Electronic Disclosures

Five interim rules by the Federal Reserve Board that establish uniform standards for the electronic delivery of required disclosures by banks. Financial institutions may deliver disclosures electronically if they obtain consumers' consent in accordance with the requirements of the digital signatures law enacted last year. The rules provide guidance on the timing and delivery of electronic disclosures so that consumers have adequate opportunity to access and retain the information. Expected to be published soon. Comments due June 1.

Credit Union Regulation

A proposal by the National Credit Union Administration that would reduce regulatory requirements for well-capitalized, well-managed credit unions. The proposal would apply to credit unions that have reserves equal to 9% of assets and Camels ratings of 1 or 2 in consecutive exams. Published March 8. Comments due May 14.

Merchant Banking Capital

A joint proposal by federal banking regulators that would institute capital requirements for banks' merchant banking activities. The plan, which is a reversal of the Fed's controversial first attempt last year, would employ a sliding scale based on each banking organization's aggregate equity investments and Tier 1 capital. It would require them to hold 8 cents for every $1 of equity investments up to 15% of Tier 1 capital, and 12 cents for every $1 of investments for the next 10%. For investments exceeding 25% of Tier 1 capital, banks would have to hold 25 cents for every $1. Published Feb. 14. Comments due April 16.

Basel Committee

A proposal by the Basel Committee on Banking Supervision to revise international bank capital rules. The proposal, which expands on an earlier draft, would let banks use their internal rating systems to help set regulatory capital and would also impose a new capital charge for operational risk. The paper, released Jan. 16, is available on the Basel Committee's Web site, Comments due May 31.

New Bank Powers I

A proposal by the Fed that would give financial holding companies the right to act as real estate brokers and managers. This would be among the first sets of new powers authorized as "financial in nature" under the Gramm-Leach-Bliley Act of 1999. Published Jan. 3. Comment period extended to May 1.


Leveraged Loans

The banking and thrift agencies issued guidelines April 9 for banks in the leveraged loan business. The guidelines outline the risk management techniques banks should employ when dealing with leveraged loans and calls on banks to define the term individually and make regular portfolio reports to managers and board members.

Deposit Insurance Reform

The Federal Deposit Insurance Corp. released its reform recommendations on April 5. The FDIC plan would use a scoring technique to price deposit insurance premiums across the entire industry, give more than 40% of banks money back from the funds, and index the coverage level per account every five years to keep pace with inflation. The plan also said the current statutory minimum reserve ratio of 1.25% of insurance fund reserves to insured deposits should be replaced with a more flexible range of 1.15% to 1.35%. Available at

Impaired Loans

Federal banking and thrift regulators issued guidelines March 27 on how institutions should account for impaired loans that they plan to sell. The guidelines apply to loans by banks, thrifts, or credit unions that were not originated with the intent that they be sold and which have declined in value for reasons other than a drop in interest or foreign exchange rates.

Insurance Sales

Federal regulators on March 14 gave institutions involved in insurance sales an extra six months to comply with consumer protection rules mandated by Gramm-Leach-Bliley. The 1999 law required banks and thrifts that advertise, solicit for, or sell insurance to warn consumers that insurance products are not federally insured and that they do not have to buy insurance to get a loan. It also required, among other things, physical separation of banking and nonbanking activities inside branches. Regulators issued rules in November, telling financial institutions then to start alerting consumers by April 1.

Regulation E

The Fed revised its staff commentary interpreting Regulation E, which governs electronic funds transfers. The revisions are meant to clarify the rule's application to transactions in which a person lets a blank check be used to initiate a direct debit from a checking account. Effective March 15; compliance optional until Jan. 1, 2002.


Community Reinvestment Act

Regulators plan to solicit public comments in June in advance of next year's scheduled review of Community Reinvestment Act compliance rules. Regulators are expected to inquire whether, among other things, to broaden their authority to consider the CRA records of merging banking companies, to permit more banks to qualify for streamlined exams, to revamp the investment test, or to redefine assessment areas to account for Internet banks.

Pooling of Interests

The Financial Accounting Standards Board announced Dec. 6 that it had reached a "tentative decision" to modify a controversial September 1999 proposal that would bar the so-called pooling-of-interests method of accounting for mergers and acquisitions. The revision would let companies carry goodwill on their books as an asset unless it became "impaired" - indicating a decline in value. Any impairment of goodwill would have to be charged against earnings. A final rule is expected by yearend.


Farm Credit National Charters

A proposal by the Farm Credit Administration that would permit any of the 133 Farm Credit regional lenders to apply for a national charter, permitting them to lend beyond their current regional boundaries. Published Feb. 16. Comments were due March 19.

Money Laundering

Guidelines by the Basel Committee on Banking Supervision for banks' "customer due diligence" lay out a framework of regulatory protections for financial institutions against money laundering and other financial crimes. The paper praises private-sector efforts to combat money laundering but says voluntary initiatives are insufficient. The paper, issued Jan. 31, is available on the Basel Committee's Web site, Comments were due March 31.

National Bank Revisions

A proposal by the Office of the Comptroller of the Currency for seven revisions in regulations that govern the activities of national banks. Among other things, the revisions, which the agency said are designed to bring regulations into line with new laws, would give national banks the authority to underwrite, deal in, and buy certain municipal bonds, as permitted by Gramm-Leach-Bliley. Published Jan. 30. Comments were due April 2.

New Bank Powers II

Interim rule by the Fed and the Treasury Department that establishes procedures for granting new powers to financial holding companies and financial subsidiaries of national banks under Gramm-Leach-Bliley. The law directed the agencies to treat as financial in nature activities in three broadly defined categories. The rule says that a financial holding company, or financial subsidiary, must formally ask the agencies to determine whether a particular activity falls into one of these categories and is permissible. Effective Jan. 2. Comments were due Feb. 2.

Predatory Lending I

A proposal by the Fed to toughen measures against abusive lending practices. The plan would reduce the annual percentage rate on mortgages covered by the Home Mortgage and Equity Protection Act to 8 percentage points above the rate for comparable Treasury securities. The current threshold is 10 points. The proposal would also include the cost of single-premium credit life insurance as part of the points-and-fees test under the law. Published Dec. 19. Comments were due March 16.

The Fed also issued a proposal Nov. 29 that would help the government identify more predatory lenders. Lenders would have to disclose the annual percentage rates on all loans as part of their Home Mortgage Disclosure Act reports. Published Dec. 14. Comments were due March 9.

Predatory Lending II

Guidelines issued Nov. 20 by the Federal Deposit Insurance Corp. to help banks avoid the purchase of predatory loans, either directly or in securitized pools. The guidelines recommended that banks investigate the loan originator's reputation, practices, underwriting policies, and compliance programs. Published on the agency's Web site at Comments were due Jan. 31.

Capital Requirements

A preliminary proposal by the banking and thrift agencies that would simplify capital requirements for community banks. The proposal includes three options for calculating capital: a standard capital-to-assets leverage ratio, a simplified risk-based ratio, and a modified leverage ratio that includes risk-based elements. Most banks in the country would probably be eligible. Published Nov. 3. Comments were due Feb. 1.

Subprime Residuals

A proposal by the banking and thrift agencies that would require banks to keep $1 of capital for every $1 of subprime residuals. The proposal also would limit the concentration of residuals to 25% of Tier 1 capital. Published Sept. 27. Comments were due Dec. 26.

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