procedures of the applicable successor agencies.
- Branching. Historically, federal thrifts have been able to branch nationwide without geographic restrictions. Prior to enactment of the DFA, a national or state-chartered commercial bank generally could open a de novo branch in another state only if the particular state expressly permitted out-of-state banks to establish a de novo branch in that state. However, the DFA removed the state "opt-in" requirement for national banks and state chartered banks, thereby providing banks with de novo branching powers. Thus, commercial banks are now on an equal footing with federal thrifts with respect to branching.
- Federal Preemption. Historically, federal thrifts have enjoyed broad federal preemption authority based on OTS regulations asserting "field preemption" over any state law that purports to regulate any aspect of a federal thrift's lending or deposit-taking activities.6 The DFA, however, eliminates federal thrift preemption as a separate doctrine, and instead pegs the preemption standards applicable to federal thrifts to the same standards applicable to national banks.7 Further, this new standard, which becomes effective July 21, 2011, specifies that federal preemption authority will be available only to national banks and federal thrifts, not their respective operating subsidiaries or affiliates. Thus, operating subsidiaries of both national banks and federal thrifts will no longer have the benefit of federal preemption protections.8
- Holding Company Requirements. One of the most
significant changes affecting the thrift charter is that the DFA
now subjects SLHCs to the same capital and activity requirements as
those applicable to bank holding companies ("BHCs").
Historically, SLHCs were not subject to formalized capital
requirements or a formal "source of strength" requirement
that a SLHC provide financial support to a subsidiary thrift in the
event the thrift experiences financial distress. In contrast,
holding company capital requirements and the "source of
strength" doctrine are key attributes for a BHC under the Bank
Holding Company Act of 1956 ("BHCA") and the FRB's
While the OTS has taken the view that SLHCs should support their thrift subsidiaries, the DFA codifies for SLHCs the FRB's long-standing "source of strength" doctrine.9 With respect to formal capital requirements, however, the DFA provides for a five-year phase-in period for SLHCs in regard to new minimum leverage capital and risk-based capital requirements.10
The DFA also imposes the same financial activities restrictions on SLHCs as are applicable to BHCs that qualify as financial holding companies ("FHCs") under the BHCA. In this regard, the DFA requires that SLHCs as well as their thrift subsidiaries be both "well capitalized" and "well managed" in order for the SLHC to be able to engage in certain financial activities to the same extent as permitted for FHCs. This alignment of SLHC powers with those applicable to FHCs serves to significantly level the playing field between SLHCs and BHCs that do not qualify as FHCs.
Finally, and perhaps most ominous for SLHCs, is a DFA study required from the U.S. General Accounting Office ("GAO") regarding whether certain exemptions from regulation under the BHCA should be eliminated. SLHCs are among the entities covered by the GAO study, which is due to Congress by January 21, 2012.
Retained Disadvantages of the Thrift Charter
Notwithstanding the elimination of most of the benefits of the thrift charter, the DFA did little to lessen the charter's historical disadvantages. These include:
- Commercial Loan Limits. Federal thrifts are subject to a statutory lending limit for commercial loans equal to 20% of their total assets.11 This limitation serves as a significant impediment for a thrift seeking to diversify its asset portfolio or change its business strategy to increase its focus on commercial lending.
- Non-Residential Lending Limits. In addition to the aggregate commercial lending limit, the HOLA imposes a limit on nonresidential real property loans by a federal thrift, which are capped at 400% of capital.12
- Secured Consumer Lending Limit. An historic anomaly of the HOLA is the limit on a federal thrift's consumer lending authority. A federal thrift may not make secured consumer loans (defined as loans for personal, family, or household purposes) or hold commercial paper and corporate debt securities in excess of 35% of its assets.13 In contrast, commercial banks may operate, compete, and diversify their lending portfolios in the manner that they view as most advantageous without regard to these types of artificial lending constraints based on their charter type.
