Acting Comptroller of the Currency Keith A. Noreika has taken another swipe at a fellow financial regulator.
Noreika chastised the Federal Deposit Insurance Corporation for what he perceived as inaction on granting deposit insurance for new banks seeking to set up shop. The OCC approves bank charters, but new banks also must obtain deposit insurance from the FDIC.
“We, ourselves, since 2001 have chartered 14 institutions, and the FDIC hasn’t acted on a single—any of those 14 applications,” Noreika said in a podcast posted Aug. 4 by the Commodity Futures Trading Commission. “They just let it hang out there forever, so that the organizers wasted all their money trying to get insurance, and then they gave up.”
“And to me, that’s unconscionable for a regulatory agency,” he added.
Noreika’s willingness to mix things up with other regulators has been a calling card of his tenure as acting comptroller. He has also tussled with Consumer Financial Protection Bureau Director Richard Cordray over the bureau’s arbitration rule and taken shots at state banking regulators over charters for fintech companies.
Noreika has also called for the OCC to have isolated authority in allowing new small banks to go into business, which would entail largely eliminating a requirement for separate deposit insurance approval from the FDIC.
An FDIC representative pushed back on Noreika’s characterization.
“The statutory provision mandating that the FDIC approve applications for deposit insurance was established in 1991 in the aftermath of the banking and thrift crisis,” Barbara Hagenbaugh told Bloomberg BNA. “A key lesson learned from that experience was that the incentives of chartering agencies often were not the same as those of the FDIC in the protection of the deposit insurance fund.”
FDIC data show that more 250 “de novo” applicants for deposit insurance, out of nearly 1600, have withdrawn their applications since 2001. The agency has approved only nine new applications since the beginning of 2009, but applications ground to a halt during the financial crisis and have still been rare during the recovery. There are five applications pending now with the FDIC.
Lawmakers and regulators, particularly Republicans, have pointed to this lack of new bank formation as a reason to deregulate. Requiring new banks to apply to separate agencies is “a significant barrier to entry into the banking business,” Noreika said in prior remarks.
“The FDIC’s role in reviewing and approving applications for deposit insurance—and closely monitoring the condition of new banks as they become established—has been an important safeguard of the safety and soundness of our banking system for more than 25 years,” Hagenbaugh said.
To contact the reporter on this story: Rob Tricchinelli in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Michael Ferullo at MFerullo@bna.com
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)