BPI Comments on FDIC Proposal to Update Section 19

On March 3, BPI submitted recommendations to the Federal Deposit Insurance Corporation (FDIC) in response to a request for public comment pertaining to Section 19 of the Federal Deposit Insurance Act. Section 19 prohibits, without the FDIC’s prior written consent, a financial institution from hiring any individual who was convicted of a crime involving dishonesty, breach of trust or money laundering, or entered a pretrial diversion program as a result of these crimes. The FDIC may grant waivers to individual candidates and has established a category of de minimis offenses for which such a waiver is automatically granted without an application. In practice, due to individuals’ reluctance to submit applications as well as the uncertainty associated with waiting for the FDIC’s decision, qualified candidates who do not meet the de minimis criteria are often unable to take advantage of employment opportunities in the banking sector.

In the letter, BPI recommends four improvements to the FDIC’s existing policies that would preserve the intent of the statute while expanding banks’ ability to hire.