- QTL Test. Another important statutory constraint imposed on thrifts by the HOLA is a requirement to qualify as a "qualified thrift lender" under the so-called "QTL test," which generally requires that at least 65% of a thrift's portfolio assets must be comprised of mortgage and consumer-related assets.14 Under the DFA, a thrift that fails to meet the QTL test is immediately subject to restrictions on its investments, activities (requiring the thrift to conform to the restrictions imposed on national banks and those already applicable to the thrift), and dividends, as well as a formal enforcement action under the HOLA. In addition, a SLHC parent of a thrift that fails the QTL test must register as a BHC within one year of the thrift's failure to meet the QTL test and will be subject to regulation and oversight by the FRB as such under the BHCA. Finally, a fairly significant burden imposed on thrifts by the QTL test is the recordkeeping necessary to establish and maintain QTL status. Particularly for institutions with nationwide lending operations, this can be quite challenging.
- Affiliate Transactions Restrictions. A less obvious, but still meaningful requirement imposed on thrifts and their parent SLHCs (and affiliates) is a bar on lending to an affiliate not engaged in activities permissible for a BHC. FHCs regulated by the FRB are not subject to the same restriction.
Thus, while oversight and jurisdiction of thrifts and SLHCs are transferred to the OCC, FRB, and FDIC as of the Transfer Date, thrifts will continue to be subject to many if not most of the historical statutory constraints imposed on the thrift charter, i.e., for as long as the institution remains a thrift. Further, as seems clear in the JIP, there appear to be many challenges ahead for both the thrift industry and its new regulators in implementing an effective transition. It will be particularly difficult to anticipate and avoid the numerous conflicts and uncertainty that this type of wholesale regulatory restructuring will involve, particularly as regulatory cultures and staff are merged, integrated, and homogenized.
Cost-Benefit Analysis of the Case for Conversion
While uncertainty regarding regulatory restructuring is a compelling factor that must be carefully weighed in the overall analysis by a thrift on whether to convert, there are numerous other important considerations. For example, a particularly difficult issue for some federal thrifts may involve not whether to convert, but the merits of converting to a state charter versus a national bank charter. Some of these issues are highlighted in the JIP, however, there are many other factors that must be taken into account in considering the business case for conversion. These include the following:
- Dual Assessment Structure. National banks and federal thrifts pay an assessment to their primary federal regulators for their federal oversight and supervision, which is in addition to FDIC-imposed federal deposit insurance assessments. In contrast, while state-chartered banks and thrifts pay assessments to their state regulators, they do not pay a separate assessment to their primary federal regulator, the FDIC or FRB. Moreover, state assessments are typically significantly less than OCC- and OTS-imposed supervisory assessments. This differential in regulatory assessments is an important issue that a federal thrift must consider both in regard to whether to convert and whether to opt for a state versus national bank charter.15
- Mutual Charter or Mutual Holding Company ("MHC") Structure. What may be a defining issue for federal thrifts operating in the mutual form of ownership is whether to opt for a state thrift charter that provides for mutual ownership rather than be subject to oversight by a federal regulator, the OCC, that does not have supervisory experience overseeing mutuallyowned depository institutions. Similarly, a federal thrift operating in a MHC structure may opt for a charter in a state that charters and supports MHCs rather than be subject to oversight by the OCC, which again does not have supervisory experience with this structure.
- Federal Thrift Lending Limits and the QTL Test. The statutory lending and similar restrictions on the federal thrift charter discussed above, and nominal benefits for many institutions of remaining a thrift will be a continuing competitive pressure for thrifts. It will also be a particularly important issue threatening the continued viability of the thrift charter. This issue, alone, is a significant source of concern for many thrifts that could be a catalyst for conversion.
