U.S. banking regulators propose restrictions on influence of investment managers
(MENAFN) Investment firms are expressing concern over new regulatory proposals aimed at limiting their sway over governance and strategic decisions at U.S. banks. The Federal Deposit Insurance Corporation (FDIC) has put forward a plan that would impose restrictions on large passive investment fund managers before they can acquire or hold substantial stakes in publicly traded banks. This initiative is driven by growing apprehensions about the impact of major investors on both political and financial fronts. Republicans fear that index funds might team up with progressive activists to spotlight social or environmental issues, while Democrats worry that banks could manipulate large investors for their own benefit, potentially raising antitrust issues.
Jonathan McKiernan, a Republican FDIC board member, emphasized the need to monitor whether large asset managers are wielding influence beyond their intended scope. The largest asset managers, such as Vanguard and BlackRock, are significant shareholders in many major U.S. banks, holding vast amounts of stock on behalf of their clients. Their influence extends to key decisions, including votes on mergers, executive compensation, and board appointments.
The proposed rule is currently open for a 60-day comment period, during which the FDIC may revise it before final implementation. Should the rule be enacted, it could lead to increased costs and reduced flexibility for major investment managers, potentially affecting their investment strategies and decisions regarding banks.
MENAFN04082024000045015682ID1108514781
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.