WASHINGTON, July 30 (Reuters) - A U.S. bank regulator is

considering a stricter framework for how large asset managers

like Blackrock ( BLK ) and Vanguard can prove they are not

influencing banks where they hold large stakes.

The Federal Deposit Insurance Corporation voted on Tuesday

to advance a proposal that would see the agency exert more

influence over whether asset managers or other firms building

large stakes in banks should receive stricter regulation and

oversight.

Agency officials also indicated they may launch a review of

existing so-called "passivity agreements" with large asset

managers, with a focus on boosting FDIC oversight of their

commitments to not play an active role in bank management.

Under law, third parties that obtain a greater than 10%

stake in a bank can be considered a controlling interest in the

bank and subjected to stricter regulation and oversight. But

firms can avoid those restrictions under so-called "passivity

agreements," in which the investor commits to regulators they

will not exert influence on the bank.

Specifically, under the proposal the FDIC would remove an

existing exemption in which the agency does not review new large

investments in banks, so long as the Federal Reserve signed off

on that approach.

"It is highly inappropriate for the FDIC to abdicate the

responsibility Congress entrusted to us to safeguard the

ownership and control of the banks we supervise," said Rohit

Chopra, director of the Consumer Financial Protection Bureau and

an FDIC board member.

FDIC Chairman Martin Gruenberg also backed the proposal,

which would also seek broader feedback about the role of asset

managers obtaining large stakes in banks.

Separately, FDIC Commissioner Jonathan McKernan offered a

proposal that would have directed FDIC staff to order a review

of existing passivity agreements for some large asset managers,

and ensure the FDIC has the capacity for monitoring the

commitments those firms make. Under his plan, the FDIC would

look to strike new agreements with those firms that would do

away with the current practice of self-certification by the

firms and require FDIC monitoring.

However, McKernan did not bring that proposal up for a vote

after Gruenberg indicated such action would not require formal

board action. Gruenberg added he is open to reviewing existing

agreements, with a focus on ending the practice of

self-certification.

When asked, Gruenberg said he expected notifications to

begin review existing agreements could happen soon.

The FDIC action comes amid growing concern among some

policymakers over large asset managers' expanding footprint in

the banking sector, driven by the growth of index investing, and

what it could mean for bank management. In his remarks, Chopra

noted BlackRock ( BLK ) and Vanguard collectively control over

$17 trillion in assets, with stakes large enough to trigger

stricter oversight.

A spokesperson for Blackrock ( BLK ) declined to comment. Vanguard

said in a statement it wants a "constructive dialogue" with

regulators over passive investments.

Spokespeople for those firms did not immediately provide

comment on the FDIC's actions.

But the industry has been quick to critique this scrutiny,

calling it unjustified and burdensome.

"It is alarming to see that the FDIC is proposing to revise

the current framework in the absence of a clearly identified

problem," said Eric Pan, CEO of the Investment Company

Institute, which represents asset managers. "We fear that the

FDIC is asking the investment funds industry to prove a

negative, setting up a flawed foundation on which to impose

harmful limits and red tape on investment funds and increase

costs on American investors."