Federal Deposit Insurance Corporation proposes expanding banks' ability to share confidential information without prior approval

The Federal Deposit Insurance Corporation approved a notice of proposed rulemaking to overhaul its information disclosure rules, with the main change being broader authority for insured depository institutions to share FDIC confidential information without first obtaining FDIC approval. The proposal would amend Part 309 to let institutions disclose information to certain third parties for a business purpose, provided required safeguards are met, and would also simplify how the FDIC handles its own discretionary disclosures of confidential information. Under the proposal, disclosures without prior FDIC authorization would be allowed to recipients such as external legal counsel, accountants, auditors, majority shareholders, qualifying service providers, prospective senior executive officers and, in limited circumstances, potential merger counterparties, generally subject to a qualifying confidentiality agreement. Affiliates and certain affiliate personnel could also receive information, and parent holding companies would be permitted to disclose confidential information on similar terms. The rule would also codify a "good cause" standard for discretionary disclosures by the FDIC, update and clarify Freedom of Information Act procedures including treatment of confidential commercial information, set clearer rules for using FDIC information in legal proceedings where the FDIC is not a party, and move service of process provisions into a new Part 306. Comments will be accepted for 60 days after publication in the Federal Register.