Federal Reserve Enhancing Transparency in Applications Process

On  February 24, the Federal Reserve Board announced in SR 14-2 that it will start publishing a semi-annual report to provide certain information on bank applications and notices filed with the Federal Reserve to enhance transparency. The guidance applies to all financial institutions supervised by the Federal Reserve, including those with $10 billion or less in consolidated assets. The purpose of SR 14-2 is to provide a better understanding of the Federal Reserve’s approach to applications and notices that may not satisfy statutory requirements for approval of the proposal or otherwise raise supervisory or regulatory concerns.

The Board stated that the report will include statistics on the length of time taken to process various applications and notices and the overall volume of approvals, denials, and withdrawals. The report also will provide the primary reasons for withdrawals. The first report will be released in the second half of 2014 and will include filings acted on from January-June 2014. The letter also describes common issues identified by the Federal Reserve that have led to recent withdrawal of applications, including:

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  • Less-than-satisfactory supervisory rating(s) for safety and soundness;
  • Less-than-satisfactory supervisory rating(s) for consumer compliance, or CRA;
  • Inadequate compliance with the Bank Secrecy Act ;
  • Concerns regarding the financial condition (capital, source of strength & acquisition debt);
  • Management of the proposed organization;
  • Adverse Comments; and
  • Competitive and Financial Stability Factors.
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