In a welcome move, two recent actions by the Federal Reserve, OCC and FDIC (the Banking Agencies) recognize the increasing role of fund complexes and passive investing.  The Banking Agencies have released a statement under the Federal Reserve’s Regulation O which acknowledges the reality that equity mutual funds may sometimes go over 10% of the shares of a banking organization without triggering limitations on loans to insiders.  In addition, the Federal Reserve has recently made public a general counsel’s letter that provides conditions for when a fund complex may go over 10% equity ownership in a banking organization without triggering the Change in Bank Control Act (CIBC Act).

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