Confused about which regulator will enforce consumer compliance at your bank after a merger or acquisition? Well, don’t be. The regulatory agencies issued a statement clarifying the measure to be used in determining an institution’s asset size.
In mergers or acquisitions that do not involve institutions already classified as large institutions, regulators will evaluate the combined assets of the institutions for the four completed quarters prior to the merger.
“The statement explains that a common measure of the asset size of an insured depository institution is the total assets reported in the quarterly Reports of Condition and Income (“Call Reports”), which banks, thrifts, and insured credit unions are required to file,” the CFPB said. “Accordingly, after an initial asset size determination based on June 30, 2011 data, an institution generally will not be reclassified unless four consecutive quarterly reports indicate that a change in supervisor is warranted.”
As has been previously reported, under Dodd-Frank, the Consumer Financial Protection Bureau will examine and enforce compliance laws for institutions with more than $10 billion in total assets. Smaller institutions will be supervised by the Board of Governors of the Federal Reserve System, the FDIC, NCUA, and OCC as applicable.
A company can also grow or shrink such that it would come under or leave CFPB supervision. The change would not be immediate but would depend on four consecutive quarters above or below the designated asset size.
A copy of the statement can be found here.