HR6555-119

What This Bill Does

The Enhancing Bank Resolution Participation Act requires the Comptroller of the Currency, Federal Deposit Insurance Corporation, and Federal Reserve Board to study tools that could expand who can bid for failed banks. The study focuses on OCC shelf charters, including conditional or preliminary approvals since January 1, 2008, and FDIC's modified bidder qualification process. The House-reported version adds review of how the Bank Holding Company Act and Home Owners' Loan Act apply to shelf charter proposals.

The agencies must examine whether shelf charters or modified bidder qualification processes were considered or used in 2023 FDIC receiverships and whether greater use could expand the acquisition participant pool, increase competition and diversity in outcomes, protect the Deposit Insurance Fund, strengthen financial stability, and reduce the need for emergency determinations by the Treasury Secretary. They must also assess financial-stability, safety-and-soundness, product-availability, and private-equity ownership effects. A report to congressional banking committees is due within one year and must include findings plus statutory or regulatory barriers and recommendations.

Who Benefits and How

Potential failed-bank bidders benefit because the study may identify ways for more participants to qualify before receiverships. Private equity bank investors benefit if shelf charter or modified bidder processes become clearer after the study. Community banks benefit if failed-bank sales become more competitive and less dependent on the largest incumbents. Deposit Insurance Fund stakeholders benefit if more competitive bidding reduces resolution losses. Congressional banking committees benefit from a record of barriers and recommendations for expanding bidder participation.

Who Bears the Burden and How

OCC charter staff must analyze shelf-charter approvals and legal barriers. FDIC resolution staff must evaluate modified bidder qualification and 2023 receivership experience. Federal Reserve supervisory staff must assess holding-company law and ownership implications. Large incumbent acquirers may face more competition for failed-bank assets if the study leads to wider bidder eligibility. Private equity firms face scrutiny over the benefits and risks of owning banks through these processes.

Key Provisions

• Requires a joint OCC, FDIC, and Federal Reserve study of shelf charters and modified bidder qualification.
• Reviews shelf-charter approvals since January 1, 2008.
• Reviews FDIC's modified bidder qualification process.
• Examines whether these tools were considered or used in 2023 FDIC receiverships.
• Requires analysis of Bank Holding Company Act and Home Owners' Loan Act barriers.
• Requires assessment of competition, Deposit Insurance Fund, financial-stability, safety-and-soundness, product-availability, and private-equity ownership effects.
• Requires a report to congressional banking committees within one year.