- OCC Supervisory Structure. An important
consideration discussed in the JIP is the structure that the OCC
has in place to supervise small "Community" banks,
"Midsize" banks, and "Large" banks. While the
OTS has a similar size approach for larger complex thrifts, there
are significant differences in regulatory and supervisory emphasis
in the two agencies' approaches. A key issue for some federal
thrifts will be whether they remain in the same peer group that
they currently are in and identify with, particularly for
institutions that have structural complexities. For example, a
thrift in a unique or financially sophisticated structure may not
see itself subject to the OCC's Large Bank Supervision program,
but it may have significant concerns being placed in the
agency's Community Bank Supervision program rather than its
Midsize Bank Supervision program. An inappropriate placement could
stress an already challenging transition and cause a thrift to seek
a better solution via a charter conversion.
Federal thrifts that experience a change in supervision due to a different supervisory emphasis may opt to convert to either a state or national bank charter. The reasons supporting a state charter decision may vary from a perception of a more familiar or responsive local regulator, a more favorable (bank or thrift) state charter, or simply to reap the perceived benefits of being a "bigger fish in a smaller pond." Perhaps as important as the action of the regulators during the transition in merging the OTS into the OCC will be the perceptions of the thrift industry and others during the process. In this regard, federal thrifts that continue to view federal preemption as an important consideration in their future operating strategy may opt for a national bank charter. To a significant degree, this decision will hinge on the unique circumstances of each institution, including their current and projected lending footprint, as well as operational latitude under the available state charter option(s).
- Second Class Treatment. Perhaps of greatest concern to thrifts and SLHCs is that the new regulatory scheme could result in thrifts and SLHCs receiving second class treatment from their new regulators, particularly given their different statutory origins and relatively smaller numbers compared with their commercial bank and BHC counterparts. Certainly, this concern could be an important factor for federal thrifts if differences in regulatory standards and/or the OCC's supervisory emphasis cause federal thrifts to be relegated to second class treatment from their new federal regulator. This is not to suggest a deliberate emphasis to treat federal thrifts differently than their national bank counterparts, but rather an institutional bias due to the OCC's familiarity with national banks and commercial banking operations. As previously noted, an important issue for thrifts will be dealing with continuing statutory constraints on commercial lending and the QTL test. These issues, coupled with other factors, could contribute to a disjointed supervisory process arising from charter differences, dislocated regulators, the integration of supervisory personnel, previously highlighted cultural and supervisory differences, and a general perception that the federal thrift charter is inferior and, thus, requires greater supervisory attention relative to a similarly sized (or similarly complex) national bank. The best solution for some federal thrifts may be to avoid any real or perceived issues related to their differential treatment by flipping to a national bank charter. However, other federal thrifts may also take the opportunity to look at state charter alternatives.
- Call Report Migration and Uniform Holding Company
Reports. A discussion in the JIP on call report migration
and holding company report uniformity, followed almost immediately
by a closely coordinated series of announcements by the OTS and its
successor agencies on proposals to impose uniform reporting
requirements on all insured depository institutions regardless of
charter and holding company type may be the strongest signal yet of
the beginning of the end for the thrift charter.16 It is
worth highlighting that the conclusion of the agencies in the JIP
is that "it would be best to phase out the separate collection
of [Thrift Financial Report ("TFR")] data and to merge
that data collection process into the [Bank] Call Report process
... beginning with the March 2012 reporting
period."17 Similarly, the FRB noted in the JIP that
it intends to "phase out the current SLHC reporting scheme and
to require SLHCs to adopt reporting standards and processes
required for all FRB-regulated BHCs."18
The announcements made on February 3, 2011 by the OTS and its successor agencies regarding proposed changes to thrift and holding company reporting requirements to, among other beneficial purposes, achieve uniform reporting systems and processes among all FDICinsured banks and thrifts and to effectuate an orderly transition – and the relatively aggressive timelines for doing so – suggest that the agencies are moving swiftly to homogenize at least certain differences between thrifts and banks.
