To encourage the participation of private investors such as private equity firms in the acquisition of failed banks, the FDIC on March 19 approved the rescission of its 2009 Statement of Policy on the Qualifications for Failed Bank Acquisitions.[1] The rescission of the Policy Statement follows other recent actions by the FDIC to expand nonbank participation in failed bank auctions, and was previewed in a March 11 speech from FDIC Chairman Travis Hill. In the same speech, Chairman Hill also suggested that the FDIC and the other banking agencies are exploring the possibility of a streamlined emergency process for the approval of “shelf charters” that could create a more realistic pathway for nonbank investors to acquire a failed bank’s deposit franchise on short notice.
Policy Statement
The Policy Statement was adopted following the May 2009 failure of the Florida-based thrift BankUnited, FSB, and its sale by the FDIC as receiver to a newly chartered federal savings bank owned by a group of private equity investors. The Policy Statement prospectively imposed terms and conditions on covered “private investors” in a company seeking to acquire any part of the deposit franchise of a failed bank.[2] These terms and conditions included a prohibition on private investors utilizing “complex and functionally opaque ownership structures,” a requirement to disclose to the FDIC information relating to the private investor’s chain of ownership and affiliates, a requirement that private investors maintain their investment for a three-year minimum term, and a requirement that the investors undertake in certain circumstances to pledge the stock acquired in one depository institution to the FDIC as a form of “cross-support” in the event of the failure of any other depository institution under common ownership by the investors. The Policy Statement also imposed conditions on the acquiring institution in which a private investor invested, most notably a requirement to maintain a ratio of Tier 1 common equity to total assets of at least 10% throughout the first three years from the time of acquisition and an outright prohibition on extensions of credit to affiliates of the private investor.[3]
In rescinding the Policy Statement, the FDIC emphasized that the restrictions made applicable to private investors were more onerous than those that would be imposed under generally prevailing law in any other failed bank acquisition and could discourage the participation of nonbank investors such as private equity firms in the bank resolution process. In announcing the rescission, the FDIC noted that private investment entities “can play a significant role in the resolution process, given their ability to access and deploy significant pools of capital,” and that given the increased speed with which a bank failure may occur, deterring their participation could considerably increase the costs of resolution.[4]
The rescission of the Policy Statement follows other recent actions by the FDIC to expand nonbank participation in the sale of loans or other assets of failed banks, including its adoption of a pilot program to prequalify nonbanks to bid for the assets of failed banks and announcement of a “seller financing” program targeted at nonbank bidders on failed bank assets.[5]
Shelf Charters
In a speech on March 11 (in which he previewed yesterday’s action), Chairman Hill noted that even in cases in which nonbank investors have “an interest in buying the entire failed bank from the FDIC,” there is currently “no path for nonbank entities to buy such a bank outright in a short period of time” if the bank fails suddenly. Chairman Hill indicated that, in addition to easing restrictions on nonbank investors through rescission of the Policy Statement, the FDIC is “exploring with the other banking agencies the possibility of establishing an emergency exception that would enable a nonbank to rapidly set up a shelf charter to bid on a failed institution following a sudden failure.”[6]
Shelf charters allow investors to receive preliminary approval from the OCC for an inactive national bank charter that remains “on the shelf,” activated only if and when a troubled institution acquisition opportunity arises. Shelf charters were first established by the OCC during the 2008 financial crisis, and were intended to expand the pool of potential buyers of troubled banks. Since their introduction, however, they have seen extremely limited adoption: the first shelf charter was granted in November 2008, and shelf charters were used to facilitate failed bank acquisitions twice, in January and July of 2010.[7] The mechanism then fell into disuse for over a decade before another institution received a shelf charter in December 2023.[8] Shelf charters have in the past required an extended application process (Chairman Hill noted that the most recent application took 22 months) and have generally only been valid for 18 months following approval, significantly limiting their appeal. The now-rescinded Policy Statement was also a significant obstacle to capital raising by prospective shelf charter applicants. In addition to the granting of a shelf charter by the OCC or another chartering authority, the FDIC must issue an approval of deposit insurance for the newly chartered entity, and the Federal Reserve must approve its ownership if any company is to have control of the shelf charter entity. In light of this multi-agency involvement, Chairman Hill observed that any effort to adopt an expedited process for making shelf charters available will need to be coordinated on an inter-agency basis.
Implications
A more streamlined emergency process for approval of shelf charters could create a more realistic pathway for nonbank investors to secure a bank charter and be in a position to submit “whole bank” bids, or bids that otherwise cover the deposit franchise of the failed institution, even where a bank failure has occurred suddenly. Private investors that are potentially interested in participating in future acquisitions of failed banks, free from the restrictions formerly imposed by the Policy Statement, should consider undertaking a fresh review of the structures and potential deal terms that may now be feasible as a result of these shifts in FDIC policy, and continue to monitor any further agency policy or guidance on shelf charters. Private investors must of course take into account the implications of the Bank Holding Company Act and other statutes in cases where that investor would be deemed to control a bank through use of a shelf charter or a failed bank acquisition.
