HR 3914 — Failing Bank Acquisition Fairness Act

(a) Approval of interstate merger transactions authorized (1) In general Beginning on June 1, 1997, the responsible agency may approve a merger transaction under section 1828(c) of this title between insured banks with different home States, without regard to whether such transaction is prohibited under the law of any State. (2) State election to prohibit interstate merger transactions (A) In general Notwithstanding paragraph (1), a merger transaction may not be approved pursuant to paragraph (1) if the transaction involves a bank the home State of which has enacted a law after September 29, 1994, and before June 1, 1997, that— (i) applies equally to all out-of-State banks; and (ii) expressly prohibits merger transactions involving out-of-State banks. (B) No effect on prior approvals of merger transactions A law enacted by a State pursuant to subparagraph (A) shall have no effect on merger transactions that were approved before the effective date of such law. (3) State election to permit early interstate merger transactions (A) In general A merger transaction may be approved pursuant to paragraph (1) before June 1, 1997, if the home State of each bank involved in the transaction has in effect, as of the date of the approval of such transaction, a law that— (i) applies equally to all out-of-State banks; and (ii) expressly permits interstate merger transactions with all out-of-State banks. (B) Certain conditions allowed A host State may impose conditions on a branch within such State of a bank resulting from an interstate merger transaction if— (i) the conditions do not have the effect of discriminating against out-of-State banks, out-of-State bank holding companies, or any subsidiary of such bank or company (other than on the basis of a nationwide reciprocal treatment requirement); (ii) the imposition of the conditions is not preempted by Federal law; and (iii) the conditions do not apply or require performance after May 31, 1997. (4) Interstate merger transactions involving acquisitions of branches (A) In general An interstate merger transaction may involve the acquisition of a branch of an insured bank without the acquisition of the bank only if the law of the State in which the branch is located permits out-of-State banks to acquire a branch of a bank in such State without acquiring the bank. (B) Treatment of branch for purposes of this section In the case of an interstate merger transaction which involves the acquisition of a branch of an insured bank without the acquisition of the bank, the branch shall be treated, for purposes of this section, as an insured bank the home State of which is the State in which the branch is located. (5) Preservation of State age laws (A) In general The responsible agency may not approve an application pursuant to paragraph (1) that would have the effect of permitting an out-of-State bank or out-of-State bank holding company to acquire a bank in a host State that has not been in existence for the minimum period of time, if any, specified in the statutory law of the host State. (B) Special rule for State age laws specifying a period of more than 5 years Notwithstanding subparagraph (A), the responsible agency may approve a merger transaction pursuant to paragraph (1) involving the acquisition of a bank that has been in existence at least 5 years without regard to any longer minimum period of time specified in a statutory law of the host State. (6) Shell banks For purposes of this subsection, a bank that has been chartered solely for the purpose of, and does not open for business prior to, acquiring control of, or acquiring all or substantially all of the assets of, an existing bank or branch shall be deemed to have been in existence for the same period of time as the bank or branch to be acquired. (b) Provisions relating to application and approval process (1) Compliance with State filing requirements (A) In general Any bank which files an application for an interstate merger transaction sh...

(a) Definitions In this section— (1) the term “Council” means the Financial Stability Oversight Council; (2) the term “financial company” means— (A) an insured depository institution; (B) a bank holding company; (C) a savings and loan holding company; (D) a company that controls an insured depository institution; (E) a nonbank financial company supervised by the Board under title I of the Dodd-Frank Wall Street Reform and Consumer Protection Act [12 U.S.C. 5311 et seq.]; and (F) a foreign bank or company that is treated as a bank holding company for purposes of this chapter; and (3) the term “liabilities” means— (A) with respect to a United States financial company— (i) the total risk-weighted assets of the financial company, as determined under the risk-based capital rules applicable to bank holding companies, as adjusted to reflect exposures that are deducted from regulatory capital; less (ii) the total regulatory capital of the financial company under the risk-based capital rules applicable to bank holding companies; (B) with respect to a foreign-based financial company— (i) the total risk-weighted assets of the United States operations of the financial company, as determined under the applicable risk-based capital rules, as adjusted to reflect exposures that are deducted from regulatory capital; less (ii) the total regulatory capital of the United States operations of the financial company, as determined under the applicable risk-based capital rules; and (C) with respect to an insurance company or other nonbank financial company supervised by the Board, such assets of the company as the Board shall specify by rule, in order to provide for consistent and equitable treatment of such companies. (b) Concentration limit Subject to the recommendations by the Council under subsection (e), a financial company may not merge or consolidate with, acquire all or substantially all of the assets of, or otherwise acquire control of, another company, if the total consolidated liabilities of the acquiring financial company upon consummation of the transaction would exceed 10 percent of the aggregate consolidated liabilities of all financial companies at the end of the calendar year preceding the transaction. (c) Exception to concentration limit With the prior written consent of the Board, the concentration limit under subsection (b) shall not apply to an acquisition— (1) of a bank in default or in danger of default; (2) with respect to which assistance is provided by the Federal Deposit Insurance Corporation under section 1823(c) of this title; or (3) that would result only in a de minimis increase in the liabilities of the financial company. (d) Rulemaking and guidance The Board shall issue regulations implementing this section in accordance with the recommendations of the Council under subsection (e), including the definition of terms, as necessary. The Board may issue interpretations or guidance regarding the application of this section to an individual financial company or to financial companies in general. (e) Council study and rulemaking (1) Study and recommendations Not later than 6 months after July 21, 2010, the Council shall— (A) complete a study of the extent to which the concentration limit under this section would affect financial stability, moral hazard in the financial system, the efficiency and competitiveness of United States financial firms and financial markets, and the cost and availability of credit and other financial services to households and businesses in the United States; and (B) make recommendations regarding any modifications to the concentration limit that the Council determines would more effectively implement this section. (2) Rulemaking Not later than 9 months after the date of completion of the study under paragraph (1), and notwithstanding subsections (b) and (d), the Board shall issue final regulations implementing this section, which shall reflect any recommendations by the Council under paragraph (1...