- Holding Company Considerations. Taking into
account the previously highlighted issues regarding the imposition
of BHC capital rules and a "source of strength"
requirement on SLHCs, the imposition of BHC reporting requirements
on SLHCs, elimination of a unified/consolidated regulator for a
thrift and its parent SLHC, and the possibility that a
grandfathered unitary SLHC may be required to establish an
intermediate holding company between it and its subsidiary thrift,
the GAO study (addressing whether SLHCs and certain other entities
should continue to be exempt from treatment as a BHC under the
BHCA) may simply be the nail in the coffin for SLHCs and,
particularly, grandfathered unitary SLHCs.
Notwithstanding the above considerations, there are two issues that may favor existing SLHCs, one of which is particularly compelling given an otherwise generally unfavorable outlook for thrifts and SLHCs under the DFA. That issue arises from the fact that BHCs with assets greater than $50 billion are deemed "systemically significant" by operation of law under the financial stability provisions of the DFA; however, SLHCs are not treated as BHCs and, thus, are not subject to this automatic "systemically significant" designation.19 Thus, unlike BHCs, large SLHCs avoid automatic designation as "systemically significant" firms, including prudential standards relating to capital and liquidity requirements, concentration limits, resolution plan requirements, short-term debt limits, and overall risk management requirements. This, of course, carries a significant caveat that a large SLHC could still be deemed to be "systemically significant" because of its complexity and relative position in the marketplace;20 or all SLHCs over $50 billion could be deemed "systemically significant" simply for the sake of ensuring uniformity in the treatment of SLHCs and similarly sized BHCs.
The second issue actually favors a SLHC that converts to a BHC during the five-year holding company capital phase-in period. A SLHC that converts to a BHC before the end of the phasein period will not lose the benefit of having the phase-in period for the new minimum leverage and risk-based capital requirements under the DFA, as described above.21 However, a SLHC may be subject to other incidents of being regulated as a BHC, including existing capital requirements and acceleration of the formal "source of financial strength" requirement.
The case for conversion requires a close examination of each thrift's unique circumstances, taking into account all of the factors highlighted above. From a legal perspective, this type of cost-benefit analysis is an important exercise from a corporate governance standpoint to inform a thrift's board of directors regarding the impact of the DFA on the thrift and options for the institution going forward.
Conversion Strategy – Timing and Procedural Considerations
While the issue of whether to convert may be difficult, more important for many thrifts may be the timing of when to convert – before or after the Transfer Date – and the choice of charter for their conversion. As noted above, all thrifts and their parent SLHCs will transfer by operation of law to the jurisdiction of their new primary federal regulators on July 21, 2011 (unless the Transfer Date is extended an additional six months). Given the few remaining months to the Transfer Date, timing a charter conversion requires a careful and strategic analysis.
There are various practical business considerations for a thrift in deciding whether to submit a charter conversion application prior to or after the Transfer Date. For example, timing considerations include maintaining a relationship for as long as possible with a team of examiners familiar with the thrift's operations, minimizing business uncertainty, and even avoiding a rush of conversion applications seeking to make the perceived deadline of the Transfer Date as well as the potential flood of conversion applications that could occur soon after the Transfer Date.
A key consideration for thrifts contemplating a charter conversion is avoiding unnecessary delays during the application process as regulators sort through various transition issues, including the reassignment of existing applications and/or staff reviewing applications as of the Transfer Date. In this regard, many thrifts may opt to "stay the course" until after the Transfer Date. Another advantage in delaying a conversion application until after the Transfer Date is the ability to continue to work with existing OTS examiners familiar with the thrift's business and who will follow the institution through the transition. This will provide continuity along with the opportunity to get to know new examination staff at the new regulators.
