FOR IMMEDIATE RELEASE
August 31, 2022
Official Legal Opinion Supports Majority Rule on the FDIC Board
The Department of Justice upheld the rule of law in its recently published opinion on the ability of the chair of the Federal Deposit Insurance Corporation to block votes sought by the majority of its board.
“This opinion vindicates principles of democracy and good governance, such as majority-rule and the rule of law,” said Renita Marcellin, senior banking policy analyst at AFR. “Congress vested the board, not one individual, with the authority to carry out the mission of the FDIC.”
The Office of Legal Counsel at the DOJ yesterday confirmed that the majority of the board was justified last year when it sought a vote on a proposal to seek public comment on bank merger guidelines. Then-chair Jelena McWilliams tried to abuse her authority by preventing the matter from being on the board meeting agenda.
With its vote, the majority of the board took action to support the process of revising bank merger guidelines followed by the DOJ and the federal banking regulators. If done properly, this process will curtail the long-standing practice of rubber-stamping bank mergers. The unprecedented consolidation in the industry has harmed consumers and small businesses, in the form of bank deserts and decreased lending to small businesses, while profiting bankers.
AFR and other public interest groups have also called for a moratorium on bank mergers until the outdated guidelines are strengthened.