Regulators Aiming to Wrap Up Work on Rate-Risk Rules by Jan. 1

SAN FRANCISCO - The regulators are aiming to complete new rules on interest rate risk by Jan. 1, Susan Krause, senior deputy comptroller for bank supervision, told bankers attending the American Bankers Association's annual convention here this week.

The rules, designed to incorporate interest rate risk to capital standards, would require banks to evaluate the interest volatility of their loan portfolios.

In panel discussions with bankers at the conference, regulators from all the agencies explained what they are working on.

The Office of the Comptroller of the Currency expects to complete its "A to Z" regulatory review by year's end, according to the agency's chief counsel, Julie Williams.

New examination guidelines for large banks, announced last month, should arrive at institutions in November, Ms. Krause said. The guidelines require examiners to assess a bank's exposure to nine separate risks.

Federal Reserve Board officials focused mainly on pending regulatory changes.

Dolores Smith, the Fed's associate director for consumer and community affairs, said the central bank will complete work on at least seven regulations within the next year.

The first change to go to the board will be a rewrite of Reg E, whichgoverns electronic transfers. Approval is expected by the end of the year, she said. Ms. Smith declined to discuss the content of the changes.

The Fed also will release for public comment a proposal that would relax some of Reg E's rules governing home banking, she said.

Final consumer-leasing rules, also nearing completion, are scheduled to reach the Fed board by April 1, she said. The staff has convened several focus groups to help identify which disclosures would most help customers understand leasing costs, she said.

Two other changes are expected in the first quarter - the Fed will propose revising Reg AA, which governs acceptable credit practices, and Reg CC, which governs check clearing. Revisions to the Home Mortgage Disclosure Act and to the Equal Credit Opportunity Act are due in the second quarter, she said.

Federal Deposit Insurance Corp. officials focused on examination techniques during their presentation.

Nicholas J. Ketcha Jr., the FDIC's acting director of supervision, said the agency expects to cut the time spent in banks by 10% this year and another 10% next year.

"We can do a heck of a lot of the exam at our field offices," he said.

The FDIC's long-delayed golden-parachute rules soon will reappear, said William F. Kroener III, the FDIC's general counsel. He declined to give a specific date.

Regulators are still reviewing Great Western's application to charter a national bank. The California thrift has asked to open bank branches at each of its thrift locations in order to convert high-cost thrift deposits into bank deposits, which are subject to much lower premiums.

Mr. Ketcha said the agency is studying how several New England banks have exploited a similar arrangement. A decision is not expected soon, he said.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER