Woodkirk Stone
In a December 9 CFPB blog post, the CFPB said that the FDIC Board has promulgated a Request for Information (RFI) regarding a review of the Bank Merger Act criteria for the ” approval of bank mergers subject to the jurisdiction of the FDIC. Rohit Chopra, the chief of the CFPB and, because of this position, a member of the board of the FDIC, wrote in part the following:
“As government agencies rethink their approach to tackling consolidation and anti-competitive practices, the FDIC board has voted to initiate a review of the agency’s policies on bank mergers and invites the public to intervene. We will accept comments for 60 days from posting. in the federal register “.
The post was unusual because it was not from the FDIC and, in fact, the FDIC indicated in its own post that the RFI had not been approved for release by the FDIC. On December 9, the same day the blog post was posted on the CFPB website, the FDIC denied the validity of the alleged action, stating the following:
“Earlier today, the Consumer Financial Protection Bureau (CFPB) posted on its website a document, allegedly approved by the FDIC, requesting comment on bank mergers. No such document has been approved by the FDIC.
The FDIC has long standing internal policies and procedures for the circulation and conduct of votes by its board of directors, and for the publication of documents for publication in the Federal Register. In this case, there was no valid Council vote, and no request for information and comment was approved by the agency for publication in the Federal Register.
The FDIC has a proud history of 88 years of board members working together in a collegial fashion. This story has spanned many presidential administrations and countless philosophical differences on substantive issues among Council members over the years. Despite actions taken today, the FDIC expects this centuries-old tradition of collegiality and courtesy to continue. “
For your information, the FDIC Board of Directors currently has four members: FDIC President Jelena McWilliams, Chopra, Former FDIC President Martin Gruenberg and OCC Acting Controller Michael Hsu . The fifth position on the Board of Directors is currently vacant.
How we got here is not clear. On December 14, Chopra released a statement ahead of the December public meeting of the FDIC board of directors, outlining from his perspective the events that led to this schism. In a December 16 opinion piece in the the Wall Street newspaper, McWilliams responded to Chopra’s statement with his description of what happened. Here’s what they said:
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Chopra |
Mcwilliam |
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At the end of October, Chopra and the other directors sent the draft of RFI to McWilliams. The group said it never received a response from McWilliams based on the FDIC attorney general’s assertion that the FDIC president had a veto over such actions by the board of directors. ‘administration. |
On October 31, Chopra presented the RFI project. McWilliams said the original RFI draft was “filled with omissions, misrepresentations and technical inaccuracies” that showed a lack of understanding of the FDIC merger approval process. However, McWilliams expressed to the other board members his willingness to work with them on a similar document prepared by FDIC staff and would do so on an expedited basis. |
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On November 16, Chopra, Gruenberg, and Hsu wrote a letter requesting the FDIC Executive Secretary to release the original RFI draft to key divisions of the agency for technical and legal review, but the RFI was not released. . Then, on November 18, the group made a direct request to the leaders of these key divisions, but received no feedback. |
On November 16, as she was about to board a nine-hour flight, McWilliams told Hsu that a new staff-drafted RFI document would be available to the FDIC board of directors of. here December 6. Seventy-five minutes later, the rest of the board instructed McWilliams staff to revise the original RFI draft rather than writing a new one. |
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On November 26, Chopra requested a vote to publish the original RFI with a closing date of December 6. |
On November 26, Chopra sent an email to the FDIC board requesting a vote on the original RFI rather than asking the FDIC executive secretary for a board vote. The FDIC General Counsel immediately informed the Board of Directors that any vote conducted in this manner was not a valid action by the FDIC Board of Directors. |
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On December 3 and 6, Chopra, Gruenberg and Hsu voted on the original RFI draft and posted it on the CFPB website on December 9. |
On December 6, FDIC staff produced the new staff-drafted RFI. On December 9, the FDIC released a statement that the original RFI posted on the CFPB website that day was not legitimate. |
Law360 reported obtaining a copy of an undated eight-page legal memorandum purportedly drafted by the CFPB, concluding that the FDIC board could make majority decisions without the approval of the FDIC president. The CFPB maintains that “to prevent the majority of the FDIC [B]the prohibition on making decisions for the company would be against the law, providing [FDIC Chairman] ultra vires authority to control the FDIC â€. At the time of writing this alert, the memorandum has not been made public.
Although certain provisions of the FDIC statute give the board the power to act by majority consent outside of a meeting, other considerations must be analyzed, such as how certain provisions of the statute are read in the context of a meeting. ‘other provisions, functions, and policies and procedures of the FDIC board of directors that have been followed for many years. As a result, it is not clear whether the FDIC and Chopra, Gruenberg and Hsu can resolve these differences and whether legal action will ensue to determine who is right and who is wrong.