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Tuesday, November 27, 2012

Agencies Issue Statement on Troubled-Bank Conversion Restrictions

The federal banking agencies—in conjunction with the Conference of State Bank Supervisors—issued an interagency statement on the Dodd-Frank Act’s restrictions on troubled-bank charter conversions. The statement describes the general prohibition on charter conversions by certain insured depository institutions.

“This prohibition occurs when the institution is subject to a cease-and-desist order or other formal enforcement action issued by, or a memorandum of understanding entered into with, its current federal banking agency or state bank supervisor concerning a significant supervisory matter,” the agencies said.

The statement also details the circumstances under which an institution may be eligible for an exception to the conversion prohibition.

The agencies, however, expect that such exceptions will be rare and generally will occur only when an institution has already largely addressed the matters in the enforcement action or when circumstances have changed substantially.

Read the interagency statement.

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