After several years of promising to do so, the Federal Reserve has proposed revisions to the standards at which “control” is considered to be held over a banking organization or that of a bank in another entity.  The Board indicated that the NPR codifies and clarifies 2008 standards.  This it does, but the manner in which “indicia of control” would be defined open numerous avenues for integrating banking and commerce or banking and other financial activities in ways the Federal Reserve in 2016 made clear it then would not countenance.  These new standards would also facilitate proxy contests that could make it easier for private-equity firms or activist investors to force major changes at large and small banking organizations.  Foreign banks would also find it easier to exercise influence over a U.S. banking organization without triggering control under U.S. law that might then subject them to costly safety-and-soundness or resolution requirements.

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