LLCs Eligible for Deposit Insurance
The FDIC has determined that banks organized as a limited liability company (LLC) are eligible for deposit insurance. Allowing banks to use the LLC structure was recommended by the ICBA in its study on Community Bank Tax Relief & Simplification Options. If existing IRS interpretations can be changed to give banks organized as LLCs favorable "pass-through" tax treatment, the LLC structure will give community banks another option in addition to the Subchapter S structure. Four states currently allow banks to organize as LLCs.
To ensure safety and soundness, the FDIC will require an LLC to have the four traditional attributes of a corporation: perpetual succession, centralized management, limited liability and free transferability of interests. The rule will take effect 30 days after it is published in the Federal Register.