Fed Proposes Rule Update for Mutual Banks

The Federal Reserve Board has proposed an update to rules for mutual banking organizations. These institutions are owned by depositors rather than shareholders, and more than 90 percent have less than $3 billion in total assets. The rules governing these banks were first established in 1993 and have not been updated since.

According to Vice Chair for Supervision Michelle W. Bowman, the continued success of this model contributes to the institutional diversity of the U.S. banking system, which is one of its greatest strengths. She stated that the proposal will allow mutual banks to continue growing and more effectively serve communities across the country.

The proposed update would modernize the framework and increase flexibility for certain mutual banks to raise capital. It would also clarify which instruments count as regulatory capital and reduce procedural burdens, among other comprehensive updates. Comments on the proposal are due 60 days after publication in the Federal Register.