According to new guidance issued by the FDIC, if a state bank or its subsidiary engages in an activity that the OCC has determined to be permissible for a national bank or its subsidiary, the state bank must maintain certain documentation of that determination if it does not submit an application or notice to the FDIC under Part 362 of the FDIC’s rules and regulations. The November 19 guidance, released as FDIC Financial Institution Letter FIL-54-2014, explains that such documentation may take the form of a legal opinion from the bank’s counsel, a copy of a relevant statute or OCC regulation, a copy of a relevant OCC circular, bulletin, order, or interpretive letter, or other written documentation satisfactory to the FDIC. According to the guidance, if an activity has been deemed permissible for a national bank but subject to certain conditions or restrictions imposed by the OCC, a state bank generally must abide by the same conditions or restrictions if it wishes to conduct the activity without first obtaining FDIC approval. Documentation that the state bank has satisfied (and continues to satisfy) any such conditions or restrictions should likewise be included in the bank’s files. All such documentation is subject to examination by the FDIC, and the FDIC may require the bank to file an application or notice if the FDIC determines that the activity has not been determined to be permissible for a national bank or if the state bank fails to satisfy the OCC’s conditions or restrictions.
Nutter Notes: Part 362 implements the provisions of the Federal Deposit Insurance Act that restrict and prohibit state banks and their subsidiaries from engaging in activities and making investments that are not permissible for national banks or their subsidiaries. For the purpose of the FDIC’s guidance and Part 362, the term “activities permissible for a national bank” refers to any activity authorized for national banks under any statute including the National Bank Act, and activities recognized as permissible for a national bank in regulations or written interpretations of the OCC. A state bank that wishes to engage in an activity permissible for a national bank, subject to the same conditions or restrictions imposed by the OCC, is not required to file an application or notice with the FDIC. However, a state bank that wishes to engage in an activity that has not been determined by the OCC to be permissible for a national bank must file an application or notice in accordance with the FDIC’s regulations at Part 362 even if the activity is authorized by applicable state law. The guidance notes that some activities are exempt from Part 362 and, as a result, the documentation requirements described in the guidance. For example, Part 362 generally does not cover activities conducted other than as principal, real estate used (or intended to be used) as bank facilities, public welfare investments, or equity investments acquired in connection with debts previously contracted. The guidance reminds banks to ensure that exempt activities are conducted in a safe and sound manner.