Overview
On March 3, 2025, the Board of Directors of the Federal Deposit Insurance Corporation (FDIC) rescinded its policy statement on bank merger transactions (Bank Merger Policy Statement), rescinded four proposed rules, and delayed the compliance date for certain provisions in the rule related to official signs and advertising requirements (Signs and Advertising Rule). The policy statement and each rule affected were implemented under the Biden administration.
These changes come barely a month after the transition to the Trump administration and the appointment of FDIC Vice Chair Travis Hill as acting Chair on January 20, 2025. These actions are part of a broader movement toward deregulation under the Trump administration, including President Trump's "Regulatory Freeze" executive order. This order directs federal agencies to halt work on all pending rulemaking and to consider postponing the effective date of any finalized rules that have not yet become effective.
Rescission of the 2024 Bank Merger Policy Statement
The FDIC has invited comments on a proposal that would rescind the recently-promulgated 2024 Bank Merger Policy Statement (2024 Final Statement) and would reinstate a policy statement nearly identical to the one in place prior to the 2024 Final Statement.1
The FDIC’s announcement echoes criticisms of the 2024 Final Statement made by then-Vice Chairman Travis Hill, who is now the acting Chairman of the FDIC. Primary issues raised by acting Chairman Hill2 include the 2024 Final Statement's deemphasis of the Herfindahl-Hirschman Index as a measure of market concentration in the FDIC's evaluation of how a merger affects market competition in favor of a broader review of a bank's activities and products.3 Additionally, the 2024 Final Statement placed a burden on merger applicants to demonstrate how a proposed transaction will benefit the public.4 The reversion to a prior iteration of the policy statement is intended to be a temporary measure, as the FDIC plans to issue a comprehensive revision to its merger policy in the future.5
Rescission of Four Proposed Rules
The FDIC also rescinded four proposed rules:6
- a proposed rule on brokered deposits;7
- a proposed rule on regulatory notices related to the Change in Bank Control Act (CBCA);8
- a proposed rule on corporate governance;9 and
- a proposed rule related to incentive-based compensation arrangements.10
In its Federal Register notice formally withdrawing the proposed rules, the FDIC Board generally described its criticisms of the above rules (except for the proposed rule on incentive-based compensation arrangements, as it was never formally published in the Federal Register), and stated that its reason for withdrawing these notices was because "it no longer intends to issue final rules with respect to these proposals."11 The FDIC's withdrawal of the proposed rules was also described in an accompanying financial institution letter.12
Brokered Deposits
On July 30, 2024, the FDIC approved a notice of proposed rulemaking on brokered deposits that would have broadened the definition of a "deposit broker" to include a number of insured depository institutions (IDIs).13 Furthermore, the rule would have significantly narrowed the "primary purpose" exception, entirely eliminated the "exclusive deposit placement arrangement" exception, and removed the "enabling transactions" designated exception.14
In its Federal Register notice rescinding the proposal, the new FDIC Board characterized it as "a major undertaking that would significantly disrupt many aspects of the deposit landscape," which "failed to account for the myriad of ways in which deposit arrangements have evolved over the years."15 It expressly took issue with the narrowing of the "primary purpose" exception as being “inconsistent with the plain meaning of the law."16
CBCA Notices
The Change in Bank Control Act requires persons who acquire control of an insured depository institution to provide the relevant federal banking agency with notice of the proposed transaction.17 Current regulations exempt the FDIC from this notice requirement if the acquisition involves a depository institution holding company for which the Federal Reserve Board (FRB) reviews a notice pursuant to 12 U.S.C. § 1817(j).18
The FDIC issued a notice of proposed rulemaking on August 19, 2024, that would eliminate that exemption.19 Its stated rationale for the change was its concern at the growing trend of asset management companies and other institutional investors building stakes subject to the notice requirement, and the potential that these investors could "have an outsized influence over the management or policies of an institution."20 However, on March 3, 2025, the FDIC withdrew the notice of proposed rulemaking, arguing that removing the exemption for firms that were required to submit a notice to the FRB "would have required a wide range of bank investors to file duplicative notices with both the FDIC and the Federal Reserve System and could have discouraged capital investments in FDIC-supervised banks."
Corporate Governance
On October 3, 2023, the FDIC approved a notice of proposed rulemaking which would have imposed sweeping and significant guidelines on corporate governance and risk management for covered institutions with consolidated assets of $10 billion or more.21 The rulemaking also aimed to establish mandatory guidelines for the boards of directors of covered institutions "regarding their obligations, compositions, duties, and committee structure to set expectations for corporate governance."22 Furthermore, it would have "expected a covered institution to have and adhere to a risk management program for managing and controlling the covered institution’s risk taking," including the creation of "front line units, an independent risk management unit, and an internal audit unit."23
In its Federal Register notice rescinding the proposal, the new FDIC Board wrote that it "would have created a number of overly prescriptive and process-oriented expectations rather than focusing on core safety and soundness risks. In addition, the proposed rule would have conflated the roles of management and the board of directors, created unworkable expectations, and, in certain areas, would have conflicted with applicable state law."24 The FDIC Board did not clarify either in its press release, financial institution letter, or Federal Register notice what the specific "unworkable expectations" or state law conflicts were.
