WASHINGTON - The Federal Reserve Board on Wednesday corrected a 33-year error in its merger application rules.
From now on, state-chartered banks that are members of the Fed must publish at least three newspaper notices before a merger can take place.
For 32 years the Fed had required these banks to publish two notices in general circulation papers.
Reversing Course
Last September, the agency cut that requirement to one notice, in order to reduce banks' so-called regulatory burden.
But after reviewing the Bank Merger Act, Fed officials decided that the wording implies regulators must require at least three newspaper publication notices for mergers of state member banks.
The law says notices must be published "at appropriate intervals" during a period of at least 30 days.
Subtle Point
One interval would imply the publication of two notices, the Fed determined, and therefore the plural "intervals" would imply at least three.
The Comptroller's office also requires three public notices. The Office of Thrift Supervision requires five. The Federal Deposit Insurance Corp. currently requires six notices, but has proposed cutting that to five.
The Fed made the change despite receiving no complaints about its one-notice rule.
One board member, Susan M. Phillips, voted against the measure, citing the need to keep the "regulatory burden" low.
Other Notices Reduced
The new requirement will take effect two weeks after publication in the Federal Register.
The Fed last September also reduced the number of notices needed for a host of applications, including membership in the Fed system, new branches, new bank holding companies, and holding company acquisitions.
These reductions remain in effect.
