The Federal Deposit Insurance Corp. (FDIC) approved a final rule Friday that makes it easier for banks to hire people with minor criminal records.
Under Section 19 of the Federal Deposit Insurance Act, banks are prohibited from hiring any person who has been convicted of a crime involving "dishonesty, breach of trust, or money laundering," without prior consent from the FDIC. The regulator said Friday's final rule excludes all offenses that have been expunged or sealed; allows a person with two, rather than one, minor crimes to qualify; and increases the threshold for small-dollar, simple thefts from $500 to $1,000.
"The changes narrow the scope of crimes subject to Section 19, enabling more individuals to work for banks without going through the Section 19 application process, without increasing risk to the Deposit Insurance Fund," FDIC Chairwoman Jelena McWilliams said in a statement.
The FDIC first signaled its plans to codify its statement of policy (SOP) final rule related to Section 19 in December, when it published a notice of proposed rulemaking.
The FDIC said Friday's final rule codifies a long-standing internal policy at the agency and is expected to reduce applications required under Section 19 by 30%.
The agency said it anticipates the SOP will also reduce regulatory burden on financial institutions and individuals.
"While not major in scope, the changes in the final rule will have a major impact on individuals who no longer need to obtain written consent from the FDIC in order to work for a bank," McWilliams said.
As least one major bank is already making efforts to broaden its hiring pool by giving former criminals a second chance.
JPMorgan Chase last year announced a public policy agenda that would make it easier for those with a criminal record to land jobs at the bank.
The country's largest bank said it removed all questions about criminal backgrounds from job applications. It also established a policy center to help former criminals find jobs.