Board of Governors of the Federal Reserve System

Good afternoon. I'd like to welcome our guests here at the Federal Reserve and our online viewers.

Today we will consider seeking public comment on a proposal to substantially increase the transparency around how the Board determines whether a company controls a bank and thus becomes subject to Federal Reserve supervision and regulation. The Board's framework for determining what constitutes control has developed over many years through an accumulation of complex precedents that can be difficult for the public to understand and apply with confidence.

The proposal before us sensibly lays out publicly the factors and thresholds that the Board would consider to determine if a company has control over a bank. The factors include, among other things, total equity and voting stock investments, director and employee interlocks, and the scope of business relationships between the company and the bank. Our proposal recognizes that different combinations of each factor may result in control of a bank. If a company wishes to make an investment in a bank, but does not want to be in control, the proposal clearly shows the combinations that would and would not trigger control.

This proposal is an important step forward in our ongoing efforts to enhance the Board's transparency and accountability. Providing all stakeholders with clearer rules of the road for control determinations will responsibly reduce regulatory burden. As a result, it will be easier for banks, particularly community banks, to raise capital to support lending and investment.

I look forward to hearing the staff presentations and will now turn to my colleague Vice Chair Quarles.