Considerations for why it may make sense to begin the conversion process as early as possible without regard to the Transfer Date include the need to minimize business uncertainty – which may translate into investor uncertainty for publicly traded thrifts or SLHCs – as early as possible. Another potential benefit of converting before the Transfer Date is avoiding a potential flood of conversion applications that may occur soon after the Transfer Date. Regardless of whether the decision is to convert before or after the Transfer Date, it is critical that the timeframe for conversion allow sufficient lead time for preparation by the thrift and SLHC, including assembling the transition team and understanding the filing procedures and information required for the conversion process.22
A final important issue for some thrifts will be the requirements of section 612 of the DFA, which restrict the ability of a thrift subject to a formal enforcement order or informal supervisory agreement to convert to a state bank, state thrift, or national bank charter without the prior sign-off of the OTS (or, if applicable, state thrift regulator that issued the order or agreement).23 This process requires the proposed new primary federal regulator to provide a remedial plan addressing the significant supervisory issues that were the subject of the formal or informal order/agreement, "consistent with the safe and sound operation of the institution." The OTS (or state thrift regulator, if applicable) must not object to the conversion and proposed supervisory plan.
Given the aggregate changes impacting the thrift industry called for by the DFA that make the federal thrift charter, in particular, less attractive than it used to be, a number of thrift institutions may seek to act soon – with timing based on the Transfer Date – to control their own fate by negotiating the details of a transfer of jurisdiction on their own terms. Thrift institutions seeking to jettison the thrift operating structure may seek to accomplish this by a charter conversion to a national or state commercial bank. In addition, federal thrifts may simply seek to convert to a state thrift charter. Applicable considerations include an evaluation of the institution's business strategy, e.g., whether it intends to diversify its asset portfolio going forward with commercial and other non-residential lending, whether federal preemption continues to be an important factor in the institution's operating strategy (and the potential risks to federal preemption from the CFPB) and whether the costs of retaining the charter outweigh the few remaining benefits. While charter conversion appears to be an inevitable consequence for many thrifts, the timing of when a conversion should take place, i.e., before or after the Transfer Date, should be carefully considered.
Notwithstanding a Transfer Date less than six months away, now may be the time for a thrift to reevaluate its charter choice. This could enable these institutions to avoid the potential consequences of a "conversion de jure" and/or dealing with the uncertainty of a new regulator unfamiliar, indifferent – and even adverse – to their existing operating structure.
1 Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1376 (enacted on July 21, 2010).
2 48 Stat. 128 (June 13, 1933), codified at 12 U.S.C. §§ 1461 et seq.
3 For a history of savings associations in the U.S. in general, including the nation's first savings association organized in 1831, see http://www.ots.treas.gov/?p=History.
4 This date may be extended to January 21, 2012.
5 All rulemaking functions with respect to implementation of the federal consumer financial laws of each federal banking agency will be transferred to the new Bureau of Consumer Financial Protection ("CFPB") on July 21, 2011. In addition to its broad rulemaking authority, the CFPB will have primary supervision and examination authority over: (i) nondepository covered persons, the scope of which will be set forth in regulations; and (ii) insured depository institutions with total assets of greater than $10 billion and their affiliates, to monitor compliance with the requirements of the federal consumer financial laws.
6 12 C.F.R. §§ 557.11(b) and 560.2. With respect to federal thrifts, preemption is the legal standard that enables the institution to operate nationwide, under uniform national standards and subject to federal regulatory oversight by the OTS. The OTS preemption regulations have been described by courts as "incredibly broad and govern the operations of every federal savings and loan association." Silvas v. E*Trade Mortgage Corp., 421 F. Supp. 2d 1315, 1318-1319 (S.D. Cal. 2006) (citing Bank of America v. City and County of San Francisco, 309 F.3d 551, 558 (9th Cir. 2002)).
7 Under the DFA standard, preemption of a state consumer financial law will be permissible only if: (i) application of the state law would have a discriminatory effect on national banks or federal thrifts as compared to state banks; (ii) the state law is preempted under a judicial standard that requires a state consumer financial law to prevent or significantly interfere with the exercise of the national bank's or federal thrift's powers before it can be preempted, with such preemption determination being made by the OCC (by regulation or order) or by a court, in either case on a "case-by-case" basis; or (iii) the state law is preempted by another provision of federal law other than Title X of the DFA. DFA § 1044.
