WASHINGTON - Requests to create financial supermarkets - banking, brokerage, and insurance offered under one roof - filed by Feb. 15 will get fast replies, the Federal Reserve Board said Wednesday.

The central bank promised to act on the applications by March 13, the first business day after the Gramm-Leach-Bliley Act takes effect and allows broad affiliations among financial services firms for the first time in 67 years.

The Fed's ambitious timetable is in a rule implementing the new financial reform law, which requires diversified firms to establish financial holding companies overseen by the Fed. To date, only Charles Schwab Corp. has said it will adopt the new organizational structure, as part of its Jan. 13 deal to acquire U.S. Trust Corp.

Other large nonbanks may hold back.

"You have got to do a cost-benefit analysis of this regulation," said Ernest T. Patrikis, senior vice president and general counsel of American International Group Inc. "I have done it and say, 'Not worth, it, not right now, not for us.' "

But many large banking companies are expected to quickly convert to financial holding companies to gain access to new products and services.

"Most holding companies, certainly ones of any size, are going to have to convert to financial holding companies in order to get into the expanded activities" granted by the law, said Gregory L. Curl, vice chairman of corporate development at Bank of America Corp.

Still, even banks, which are more accustomed to strict regulation, will have to pay attention to the demands of regulators because the benefits of the financial-holding-company structure hinge on strict adherence to capital, management, and community reinvestment standards.

"The need to comply with what examiners require is going to become close to 100%, I fear," said H. Rodgin Cohen, a partner at the Sullivan & Cromwell law firm in New York.

The Fed rule lays out how to become a financial holding company, details the minimum requirements, and explains the repercussions if a company's condition or performance subsequently deteriorate. It is just the first of a number of regulations various agencies will issue to implement the reform law.

Separately, the Office of the Comptroller of the Currency said it will propose rules today detailing how national banks may take advantage of new rights granted by the law. Banks may set up financial subsidiaries to sell products and services they would otherwise be barred from offering.

Gramm-Leach-Bliley defines a financial holding company as a bank holding company that meets certain requirements, including: all depository institutions controlled by the parent must be well capitalized and well managed and must hold at least a satisfactory rating under the Community Reinvestment Act.

"Well capitalized" is defined as 6% Tier 1 and 10% total capital to risk-based assets, and 5% Tier 1 capital to total assets.

A "well-managed institution" is defined as receiving a 1 or 2 composite rating on the 5-point regulatory scale in its most recent exam and a similar rating for the management and compliance components of the overall grade.

An application to convert to a financial holding company, according to the Fed, is a "short and simple document" verifying that the subsidiary banks are well capitalized and well managed. The Fed will verify CRA ratings. Companies that have acquired, within 12 months, a bank that does not have a satisfactory CRA rating will still be able to convert to financial holding companies as long as they have an acceptable plan for improving the bank's rating.

Unless the Fed objects sooner, applications will be deemed approved 31 days after submission. The Fed also has the option of notifying a company sooner that an application has been approved. But until an application is approved, a bank holding company may not engage in any of the new powers authorized by the law.

Under the law, only bank holding companies are eligible to become financial holding companies. So the Fed has set up a system for companies that are not already bank holding companies to make both moves at once.

Financial holding companies are required to notify the Fed if a bank under its control experiences capital or management trouble. The Fed said most companies will be given 45 days to devise a plan that explains what will be done when to repair the problem.

Until fixed, no new activities or acquisitions may be pursued without the Fed's approval.

If repairs take more than 180 days, the Fed has the power to require the company to divest its subsidiary banks. "A company may comply with an order to divest by instead ceasing to engage in activities that are permissible only for financial holding companies," according to the rule.

The penalties are less severe when a bank subsidiary's CRA rating falls to one of the two grades below "satisfactory." Once this happens, the financial holding company may not enter new businesses, but its existing operations are not affected.

Fed General Counsel J. Virgil Mattingly Jr. described this as "an expansion of CRA" during a speech Wednesday. "You have to stop expanding until you have fixed the problem," he explained.

The rule takes a slightly different approach to foreign bank companies.

The Fed said its analysis of capital and management would "take into account the foreign bank's composition of capital, accounting standards, long-term debt ratings, reliance on government support to meet capital standards, the extent to which the foreign bank is subject to comprehensive consolidated supervision, and other factors."

For banks based in countries that follow the international capital standards issued by the Basel Committee on Banking Supervision, the capital requirement is largely the same; however, most foreign banks do not have to comply with so-called leverage ratios. The Fed plans to impose a lower leverage ratio, 3% Tier 1 capital to total assets.

For banks in other countries, the Fed will individually review their capital adequacy.

The rule takes effect March 11, though the Fed said it would take comments on it through March 27 and could change the final rule in the future. For the full text of the document or the OCC proposal, go to the following sites:

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