Incentive-Based Compensation Arrangements
On May 6, 2024, the FDIC, joined by the Office of the Comptroller of the Currency (OCC), the Federal Housing Finance Agency (FHFA), and the National Credit Union Administration (NCUA), approved a notice of proposed rulemaking which sought to implement Section 956 of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act").25 This proposal would have required covered institutions to adhere to certain risk management principles and would have applied a number of other specific requirements based on the average total consolidated assets of the given covered institution.26
This 2024 proposal was preceded by proposals in 2011 and 2016, which were jointly published by the FDIC, OCC, FHFA, NCUA, as well as the Board of Governors of the Federal Reserve System (Federal Reserve Board) and the Securities and Exchange Commission (SEC).27 The 2024 proposal largely reintroduces the 2016 proposal while inviting comments on every provision and offering alternative provisions.28
The Federal Reserve Board and the SEC helped to develop the 2016 proposal, but neither agency joined the 2016 proposal, although the SEC had implementation of Section 956 of the Dodd-Frank Act on its agenda.29 The FDIC agreed to publish the proposal in the Federal Register, provided all six agencies required to issue the rule agreed to the proposal. However, due to a lack of unanimity, the FDIC never published it.30 On March 3, the FDIC rescinded its grant of authority for the proposal’s publication, though it did not explain any of its issues with it in either the accompanying press release or financial institution letter.31
Delayed Compliance Dates for Certain Provisions of the Sign and Advertising Rule
Finally, the FDIC Board has extended the compliance date for certain provisions in its Sign and Advertising Rule.32 The final rule, initially adopted on December 20, 2023, was meant "to modernize the rules governing use of the official FDIC signs and advertising statements. It also aimed to clarify the FDIC's regulations regarding false advertising, misrepresentations of deposit insurance coverage, and misuse of the FDIC's name or logo."33 Importantly, Sections 328.5 and 328.4 require that IDIs display the FDIC's official digital sign on certain pages and screens on its "digital deposit-taking channels." Not to mention, the sign must also be visible on the home page or screen and each transaction page or screen on its ATMs "or like devices that receives deposits" for the IDI.34
The original compliance date for all provisions of the Signs and Advertising Rule was April 1, 2025.35 However, on October 17, 2024, the compliance date for Subpart A of the rule — which includes the provisions for displaying the FDIC’s official digital sign — was extended to May 1, 2025. This change was made under the Biden administration "based upon feedback from banks and other banking industry participants."36
Similarly, the FDIC Board extended the compliance date for Sections 328.4 and 328.5 to March 1, 2026, but did not extend the compliance date for the rest of Subpart A.37 In its Federal Register notice, the FDIC Board clarified that it would use the time to "review the feedback received regarding implementation issues and potential customer confusion that may result from requirements related to the display of the digital sign."38 It did not, however, clarify these issues and potential customer confusion in its press release, financial institution letter, or Federal Register notice. After its review, the FDIC Board plans to “propose changes to the regulation to address implementation concerns and potential sources of confusion."39
Takeaways
Notably, the FDIC has not withdrawn its proposed rule on recordkeeping for custodial accounts. Nonetheless, the FDIC's actions above mark a clear shift in rulemaking priorities and, in part, reflect a return to long-standing policies and frameworks. We will continue to monitor future developments, including any re-proposals, on these issues.
1 Press Release, FDIC Board of Directors Approves Proposal to Rescind 2024 Bank Merger Policy Statement, Federal Deposit Insurance Corporation, Mar. 3, 2025, https://www.fdic.gov/news/press-releases/2025/fdic-board-directors-approves-proposal-rescind-2024-bank-merger-policy; 89 Fed. Reg. 79125 (Sep. 27, 2024) (Final Statement of Policy on Bank Merger Transactions).
2 Vice Chairman Travis Hill, Proposed Statement of Policy on Bank Merger Transactions, Mar. 21, 2024 https://www.fdic.gov/news/speeches/2024/spmar2124c.html#footnote3_aRnAvqHC28wv1dfll0shigZLc-umXgiEaVTFs6hm6Q_qy2fVARp36MJ.
3 See 89 Fed. Reg. 29222, 240 (Apr. 19, 2024).
4 89 Fed. Reg. 29222, 242 (Apr. 19, 2024).
