FR 2025-02362

The Federal Reserve System has opted to maintain the current protocol for state member banks when they wish to establish new branches. This decision involves extending the Domestic Branch Application process, officially known as the FR 4001, for an additional three years, without making any revisions to the existing procedure. This extension requires state member banks to continue seeking approval from the Federal Reserve before opening or acquiring new branches. Instead of using a formal reporting form, banks notify the Federal Reserve via a letter, thereby keeping the process relatively informal.

General Summary

The document in question is a notice from the Board of Governors of the Federal Reserve System. It announces a three-year extension of the Domestic Branch Application procedure (FR 4001) without any changes. This means the process by which banks receive federal approval for opening new branches remains unchanged. The extension is administrative in nature and follows a standard regulatory process.

Significant Issues and Concerns

Several critical issues are raised by this document. Firstly, the document lacks a clear justification for why an extension was necessary or how it benefits the stakeholders. The absence of proposed improvements or changes raises questions about whether the current process is sufficiently effective and efficient. Additionally, the document makes use of technical and legal terminology that might be challenging for individuals unfamiliar with regulatory practices and banking operations.

Furthermore, the document does not address why no public comments were received during the notice period. This absence of feedback might suggest either a lack of interest or awareness among stakeholders or potentially an indication that the current procedure is largely without controversy.

Another area of concern is the lack of transparency about how the burden hours—estimated at 425 hours annually—are calculated. Without this information, it may be difficult to assess whether the administrative workload for banks is reasonable.

Public and Stakeholder Impact

Broad Public Impact:

Overall, the broader public might not feel any direct impact from this document or the decision it announces. However, indirectly, the process of opening new bank branches affects economic development, community access to banking services, and potentially job creation in areas where branches are established.

Specific Stakeholder Impact:

For state member banks, the main stakeholder, this extension means a continuation of the status quo. They will not face additional regulatory burdens in seeking branch approvals, nor will they benefit from any process efficiencies that a revised procedure might have offered. The process's informality—submissions are done by letter rather than a structured form—could either be seen as a positive for banks favoring flexibility or a negative for those seeking more structured guidance.

The document does not elaborate on how this will affect communities, particularly those anticipating new branches. The potential lack of public engagement in the commenting process also raises questions about whether community voices are adequately considered in decisions that could affect local banking access.

By maintaining the existing system without change, the Federal Reserve has chosen a path of consistency. Stakeholders, however, may have diverse perspectives on whether this choice supports or hinders development and innovation within their operational and community spheres.