On March 31, 2020, the Board of Governors of the Federal Reserve System (the “Board”) announced that it has decided to delay the effective date of its final rules revising the Board’s framework for determining whether a company controls another for purposes of the Bank Holding Company Act or the Home Owners’ Loan Act (the “Final Control Regulation”). The Final Control Regulation was to become effective on April 1, 2020, but pursuant to the Board’s new release, the effective date has been pushed back by two quarters to September 30, 2020. The Board did not make or discuss any substantive changes to, or interpretations of, the Final Control Regulation. For more on the content of the Final Control Regulation, please refer to our previous client note, Federal Reserve Board Adopts Final Control Rule.

The Board set forth two rationales for delaying the effective date: first, that the COVID-19 outbreak has significantly impacted banks and other financial institutions and resulted in market dislocation; and second, that many regulated institutions have expressed a desire to consult with Board staff on existing investments and relationships. The extension thus acknowledges that banks and other companies affected by the Final Control Regulation may need more time to analyze its impact and consult with the Board about prior investments and relationships. The delayed effective date also allows companies greater flexibility to focus on other obligations and concerns that have arisen in the wake of the COVID-19 pandemic.