The Federal Reserve Bank of Atlanta is stepping up its surveillance of Latin banks in the United States in view of economic instability in Mexico and other Latin countries.

Mary Rosenbaum, vice president and senior economist at the Atlanta Fed, said that the federal banking agency is examining specific country as well as regional issues that could affect the safety and soundness of Latin banks operating here.

Forty-nine Latin banks from 12 countries have branches, agencies, or subsidiaries in the United States.

Under a broad reorganization of foreign bank supervision after Congress passed the Foreign Bank Supervision Enhancement Act in 1991, the Federal Reserve Board was given expanded responsibilities for monitoring foreign banks and their parent companies outside the United States.

The Atlanta Fed examines and processes applications from Latin and Caribbean banks, excluding Mexico, and shares joint jurisdiction for Brazilian banks with the New York Fed.

The New York Fed was given supervisory responsibility for European banks, the San Francisco Fed for Pacific Rim banks, and the Dallas Fed for Mexican banks.

U.S. regulatory agencies have been criticized over the past few months for failing to foresee the financial crisis that hit Mexico last December. The Mexican government almost ran out of the hard currency reserves it needed to support the value of the peso against other currencies. The peso has since fallen about 50% in value against the dollar, triggering a banking crisis in Mexico as many borrowers had trouble repaying their loans.

Late last year, the Atlanta Fed set up a special team to collect and monitor financial intelligence from Latin America in order to assist examiners and process applications from banks in the region. Position papers have been completed for seven countries, including Costa Rica, Venezuela, Brazil, Uruguay, Chile, Guatemala, and the Dominican Republic. The papers cover country risk, financial and economic trends, local banking laws, the impact of political issues on economic reform, and central bank independence.

Ms. Rosenbaum declined to disclose contents of the reports and said there are no current plans to make the papers publicly available.

Officials at the Atlanta Fed were unavailable for comment on the status of applications for U.S. offices from Latin banks.

Two Brazilian banks, Banco Bandeirantes and Unibanco S.A., and one Mexican bank, Banco Nacional de Mexico, as well as Argentina's Banco Frances del Rio de la Plata, have applications for U.S. offices pending with the Fed. Two other Mexican banks - Bancomer S.A. and BanCrecer S.A. - and one Brazilian bank, Banco Noroeste S.A., have filed applications that have not yet been processed.

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