Capital Briefs: OTS Clarifies Subsidiary Investment Rule

The Office of Thrift Supervision wrapped up a yearlong rewrite of its regulations on Wednesday by simplifying a rule governing subsidiary investments.

The agency clarified which activities can be conducted through operating subsidiaries and service corporations. The rule, effective Jan. 1, also consolidates provisions that had been scattered throughout the OTS rulebook.

"This rule gives thrifts a clearer picture and more flexibility regarding what they can do with their subsidiaries," said John C. Price, the agency's director of supervision policy.

While a thrift still may invest only 3% of its assets in a service corporation, these subsidiaries will be permitted to participate in any pre-approved activity after 30 days' notice.

The rule, published in Wednesday's Federal Register, also includes a chart thrifts can use to compare the rules that apply to operating subsidiaries and those covering service corporations.

Early next year, the agency will launch a second round of proposals to further streamline its rulebook. Deborah Dakin, OTS deputy chief counsel, said the agency will begin by revamping its deposit rules.

"There are a lot of regulations on deposits where thrifts are being held to outdated and duplicative requirements," Ms. Dakin said.

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