Financial-Subsidiary Rule for Smaller Banks

WASHINGTON - The Federal Reserve Board and the Treasury Department moved to clarify the conditions banks must meet in order to engage in new activities through financial subsidiaries.The Gramm-Leach-Bliley Act set specific criteria that the 50 largest insured banks must meet to own a financial subsidiary. Among these was the requirement that they issue outstanding long-term debt rated in one of the top three categories by a nationally recognized rating agency.

The law left it to regulators to set an alternative for the 50 next-largest banks. The interim rule issued Tuesday would require these banks to get a "long-term issuer credit rating" in one of the same top three categories.

This is less burdensome, because such ratings do not require a bank to actually issue debt. It is based on the strength of the bank itself, and reflects the rating agency's opinion of how the bank's debt would be rated if it were issued. The interim rule took effect Tuesday, but comments will be accepted until May 15.

- Rob Garver


FDIC Schedules Seminars for Banks, Thrifts

WASHINGTON - The Federal Deposit Insurance Corp. will conduct training seminars in 12 cities from early April to mid-June.The half-day seminars, which will kick off April 4 in Atlanta, are intended to help banks and thrifts distribute accurate deposit insurance information. The sessions will focus, in part, on developing in-house insurance training programs and distinguishing uninsured deposit-like products from insured deposits.

From Atlanta the agency will move to Miami on April 6, Dallas on April 11, Denver on April 13, San Francisco on April 25, Seattle on April 26, and Los Angeles on April 28. After a short break, the seminars will resume in Chicago on May 16; Kansas City, Kan., on May 18; Newark, N.J., on June 6; Memphis on June 13; and Boston on June 15.

The FDIC is expecting up to 2,600 bankers, or 900 more than attended a set of similar seminars in 1995. Institutions may register up to five people at $50 each. Registration is by mail only and must be received two weeks before the date of the seminar. Registration forms are available by calling 703-359-0200, ext. 449.

- Kevin Guerrero


ABA Hits Bill to Merge Bank, Thrift Funds

WASHINGTON - The American Bankers Association said it "strongly opposes" legislation unveiled last week to merge the bank and thrift deposit insurance funds.Rep. Marge Roukema, chairwoman of House Banking's financial institutions subcommittee, and Rep. John J. LaFalce, the top Democrat on House Banking, are sponsoring legislation that would combine the Bank Insurance Fund and the Savings Association Insurance Fund on Jan. 1.

The ABA supports merging the two funds - which together hold nearly $40 billion - but wants to cap the size of a combined fund and to merge the Office of Thrift Supervision and the Office of the Comptroller of the Currency. Rep. LaFalce has said such issues should be debated separately. "I am concerned that the funds merger could get bogged down through consideration of other important, but essentially extraneous issues," he said at an America's Community Bankers conference here.

The industry is divided. ACB supports the bill, while the Independent Community Bankers of America is pushing for an increase, to $200,000, in the amount of deposit insurance per account.

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