The U.S. Federal Deposit Insurance Corporation (FDIC) has reached an agreement with Vanguard to enhance the regulatory framework governing the firm’s investment activities in large U.S. financial institutions. This new arrangement, outlined in a statement released on Friday, grants the FDIC greater oversight of Vanguard’s investments and clarifies the rules surrounding passive investment in banks under FDIC supervision.
The aim of this deal is to prevent major asset managers, including Vanguard and BlackRock, from exerting undue influence over the operations of the country’s largest banks, even when holding substantial stakes through passive investment funds like index funds.
Jonathan McKernan, a director at the FDIC, noted that academic critics have raised alarms about the risks associated with concentrated ownership and the growing power of a small number of institutional investors. This agreement is seen as a way to address those concerns, ensuring that firms like Vanguard do not wield control over bank decisions despite their large holdings.
Under the terms of the agreement, Vanguard is explicitly prohibited from attempting to influence the management or policies of FDIC-regulated banks or their subsidiaries, a practice consistent with the company’s current approach. A Vanguard spokesperson emphasized that the company is rooted in passive investing and has long supported measures to maintain the integrity of passive investment strategies.
सम्बंधित ख़बरें
The agreement also establishes “passivity agreements,” where investors formally pledge not to engage in activities that would impact the operations of the banks in which they invest. As part of its enhanced oversight, the FDIC will monitor Vanguard’s investment practices, particularly its informal interactions with bank management.
There has been no announcement of a similar agreement with BlackRock, and the company did not immediately respond to requests for comment. The FDIC has also not provided additional details at this time.
