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6.1 Moratorium on New Nonbank Banks and on Change in Control of Nonbank Banks

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6.1 Moratorium on New Nonbank Banks and on Change in Control of Nonbank Banks

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6.1              Moratorium on New Nonbank Banks and on Change in Control of Nonbank Banks.  The Act seeks to fundamentally reexamine the current policy of allowing entities to control a depository institution without being deemed to be a BHC.  The first prong of this approach is to provide that for a 3-year period from the date of enactment of the Act, the FDIC is not permitted to approve any applications for deposit insurance that were received after November 23, 2009, for any industrial bank, credit card bank, or trust bank (each a "nonbank bank") that is directly or indirectly owned or controlled by a "commercial firm."  Moreover, during this period, the FDIC is not permitted to approve a change in control application with respect to a nonbank bank by a commercial firm. [§603]  A company qualifies as a "commercial firm" if activities that are financial in nature (under Section 4(k) of the BHCA) comprise 15 percent or less of the annual gross revenues of the company and its affiliates combined. [§602]  

6.1.1.   Exceptions. The moratorium does not apply to applications with respect to the following situations, assuming the application otherwise would have been granted under applicable federal and state law: (i) nonbank banks determined by their primary federal regulator to be in danger of default; (ii) mergers or acquisitions of commercial firms directly or indirectly controlling the nonbank bank; or (iii) acquisitions of less than 25 percent of the voting shares of a publicly-traded commercial firm by a person or group of persons. [§603]  

            6.1.2.    Study of Whether the Nonbank Bank and Savings Institution Exceptions Should Be Eliminated.  The second prong of the reexamination of exemptions from BHC status is a study by the Comptroller General of the adequacy of the federal regulatory framework applicable to nonbank banks, savings associations, and credit unions and the potential consequences of subjecting these institutions to the requirements of the BHC Act.

The Comptroller General must report to Congress within 18 months of enactment of the Act with respect to whether exceptions afforded to nonbank banks, savings associations and credit unions from the BHC Act serve to weaken the safety and soundness of these institutions or the financial system generally.