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Federal Banking Agencies Finalize Rules Increasing Number of Banks and Savings Associations Eligible for 18-Month Examination Cycle

On December 12, the Federal Deposit Insurance Corporation, Federal Reserve Board and Office of the Comptroller of the Currency issued joint final rules permitting these federal banking agencies to conduct examinations every 18 months instead of every 12 months for qualifying insured depository institutions with less than $1 billion in total assets. These final rules are intended to reduce regulatory compliance costs for smaller insured depository institutions while still maintaining safety and soundness standards. Interim final rules have been in effect since February 29, which are identical to the joint final rules.

Under the final rules, well capitalized and well managed insured depository institutions with less than $1 billion in total assets can benefit from an extended 18-month examination schedule, as opposed to a 12-month examination schedule. Previously, only qualifying insured depository institutions with less than $500 million in total assets were eligible for an extended examination schedule. In addition, qualifying US branches and agencies of foreign banks also are eligible for an extended 18-month examination schedule.

These final rules increase the number of qualifying insured depository institutions by approximately 611 institutions, bringing the total number of qualifying insured depository institutions to 4,793. In addition, under the final rules, the number of eligible US branches and agencies of foreign banks increased by 30, which means approximately 89 total US branches and agencies of foreign banks are eligible for an extended 18-month examination cycle.

©2022 Katten Muchin Rosenman LLPNational Law Review, Volume VI, Number 351
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About this Author

Our Financial Services Practice advises a broad spectrum of domestic and international fund managers, trading advisors, banks, brokerages and proprietary trading firms in all aspects of exchange-traded and over-the-counter commodities, securities and derivatives transactions. We help clients find business-based solutions and make business-driven decisions that are in compliance with applicable regulatory requirements. Our lawyers have extensive experience in the financial markets and are fully attuned to the need to provide advice quickly and efficiently in light of the time-sensitive and...

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