After months of delay, the Federal Reserve Board should resume processing regulatory applications from foreign banks within 30 days, a senior Fed official said Monday.
"I am somewhat concerned that we have not yet accepted applications in the pipeline for final processing," said William Ryback, associate director for international supervisory policy and activities at the Fed.
The backlog - of dozens of international applications to open branches, agencies, and various types of subsidiaries - accumulated while the Fred prepared the tougher regulations mandated by the November 1991 banking legislation.
State Approval a Plus
Mr. Ryback said the Fed will move first with "selected" applications, such as those that have already been approved by state regulators or for which information required by the Fed is readily available.
In mid-April the Fed issued interim regulations to the 12 Federal Reserve Banks. The reserve banks are due to return their comments to the board by mid-June.
"Contrary to what some might have suggested, the Foreign Bank Supervision Enhancement Act is not intended to discourage foreign banks from doing business in the U.S.," Mr. Ryback told foreign bankers and their legal advisers Monday at a seminar in New York sponsored by Prentice-Hall.
A Whole New Ball Game
Some participants in the seminar expressed doubts about how fast the Fed will move.
Even if it does resume processing applications, they said, foreign banks may still have to wait a long while for approval.
"It's quite clear that the initial round of applications is going to take a good time indeed," said William F. Kroener 2d, a partner with Davis Polk & Wardwell. "It's clear that the board has no procedures and no experience in dealing with these applications."
As an example of the kind of delay that could rise, Mr. Kroener pointed to the case of an unnamed major international bank that "requested a representative office and was asked to describe the bank secrecy laws in each of the 15 countries in which it does business."
'It May Take a While'
"The sentiments expressed by regulators are noble, but those of us having to focus on the interim period feel it may take a while for things to sort out," said Sam Laud Abram, senior counsel for the Royal Bank of Canada.
Experts in international bank law and state banking regulators, who opposed the additional regulatory powers that the 1991 legislation granted the Fed, noted that the central bank has yet to hire the staff it needs to handle applications and examinations of foreign banks.
They must also clarify numerous gray areas, the critics said, such as which banks meet the requirements for consolidated regulation of their worldwide operations.
"The Fed is very much still on the learning curve," said Robert McCormick, deputy New York State superintendent of banks. "They have a tremendous number of things on their plate and don't have the staff to do it."