Federal Reserve Proposes Comprehensive Regulation for Determining “Control”: Federal Reserve Proposes Revision of Its Control Rules

Sullivan & Cromwell LLP - April 24, 2019
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On April 23, 2019, the Board of Governors of the Federal Reserve System (the “Federal Reserve”) approved a much-anticipated notice of proposed rulemaking (the “NPR”) to revise its “control” rules under the Bank Holding Company Act of 1956.  Historically, the formal codification of the control rules has been limited, with much of the jurisprudence on control arising from the Federal Reserve’s case-by-case interpretations, some of which have not been published.  The NPR is intended to “provide substantial additional transparency on the types of relationships that the Board would view as supporting a determination that one company controls another company” by codifying, and in some cases modifying, the Federal Reserve’s rebuttable presumptions of control and noncontrol in a formal regulation.  The NPR provides for a 60-day period during which the Federal Reserve will accept comments on nearly every aspect of the proposed framework.