Correspondent Banks
The Treasury is expected to finalize a rule soon that would restrict the type of foreign bank correspondent accounts that interact with U.S. banks. The rule, implementing section 312 of the USA Patriot Act, also would define what types of foreign officials are "politically exposed persons" and require more scrutiny from banks. A proposal and an interim rule were issued in 2002.
Commercial Real Estate
Federal banking and thrift regulators are working on guidelines for commercial real estate lending. Regulators, especially top Fed officials, have repeatedly warned bankers that financial institutions could be overexposed because of the growing concentration of commercial real estate loans. Policymakers have also warned that bankers are easing lending standards because of competitive pressures.
FACT Act Rules
The bank and thrift regulators, along with the National Credit Union Administration, the SEC, and the Federal Trade Commission, are expected to issue a final rule soon on information sharing among affiliates. A proposal was released in the summer of last year; a final rule is required by the Fair and Accurate Credit Transactions Act.
The Fed and the FTC are also drafting a proposal that would require lenders to notify an applicant if a loan's terms are less favorable because of a risk assessment based on the applicant's credit report. The FACT Act required that the rule be finalized by Dec. 1, 2004, but the complexity of crafting the plan has delayed its release.
Broker-Dealer Rules
The SEC has set a Sept. 30 deadline for its proposal on "push-out" requirements. Observers expect a delay, however, because of a change of leadership. Rep. Christopher Cox, R-Calif., was sworn in last week as the agency's chairman; he succeeded William Donaldson, who stepped down June 30.
The proposal stems from a Gramm-Leach-Bliley Act provision that says banks must transfer certain broker-dealer activities to an SEC-regulated affiliate. Bankers, lawmakers, and regulators had said the version proposed last year would clash with the law's intent.
Predatory Lending
Federal Housing Finance Board Chairman Ronald Rosenfeld said May 9 that the agency would soon release an advisory bulletin providing the Home Loan banks with guidelines on preventing predatory lending. He said his goal was to create a uniform standard outlining the types of loans that the banks can purchase or accept as collateral for advances.
Tying
The Fed is expected soon to issue a legal interpretation aimed at drawing a clearer line between legitimate cross-marketing and illegal tying. Federal law prohibits banks from conditioning, or "tying," product availability or pricing on the purchase of certain other products or services. The Fed is considering giving banks an exemption for transactions with large or sophisticated customers.