5 FDIC, Statement of Policy on Bank Merger Transactions at 5, Mar. 3, 2025, https://www.fdic.gov/news/press-releases/2025/fdic-board-directors-approves-proposal-rescind-2024-bank-merger-policy.
6 Press Release: FDIC Board of Directors Withdraws Four Outstanding Proposed Rules, FDIC (Mar. 3, 2025), https://www.fdic.gov/news/press-releases/2025/fdic-board-directors-withdraws-four-outstanding-proposed-rules.
7 Press Release: FDIC Board Approves Proposed Rule to Revise Brokered Deposit Regulations, FDIC (July 30, 2024), https://www.fdic.gov/news/press-releases/2024/fdic-board-approves-proposed-rule-revise-brokered-deposit-regulations.
8 89 Fed. Reg. 67002 (Aug. 19, 2024).
9 Notice of Proposed Rulemaking for Guidelines on Corporate Governance and Risk Management for Covered Institutions of $10 Billion or More, FDIC (Oct. 3, 2023), https://www.fdic.gov/news/speeches/2023/spoct0323.html.
10 Incentive-Based Compensation Arrangements, FDIC (May 6, 2024), https://www.fdic.gov/news/financial-institution-letters/2024/incentive-based-compensation-arrangements.
11 Fed. Dep. Ins. Corp., Withdrawal of Proposed Rules at 3 (Mar. 3, 2025), https://www.fdic.gov/board/federal-register-notice-withdrawal-proposed-rules-march-3-2025
12 FDIC Withdraws Proposed Rules Related to Brokered Deposits, Corporate Governance, the Change in Bank Control Act, and Incentive-Based Compensation Arrangements, FDIC (Mar. 3, 2025), https://www.fdic.gov/news/financial-institution-letters/2025/fdic-withdraws-proposed-rules-related-brokered-deposits.
13 Brokered Deposits Restrictions, 89 Fed. Reg. 68244, 68251 (proposed Aug. 23, 2024) (to be codified at 12 C.F.R. pts. 303, 337).
14 Id.
15 Fed. Dep. Ins. Corp., Notice of Withdrawal of Proposed Rules at 2 (Mar. 3, 2025), https://www.fdic.gov/board/federal-register-notice-withdrawal-proposed-rules-march-3-2025.
16 Id.
17 12 U.S.C. § 1817(j).
18 12 C.F.R. 303.84(a)(8).
19 89 Fed. Reg. 67002 (Aug. 19, 2024).
20 89 Fed. Reg. 67002, 004.
21 Supra n.9.
22 Guidelines Establishing Standards for Corporate Governance and Risk Management for Covered Institutions, 88 Fed. Reg. 70391, 70394 (proposed Oct. 11, 2013) (to be codified at 12 C.F.R. pts. 308, 364).
23 89 Fed. Reg. at 70397.
24 Supra n.11 at 2-3.
25 Supra n.10.
26 Off. of the Comptroller of the Currency, Fed. Dep. Ins. Corp., Fed. Hous. Fin. Agency, Nat'l Credit Union Admin., Incentive-Based Compensation Arrangements at 14-16 (May 6, 2024), https://www.fdic.gov/sites/default/files/2024-05/2024-05-03-fed-reg-incentive-based-compensation-agreements.pdf.
27 Id. at 10.
28 Id. at 44.
29 Id. at 45.
30 Supra n.12.
31 See id.
32 Press Release: FDIC Board of Directors Approves Delay of Compliance Date For Certain Provisions in Sign and Advertising Rule, FDIC (Mar. 3, 2025), https://www.fdic.gov/news/press-releases/2025/fdic-board-directors-approves-delay-compliance-date-certain-provisions.
33 Press Release: FDIC Finalizes Rule to Modernize Official Signs and Advertising Statement Requirements for Insured Depository Institutions (Dec. 20, 2023), https://www.fdic.gov/news/press-releases/2023/pr23110.html.
34 FDIC Official Signs and Advertising Requirements, 89 Fed. Reg. 3504, 3529 (Jan. 18, 2024).
35 89 Fed. Reg. 3504.
36 Press Release: FDIC Extends Compliance Date for Subpart A of the FDIC Official Signs and Advertising Requirements, False Advertising, Misrepresentation of Insured Status, and Misuse of the FDIC's Name or Logo, FDIC (Oct. 17, 2024), https://www.fdic.gov/news/press-releases/2024/fdic-extends-compliance-date-subpart-fdic-official-signs-and-advertising.
37 Fed. Dep. Ins. Corp., FDIC Official Signs and Advertising Requirements at 1 (Mar. 3, 2025), https://www.fdic.gov/board/federal-register-notice-delay-compliance-date-digital-sign-requirements-under-part-328.
38 Id.
39 Id.
