The Federal Reserve Board is seeking public feedback on a proposal to modernize rules for mutual banks, institutions that are owned by depositors rather than shareholders.
The rules governing mutual banks were first established in 1993 but they have not been updated since. Over time, they have proven to be overly burdensome and complex, according to Fed officials.
“Today’s proposal is another important step in our work to modernize the bank regulatory framework by updating mutual bank regulations for the first time in 30 years. The continued success of this model contributes to the institutional diversity of the U.S. banking system, which is one of the greatest strengths of our financial system,” The Fed’s Vice Chair for Supervision Michelle Bowman said. “This proposal will allow mutual banks to continue to grow and more effectively serve communities across the country, while preserving their unique depositor-owned structure.”
The proposal is focused on modernizing the framework and increasing flexibility for certain mutual banks to raise capital. More specifically, the proposed changes would clarify which instruments count as regulatory capital and reduce procedural burdens, among other comprehensive updates.
Comments on the proposal are due 60 days after they are published in the Federal Register.