The Federal Deposit Insurance Corporation (FDIC) has proposed amendments to its regulations under the Change in Bank Control Act (CBCA), which have drawn criticism from the Bank Policy Institute (BPI). The BPI, in a comment letter filed recently, argued that the proposal oversteps the FDIC's statutory authority and adds unnecessary complexity to government reviews of bank investments. The organization urged the FDIC to withdraw the proposal.

Gregg Rozansky, BPI senior vice president and senior associate general counsel, stated: "The FDIC aims to regulate 10% investments by index funds in a number of bank holding companies already subject to Federal Reserve scrutiny, but this proposal is a solution in search of a problem. It’s unclear why the agency sees index funds as a threat justifying an unnecessary regulatory requirement when these investors are motivated to prioritize long-term shareholder value, are unable to sell shares quickly as a means of influence and are already restricted from exercising active control of banks. In fact, the proposal may threaten a stable source of bank equity funding and elevate the voting power of activist investors. The FDIC should avoid unintended consequences and abide by the statute."

Under current law, when Congress enacted the CBCA, it allowed federal banking regulators to assess transactions where an individual intends to acquire at least 10% of voting shares in an insured depository institution (IDI). This includes both conventional IDIs like banks and bank holding companies. Currently, only one federal banking agency is authorized to review such changes.

However, according to BPI's interpretation, the FDIC's new proposal would require its approval for a 10% stake in a Federal Reserve-supervised bank holding company that owns an FDIC-supervised state non-member bank. This change could result in investors needing consent from both the FDIC and Federal Reserve for certain acquisitions.

The BPI outlined several reasons for opposing this proposal:

1. The action exceeds statutory authority since only one federal banking agency is granted authority under CBCA.

2. It contradicts existing statutes' text and structure while deviating from longstanding interagency practices.

3. No practical benefits have been articulated by extending CBCA jurisdiction further than intended.

In conclusion, BPI believes that this proposal could create confusion within equity markets due to redundant requirements and inconsistent applications across agencies. They argue that on matters concerning changes in bank control, each agency should adhere strictly to their designated roles as per existing statutes.

The Bank Policy Institute represents various banks operating within America including universal banks along with regional ones plus major foreign entities conducting business stateside; they focus on producing research alongside analysis regarding regulatory issues impacting financial services industry stakeholders like cybersecurity or fraud prevention measures among others.