Regulatory Roundup: Recent Actions

SMALL BUSINESS: The Fed on July 1 announced it has begun a survey to find out how economic and regulatory changes have affected small-business financing. By yearend the National Opinion Research Center will interview 6,000 executives at firms with fewer than 500 employees about their use of credit and other financial services.

LARGE BANKS: The Fed issued two separate supervisory letters explaining changes to its oversight of large, complex banking organizations. The June 24 letter details how teams of examiners dedicated to each of 30 large U.S. and foreign banks will tailor oversight to fit the bank's risk profile. The July 1 letter focuses on determining the capital needs of these large banks by identifying and monitoring risks.

CUSO INVESTMENTS: The NCUA liberalized rules governing federal credit union investments in and loans to credit union service organizations. Published June 22.

TRUTH-IN-SAVINGS: The NCUA on June 21 published a final rule implementing changes to the Truth-in-Savings Act. The rule mirrors an interim final rule issued by the agency late last year. Effective July 21.

EFT ACCOUNTS: The Treasury Department on June 30 announced the details of low-cost bank accounts for recipients of electronically delivered federal benefits. The government subsidy is $12.60 per account, which may not have a minimum balance requirement, cannot cost more than $3 a month, and must allow four free withdrawals a month. Banks, thrifts, and credit unions offering the accounts may accept additional deposits and may pay interest. Insured institutions cannot subcontract with unregulated check cashers, currency dealers, or money transmitters.

Y2K BACKUP: The Federal Deposit Insurance Corp. issued an interim final rule requiring banks unprepared for the year-2000 changeover to make digital copies of account data beginning Dec. 24. Affected banks will be those with less-than-satisfactory Y2K compliance ratings as of July 31. Published June 9.

BRANCH CLOSINGS: The four agencies have agreed to a policy statement clarifying the steps interstate banks must take before closing a branch in a low- or moderate-income area. Published June 29.

LOAN-LOSS RESERVES: The Fed issued guidelines May 21 concerning a loan- loss reserves article by the Financial Accounting Standards Board. The Fed said banks should maintain conservative allowances but can adopt the high end of the range of estimated losses when appropriate. The other bank and thrift regulators may issue similar guidelines.

MERGER ACCOUNTING: The FASB on April 21 announced it would eliminate the "pooling of interests" method of accounting for mergers and acquisitions. Instead, the FASB will require merging parties to use the "purchase" method. Effective Jan. 1, 2001.

RISK-BASED CAPITAL: The four bank and thrift regulators amended the risk-based capital standards for market risk. Under the rule, institutions with a qualified internal risk-measuring model no longer also have to use the standardized model. Published April 19. Effective July 1.

CONSUMER LEASING: The Fed revised its Regulation M staff commentary to clarify how banks should disclose lease negotiations, fees, and taxes. Published April 6. Effective March 31, but compliance is optional for one year.

TRUTH-IN-LENDING: A Fed staff commentary clarified that banks may not mail unsolicited credit cards to consumers, even if the product also serves as a stored value card. Published April 6. Effective March 31, but compliance is optional for one year.

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