America's Mutual Banks Files Comment Letter to FDIC on Insurance of Accounts ‎for De Novo Banks: Questions Reasons for No New Mutuals in Almost a Half ‎Century

WASHINGTON, Feb. 13, 2019 /PRNewswire-PRWeb/ -- America's Mutual Banks (AMB) filed a comment letter with the Federal Deposit Insurance ‎Corporation (FDIC) regarding the deposit insurance application process, particularly as it ‎relates to the formation of de novo mutual banks. ‎

The detailed comment letter welcomed FDIC Chairman McWilliams' initiative in examining ‎the root causes for the decline in de novo insurance of accounts and highlighted the ‎imbalance in the relationship between the FDIC and federal chartering agencies that has ‎halted de novo development since the passage of The FDIC Improvements Act of 1991. ‎Most importantly, the letter decried the absence of FDIC action on any de novo mutual ‎institution for almost half a century. ‎

The letter brings attention to the almost cavalier disregard by the agencies in conforming ‎key requirements to the needs of mutual banks and the FDIC's failure to provide any ‎practical guidance on how a group attempting to form a mutual bank could qualify for ‎FDIC insurance and meet Basel III capital rules. The lack of attention to the special needs ‎of mutual banks is highlighted by the fact that the FDIC's recent issuance of the FDIC ‎handbook for organizers of de novo institutions provides little useful guidance on applying ‎for insurance of accounts for a de novo mutual. ‎

AMB concluded the comment letter by providing nine recommendations to the FDIC. ‎Among them, AMB urged the FDIC and OCC to provide more practical guidance in ‎establishing forms of capital to support a de novo mutual bank and asked the FDIC to take ‎a leadership role in establishing an outreach program to contact various sponsors and ‎affinity groups that would be interested in organizing new mutual banks. Given that mutual ‎form institutions are a historically vital part of the fabric of many ‎communities,‎ AMB also ‎recommended that the FDIC take action and encourage the formation and sponsorship of ‎mutual banks by foundations, community groups, and other charitable ‎organizations to ‎serve inner cities and rural communities which suffer from the lack of banking ‎alternatives. ‎

About America's Mutual Banks
America's Mutual Banks is an association of like-minded mutual banks dedicated to ‎preserving and advancing the mutual banking form. America's Mutual Banks is headquartered ‎at 701 8th Street NW, Suite 700, Washington, D.C. 20001. Please visit ‎http://www.americasmutualbanks.com or contact Douglas Faucette, Locke Lord LLP, at 202-220-‎‎6961 with any questions or requests for additional information on America's Mutual Banks.‎

SOURCE America’s Mutual Banks