Thrift holding companies, industrial loan companies and other limited-charter financial institutions will be subject to a rule, mandated by Dodd-Frank, that will require parent companies to act as a "source of strength."
"The proposal is likely to require such parents to prove they can inject cash into a struggling bank under their control — and ensure that they can't drain the bank's liquidity if the parent gets into trouble,” writes American Banker’s Joe Adler."
"The FDIC historically has not been very active in supervising ILC parents. That is likely to change," said Sanford "Sandy" Brown at Bracewell & Giuliani.
The OCC says the regulatory agencies are working on a draft of the rule, which technically went into effect last July. Up until now the regulations and expectations regarding parent companies acting as a source of strength have been unclear, writes Adler.
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