would further restrict a bank's ability to extend credit to affiliates. The proposed rule would change the way capital is calculated for affiliate loans, producing figures about 5% lower than the current method. The change is important because the law restricts a bank's ability to extend credit or buy assets from an affiliate to 20% of its capital. Also, it says no single deal with an affiliate can exceed 10% of the bank's capital. Richard Whiting, general counsel at the Bankers Roundtable, said lenders won't like the change. But he said he understands why the Fed is proposing it. "It does limit the flexibility of an organization to fund its affiliates, and it is definitely a decrease," Mr. Whiting said. "But we understand that they have other concerns such as regulatory consistency and stability over time." The new rule would require the Fed to determine a bank's total capital by adding the Tier 1 and Tier 2 capital figures in the call report to the loan- and lease-loss allowances. This is the same definition the Fed recently adopted for its insider lending rules, and it mirrors the definition the Office of the Comptroller of the Currency uses in its lending limit regulations. The Fed now determines a bank's capital and surplus by looking at the amount of unimpaired, outstanding preferred and common stock. The Fed expects to publish the proposal shortly in the Federal Register. The public then will have until Jan. 2 to comment. The Fed also named 13 new chairmen and vice chairmen for the reserve banks and reappointed 11 others. John C. Whitehead, chairman of investment company AEA Investors Inc., takes the helm of the Federal Reserve Bank of New York. "I'm honored and looking forward to it," Mr. Whitehead said. "I feel as if I have had a long background that prepares me well for it. I spent 38 years at Goldman Sachs in New York and spent time at the State Department." Other reserve bank chairmen appointed include Donald J. Kennedy, business manager for the International Brotherhood of Electrical Workers, in Philadelphia, and Claudia Malone, president of Financial and Management Consulting Inc., in Richmond. Also appointed were Hugh M. Brown, president of Bamsi Inc., to the Atlanta bank; John F. McDonnell, chairman of McDonnell Douglas Corp., to the St. Louis bank; and Jean D. Kinsey, professor at the University of Minnesota, to the Minneapolis bank. The New York, Philadelphia, Richmond, Atlanta, Chicago, St. Louis, and Minneapolis reserve banks also got new vice chairmen.

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