WASHINGTON -- The Federal Reserve Board is promising faster service under new regulatory approval deadlines required by Congress.
The central bank last week shortened the time it takes to set up a bank holding company, gain approval for new activities, and clear antitrust hurdles.
The Reigle Community Development and Regulatory Approval Act of 1994 required the Fed to amend its rules immediately.
The rules issued late Thursday will apply retroactively to all applications filed since Sept. 24. But the public has until Dec. 5 to recommend changes to these interim rules. The board will review the comments and then issue final rules, a Fed staffer said.
Gilbert T. Schwartz, a partner with the Skadden, Arps, Slate, Meagher & Flom law firm here, said the central bank did just what the law required to reduce regulatory burden and nothing more.
"Bankers should not expect this to be nirvana," Mr. Schwartz said. He explained the Fed left itself a huge loophole. The agency can extend any of the expedited waiting periods by asking for more information, Mr. Schwartz said.
"They have left themselves a number of outs," he said.
Also, the rules don't address major acquisitions by large banks, he said. Instead, they are limited to acquisitions of nonbanks, and only then if they cost less than $15 million.
"The Fed clearly says that for expansion, all bets are off," Mr. Schwartz said.
Still, the Fed is speeding up some parts of the regulatory approval process.
For example, an application to engage in a nonbanking business used to sit at the nearest Federal Reserve bank for 28 days before the agency even considered it. Now, a Fed bank can act on the application immediately, and in most cases it must make a decision within 30 days.
The new rules also cut in half, to 15 days, the time the public has to comment on applications banks file to engage in previously-approved nonbank activities, such as brokerage work.
The revised regulations also contain an expedited procedure for notifying the public before a bank purchases less than $15 million in stock of a securities firm or another nonbank financial establishment.
Banks using this option can publish their notice in a local newspaper, rather than in the Federal Register.
Another set of changes affect the formation of holding companies. Now, a bank can create a holding company 30 days after notifying the Fed as long as the central bank doesn't object, the holding company is not acquiring another institution, the share-holders remain the same, and all capital-adequacy standards are maintained.
The Fed also shortened the amount of time applicants must give the Justice Department to object to proposed acquisitions on antitrust grounds. Now banks will wait 15 days, rather than 30 days.
A Fed staffer said the central bank is working with Justice to reduce this delay even further.
Finally, the Fed eliminated its role in certain thrift acquisitions. Under the prior system, an institution had to seek approval from its primary regulator as well as the central bank. Now, thrifts will only have to get clearance from the primary regulator.
