Fed proposes modernizing rules for mutuals

The Federal Reserve proposed modernizing rules for mutual banking organizations, saying the rules governing these banks are overly burdensome and have not been updated since they were established in 1993.

Details: The Fed’s proposal would:

• Facilitate mutuals’ access to capital by clarifying that mutual capital instruments may qualify as regulatory capital.

• Update the rule governing the operations of thrift mutuals for the first time since the board introduced the rule in 2011.

• Make it easier for thrifts to waive dividends, allowing mutuals to more effectively raise capital.

• Remove unnecessary restrictions and requirements associated with conversions from mutual to stock form.

• Allow charter flexibility for subsidiary holding companies of thrift mutuals.

ICBA Support for Mutuals:

• ICBA and other groups last fall encouraged clearer capital rules for mutual banks ahead of meetings with FDIC Chairman Travis Hill and OCC staff.

• ICBA believes regulatory agencies should recognize the benefits of growing mutual banks and provide resources to aid in their formation, particularly in areas that are underserved.

• An Independent Banker article highlights how ICBA advocates to ensure mutual institutions are equally represented and accorded parity in all respects with other charter forms.