The Federal Reserve Board on July 31, 2026, requested comment on a proposal to modernize rules for mutual banking organizations. Mutual institutions are owned by depositors rather than shareholders, and more than 90 percent have less than $3 billion in total assets.
The Board assumed regulatory and supervisory authority over mutual banks from the Office of Thrift Supervision in 2011. The rules governing these banks were first established in 1993. According to the Board, they have not been updated and have proven over time to be overly burdensome and complex.
Proposed regulatory changes
The proposal would modernize the regulatory framework and increase flexibility for certain mutual banks to raise capital. It would clarify which instruments count as regulatory capital and reduce procedural burdens, among other comprehensive updates.
“Today's proposal is another important step in our work to modernize the bank regulatory framework by updating mutual bank regulations for the first time in 30 years. The continued success of this model contributes to the institutional diversity of the U.S. banking system, which is one of the greatest strengths of our financial system,” said Vice Chair for Supervision Michelle W. Bowman.
Bowman said the proposal would allow mutual banks to continue to grow and more effectively serve communities across the country while preserving their unique depositor-owned structure. Comments on the proposal are due 60 days after its publication in the Federal Register.