The Federal Reserve Board ("FRB") proposal to modify its regulations for determining "whether a company has the ability to exercise a controlling influence" on another company under the Bank Holding Company Act and the Home Owners' Loan Act was published in the Federal Register. Comments on the proposal must be received by July 15, 2019.
As previously covered, the proposal identifies several factors and thresholds that the FRB will use to determine whether a company has such a "controlling influence," including:
- the company's total voting and non-voting equity investment in the bank;
- director, officer and employee overlap between the company and the bank in question; and
- the scope of business relationships between the company and the bank.
In addition, the FRB proposed a "tiered framework" that would modify and clarify the FRB's existing regulatory presumptions of control.
The proposal also includes:
- several additional presumptions of control;
- a new presumption of non-control;
- additional provisions to highlight how the presumption would apply in specific circumstances; and
- definitions and ancillary rules to make sure that the application of the proposed presumptions is "clear, transparent, and consistent."
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