WASHINGTON, D.C.—Shayna Olesiuk, Director of Banking Policy, issued the following statement on the filing of Better Markets’ Comment Letter to the Federal Deposit Insurance Corporation (FDIC) in response to proposed changes for evaluating bank change in control notices.

“As investment fund managers like BlackRock, Vanguard, and State Street continue to grow, so does their influence and control of banks. Many mutual funds and ETFs are also owned by the same parent company, forming even larger and more powerful—and riskier—fund complexes. The Change in Bank Control Act was initially intended to curb speculative purchases of small banks and address the fraud and insider abuse stemming from these purchases.

“The FDIC has rightly identified concerns about the growth and concentration of outside control of banks, which can be addressed with the proposed changes. First, the influence that fund complexes have over management, business strategies, or policy decisions at banks could lead to excessive risk-taking to enhance profits, investor returns, or stock prices. Second, as fund complexes grow and gain larger voting shares, they have more potential to influence decisions that can affect the broader banking industry and financial stability. And third, these forces can increase the vulnerability of the FDIC’s Deposit Insurance Fund which is a vital backstop when a bank fails.

“To address these risks, the FDIC should participate in the decision-making process for all change in control transactions for the largest FDIC-supervised banks, specifically those above a defined asset size threshold. The FDIC should also work together with the other federal banking regulators to coordinate an interagency approach for handling these transactions.”

The Comment Letter is available here.

###

Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.