WASHINGTON - As part of a continuing campaign to eliminate unnecessary rules, the Federal Reserve Board wants to make it easier for bank holding companies to sell assets with financing.
The proposal would change section 2(g)(3), which requires the Fed to assume that a holding company retains control of a subsidiary or asset when it finances the sale.
The point of the rule is to prevent holding companies from using financing to control nonbanking interests that they are not allowed to operate.
But since holding companies already have divested their nonbanking interests, the reason for the rule has disappeared. In fact, most bankers encounter the rule only when they sell land they've foreclosed on.
The proposal, on which the public has until April 28 to comment, reduces paperwork by eliminating the need for bankers to get a Fed determination that the buyer will control the asset in question.
"This is something that was a constant irritant in the sides of bank holding companies when they sold assets they controlled," said Gil Schwartz, a partner at Schwartz & Ballen. "It hindered transactions. What this does is recognize the fact that these are pretty routine transactions that should not be slowed up."