WBK Industry News - Federal Regulatory Developments

Agencies Issue Final Rule to Increase Management Interlocks Rule Thresholds

The Federal Reserve Board, FDIC, and OCC (collectively, the Agencies) recently issued a final rule, effective October 10, 2019, which increased both thresholds in the major assets prohibition for management interlocks under the regulations implementing the Depository Institution Management Interlocks Act (DIMIA).  The DIMIA major assets prohibition prevents a management official of a depository organization with over $2.5 billion total assets (or any of its affiliates) from simultaneously serving as a management official of an unaffiliated depository organization with over $1.5 billion total assets (or any of its affiliates), regardless of where the organizations are located.  These thresholds were established in 1996.

Under the final rule, and consistent with the proposed rule, both the $2.5 billion and the $1.5 billion thresholds have increased to $10 billion.  DIMIA allows for such adjustments by the Agencies through regulation to respond to inflation or market changes.  The Agencies explained that the purpose of this increase is to accurately reflect the growth and consolidation among U.S. depository organizations since 1996 and, therefore, further DIMIA’s goals of addressing anticompetitive concerns by prohibiting interlocks between larger depository organizations while exempting smaller organizations.  The $10 billion figure is also consistent with other ways in which Congress and the Agencies have distinguished between larger and smaller depository institutions.  The Agencies further indicated that future adjustments responding to inflation will be made by publishing in the Federal Register a direct final rule without notice and comment, though changes for reasons other than inflation would be accomplished through notice and comment rulemaking.

For additional information regarding this change, see WBK’s article describing the proposed rule.