8 The DFA's alignment of federal preemption standards for federal thrifts with those applicable to national banks, as well as the elimination of the availability of preemption for non-depository institution subsidiaries of such institutions, has caused both national banks and federal thrifts to consider restructuring their business operations. Among the important considerations are whether to continue conducting certain activities, such as mortgage lending, through a subsidiary or whether to roll such activities into the bank or thrift in order to be able to continue to rely on any continuing benefits of preemption. For additional discussion on the DFA's impact on federal preemption for national banks and federal thrifts, see Comizio and Lee, Paul Hastings StayCurrent: The Dodd-Frank Wall Street Reform and Consumer Protection Act: Impact on Federal Preemption for National Banks and Federal Thrifts (July 2010), available at http://www.paulhastings.com/assets/publications/1668.pdf?wt.mc_ID=1668.pdf.
9 This requires that any company that controls an insured depository institution must serve as a source of financial strength for any depository institution subsidiary of the holding company. The phrase "source of financial strength" is defined as "the ability of a company that directly or indirectly owns or controls an insured depository institution to provide financial assistance to such insured depository institution in the event of the financial distress of the insured depository institution. DFA § 616(d).
10 Even if a SLHC converts to a BHC within the five-year phase-in period, the former SLHC will still enjoy the benefit of having five years to comply with the new capital requirements, as the delayed effective date is available to "any depository institution holding company that was not supervised by the FRB as of May 19, 2010." DFA § 171(b)(4)(D). However, a converting SLHC may be subject to other incidents of being regulated as a BHC, including existing capital requirements and acceleration of the formal "source of financial strength" requirement.
11 Generally, half of the allowable amount of commercial loans (i.e., 10% of total assets) may be in any type of commercial lending, and any amount exceeding 10% of total assets may only be in small business commercial lending. See 12 U.S.C. § 1464(c)(2)(A) and 12 C.F.R. § 560.30.
12 12 U.S.C. § 1464(c)(2)(B).
13 12 U.S.C. § 1464(c)(2)(D). Interestingly, federal thrifts may not exceed 35% of their assets in secured consumer lending, but are not subject to a limit on unsecured consumer credit card lending.
14 12 U.S.C. § 1467a(m). Alternatively, a thrift may qualify as a "qualified thrift lender" by meeting the requirements of the Domestic Building and Loan Association test under the Internal Revenue Code.
15 The FRB does not generally impose any assessment at the holding company level, unless a BHC (and now SLHC) has total consolidated assets of $50 billion or more. Beginning in 2012, all BHCs and SLHCs with total consolidated assets of $50 billion or more will be subject to assessments by the FRB that are equal to the total expenses necessary to appropriately carry out the FRB's supervisory and regulatory responsibilities.
16 See "Agencies Propose Changes in Reporting Requirements for OTS-Regulated Savings Associations and Savings and Loan Holding Companies" and accompanying regulatory proposal; Joint FBA Press Release (February 3, 2011).
17 Joint Implementation Plan (January 2011), issued by the FRB, FDIC, OCC, and OTS.
19 A SLHC could still be designated a systemically important nonbank financial company under the DFA; however, this would require an affirmative vote for the designation by the Financial Stability Oversight Council ("FSOC"), and an opportunity for the SLHC to challenge the designation via an appeal to the FSOC.
21 Pursuant to DFA § 171(b)(4)(D), the phase-in period is available to "any depository institution holding company that was not supervised by the [FRB] as of May 19, 2010."
22 For example, a notice of the conversion must be given to the OTS on Form 1585, available at http://www.ots.treas.gov/_files/78069.pdf. A conversion application (available at http://www.occ.gov/static/licensing/formconversion- app-v2.pdf) must be submitted to the OCC. Additionally, a holding company application on Form FR Y-3 (available at http://www.federalreserve.gov/reportforms/forms/FR_Y-320080430_f.pdf) must be submitted to the FRB. 23 DFA § 612 also applies to national and state-chartered banks seeking to convert to a different charter type.
The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.