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Federal Reserve seeks comment to modernize mutual bank regulations

The proposal would update outdated 1993 rules and clarify what counts as regulatory capital, with comments due 60 days after publication in the Federal Register.

Reported · Written up by our desk · Economy

The Federal Reserve Board has requested public comment on a proposal aimed at modernizing regulations for mutual banking organizations, institutions owned by depositors rather than shareholders, according to the Federal Reserve.

The Fed said mutual banks make up the majority of the sector, with more than 90 percent having less than $3 billion in total assets. The Board also said it assumed supervisory and regulatory authority for mutual banks from the Office of Thrift Supervision in 2011, while the core rules were first established in 1993 and have not been updated since.

The proposal is intended to reduce what the Fed described as overly burdensome and complex requirements by updating the regulatory framework. In particular, it would clarify which instruments count as regulatory capital and reduce certain procedural burdens, among other changes.

Federal Reserve Vice Chair for Supervision Michelle W. Bowman said the action is another step in modernizing the bank regulatory framework and would allow mutual banks to keep growing while preserving their depositor-owned structure. Comments are due 60 days after the proposal is published in the Federal Register.

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