Fed Offers More Certainty Over Investors’ Control of Banks (1)

The Federal Reserve is seeking to formalize its process for determining whether investors have controlling stakes in lenders, which can result in firms becoming bank holding companies that are subject to tough rules.

At an April 23 meeting, the regulator voted to propose new language that’s meant to clarify what it means to have a dominant stake in a lender.

Key Details

• The Fed has long used a case-by-case approach to answer questions of control. The proposed rule would mostly codify the agency’s historic practices, which Chairman Jerome Powell said represent an “accumulation of complex precedents that can be difficult ...