The partial federal government shutdown could affect the timing of processing of certain new merger and acquisition applications by the Board of Governors of the Federal Reserve System (the “Board”).
Pursuant to special procedures outlined in a December 2018 notice, the Office of the Federal Register is not publishing documents during the partial government shutdown except where necessary to safeguard human life, protect property, or provide other emergency services consistent with the performance of functions and services exempted under the Antideficiency Act. Exempt functions and services include activities related to the supervision of the stock markets and commodities and futures exchanges, but not other normal and routine activities of the federal banking regulators.
According to remarks of the Board’s general counsel Mark Van Der Weide last week at the American Bar Association’s Banking Law Committee Annual Meeting, the Board’s general inability to publish notices in the Federal Register could delay action on certain applications, including bank holding company and savings and loan holding company formations, mergers, and acquisitions. Under the Board’s Regulation Y and Regulation LL, upon receiving an application under section 3 of the Bank Holding Company Act or section 10(e) of the Home Owners’ Loan Act, the Board is to promptly publish notice of the proposal in the Federal Register in order to start the 30-day public comment period on the proposal, after which the Board may approve the application. The regulations allow the Board to waive the notice requirement only where “an emergency exists requiring expeditious action on the proposal, or if the Board finds that immediate action is necessary to prevent the probable failure of an insured depository institution.”
While the Board’s processing of applications filed since the shutdown commenced and for which no Federal Register notice has been published could be affected, the Board remains able to act on applications for which notice has already been published in the Federal Register and the 30-day comment period has ended.
The shutdown may or may not affect processing of other types of holding company and bank applications, as follows:
- Change in Bank Control Act Notices to Board. Notices to the Board under the Change in Bank Control Act generally require Federal Register publication, but under Regulation Y and Regulation LL, the Board may waive Federal Register publication “if the Board determines that such action is appropriate.” The Board’s delegation rules do not expressly delegate to Board staff the authority to approve such waivers.
- Change in Bank Control Act Notices to OCC and FDIC. In contrast, Change in Bank Control Act notices submitted to the Office of the Comptroller of the Currency (OCC) or Federal Deposit Insurance Corporation (FDIC) do not require Federal Register publication under those agencies’ regulations.
- Other Applications. Applications for deposit insurance, bank charters, branching, or mergers of insured depository institutions under the Bank Merger Act do not require Federal Register publication under any of the federal banking agencies’ regulations.
The federal banking agencies have not published any notices in the Federal Register since December 28, 2018.