Lawmakers have raised concerns over recent actions by the Federal Deposit Insurance Corporation (FDIC) regarding changes to asset manager passivity agreements. Patrick McHenry, Chairman of the House Financial Services Committee, along with Andy Barr and Bill Huizenga, chairmen of relevant subcommittees, sent a letter to FDIC Chair Martin Gruenberg. They are demanding a briefing and documents about these changes and the Notice of Proposed Rulemaking (NPRM) related to the Change in Bank Control Act (CBCA).
The NPRM's comment period has been extended until November 18, 2024. However, the FDIC is requiring two asset management firms to enter into new passivity agreements by October 31, 2024. The lawmakers argue that this move may violate legal processes since it occurs before finalizing rulemaking and without a board vote.
The letter outlines: “On July 30, 2024, the Board of the Federal Deposit Insurance Corporation (FDIC) voted on partisan lines to approve Director Chopra’s proposal to issue a Notice of Proposed Rulemaking (NPRM) to amend the FDIC’s regulations implementing the Change in Bank Control Act (CBCA)."
Further expressing their concern: “Despite the extended comment period, it is our understanding the FDIC is requiring asset management firms to enter into new passivity agreements with the agency no later than October 31, 2024 or potentially be found in noncompliance.”
They emphasize interagency coordination as crucial: “Director Hsu did not support the first CBCA amendment proposal submitted by Director Chopra on April 25, 2024 stating ‘[the FDIC should not be] creating more process and opportunities for turf battles or fragmentations.’”
The letter requests documentation provided to asset management firms about proposed amendments and seeks justification for enforcing passivity agreements by October 31, 2024. Lawmakers request these documents and a briefing by November 8, 2024.