ENDNOTES
[1] Press Release, FDIC, FDIC Board of Directors Rescinds Statement of Policy on the Qualifications for Failed Bank Acquisitions (Mar. 19, 2026), https://www.fdic.gov/news/press-releases/2026/fdic-board-directors-rescinds-statement-policy-qualifications-failed-bank; FDIC, Rescission of Statement of Policy on the Qualifications for Failed Bank Acquisitions (Mar. 19, 2026) [hereinafter Rescission Notice], https://www.fdic.gov/board/federal-register-notice-rescission-statement-policy-qualifications-failed-bank-acquisitions. The rescission will be effective upon publication in the Federal Register.
[2] Private investors with less than 5% of the total voting power in an investee institution were excluded, as were investors who partnered with an established bank holding company that had a “strong majority interest” post-acquisition (i.e., the private investors had no more than one-third of total equity and voting power).
[3] FDIC, Final Statement of Policy on Qualifications for Failed Bank Acquisitions, 74 Fed. Reg. 45440 (Sept. 2, 2009); Statement of Policy on Qualifications for Failed Bank Acquisitions, FDIC (Mar. 15, 2024), https://www.fdic.gov/laws-and-regulations/statement-policy-qualifications-failed-bank-acquisitions. For more on the 2009 adoption of the Policy Statement, see our related client memoranda, S&C Memo, FDIC Releases Draft Policy Statement on “Private Capital Investors” in Banks and Thrifts (July 2, 2009), https://www.sullcrom.com/SullivanCromwell/_Assets/PDFs/Memos/Failed-Bank-Acquisitions-Draft-Policy-Statement.pdf; S&C Memo, FDIC Releases Final Policy Statement on Private Investments in Failed Insured Depository Institutions (Aug. 28, 2009), https://www.sullcrom.com/SullivanCromwell/_Assets/PDFs/Memos/Failed-Bank-Acquisitions-Final-Policy-Statement.pdf; and S&C Memo, FDIC Releases Frequently Asked Questions on the Statement of Policy on Qualifications for Failed Bank Acquisitions (Dec. 14, 2009), https://www.sullcrom.com/SullivanCromwell/_Assets/PDFs/Memos/Failed-Bank-Acquisitions-FAQs.pdf.
[4] FDIC Rescission at 3.
[5] See S&C Memo, FDIC Provides Update on Resolution Planning for Large Banks and New Transparency on Failed Bank Sale Process (Jan. 12, 2026), https://www.sullcrom.com/insights/memo/2026/January/FDIC-Issues-Updates-Resolution-Planning-Sale-Process; S&C Memo, Acting FDIC Chairman Previews Changes to Resolution Planning and Execution: Acting FDIC Chairman Hill Offers Lessons Learned from 2023 Bank Failures and Discusses Potential Streamlining of Resolution Plan Requirements and Improvements to Failed Bank Receivership Process (Oct. 27, 2025), https://www.sullcrom.com/insights/memo/2025/October/Acting-FDIC-Chairman-Previews-Changes-Resolution-Planning-Execution.
[6] Travis Hill, Chairman, FDIC, Speech at the American Bankers Association Washington Summit: An Update on Reforms to the Regulatory Toolkit (Mar. 11, 2026), https://www.fdic.gov/news/speeches/2026/update-reforms-regulatory-toolkit.
[7] Press Release, OCC, OCC Conditionally Approves First National Bank Shelf Charter to Expand Pool of Qualified Bidders for Troubled Institutions (Nov. 21, 2008), https://www.occ.gov/news-issuances/news-releases/2008/nr-occ-2008-137.html; Press Release, OCC, OCC Approves First Use of “Shelf Charter” to Acquire Failed Bank (Jan. 22, 2010), https://www.occ.treas.gov/news-issuances/news-releases/2010/nr-occ-2010-8.html; Press Release, OCC, OCC Approves Use of Second Shelf Charter to Acquire Three Failed Banks (July 16, 2010), https://www.occ.treas.gov/news-issuances/news-releases/2010/nr-occ-2010-82.html.
[8] OCC, Conditional Approval #1315 (Dec. 21, 2023), https://www.occ.treas.gov/topics/charters-and-licensing/interpretations-and-actions/2024/ca1315.pdf.
This post is based on a Sullivan & Cromwell LLP memorandum, “FDIC Rescinds Policy Statement Limiting the Participation of Private Investors in the Acquisition of Failed Banks,” date March 20, 2026, and available here.