At least one member of the Federal Deposit Insurance Corporation (FDIC) board of directors would need to have experience as a state bank supervisor under bicameral legislation introduced by U.S. Sen. Orrin Hatch (R-UT) and U.S. Rep. Frank Lucas (R-OK) on Tuesday.
The FDIC board of directors is required to have representation from at least one director with “state bank supervisory experience” under the Economic Growth and Regulatory Paperwork Reduction Act of 1995. But the bicameral and bipartisan bill, the State Regulatory Representation Clarification Act, would clarify that a least one director must have specific experience as a “state bank supervisor.”
“State bank supervisors understand local credit markets and comprehend the vital role banks play in individual communities,” Hatch said. “With the recent growth in the number of state chartered banks, it is critical a state bank supervisor is on the FDIC board to contribute their unique expertise and viewpoints. Our legislation gives state bank supervisors a seat at the table to ensure that the voices of local communities are heard.”
If enacted, the bill would apply to future FDIC directors and wouldn’t impact the terms of current directors.
“The folks in charge of overseeing our local credit markets and banks should be responsive to the specific needs and challenges of our local communities,” Lucas said. “I’m proud to support this bill because it enhances state regulatory input by ensuring the FDIC board reflects the perspective and experience of state bank supervisors.”
The bill was introduced with support from U.S. Sen. Mazie Hirono (D-HI) and U.S. Rep. Denny Heck (D-WA).
John Ryan, the president and CEO of the Conference of State Bank Supervisors, noted that state regulators charter and oversee 78 percent of all banks across the United States, which gives them perspective on the impact credit and banking services have on local communities.
“In recent years, this requirement has been improperly interpreted,” Ryan said. “The bipartisan, bicameral State Regulatory Representation Clarification Act, which we strongly support, reinforces Congress’ original intent: the FDIC board must include a state bank regulator. Period.”