Bank-Affiliate Transactions I

A proposal by the Federal Reserve Board that would codify past interpretations of rules 23a and 23b, which govern transactions between affiliates. Expected to be published soon in the Federal Register, with comments due in 90 days.

The Fed also issued an interim final rule that would confirm that the 23a and 23b rules apply to derivatives transactions between banks and their affiliates and would govern the intraday extension of credit by banks to their affiliates. The interim rule will not take effect until January. Expected to be published soon, with comments due in 90 days.

Exam Fees

A proposal by the Office of Thrift Supervision that would increase exam fees for thrifts rated Camels 3, 4, or 5. (The Office of the Comptroller of the Currency is considering a similar proposal.) Expected to be published soon, with comments due in 30 days.

State Bank Definition

A proposal by the Federal Deposit Insurance Corp. that would clarify the definition of a state bank as an institution that has one or more deposits equaling more than $500,000. The definition is important because it could affect the ability of state-chartered credit card banks to export interest rates across state lines. Published April 19. Comments due July 18.

Prohibition Against Deposit Production

A proposal by the banking regulators to amend the uniform regulations enforcing the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 that prohibit any bank from establishing or acquiring a branch or branches outside its home state primarily for the purpose of deposit production. The proposal would expand that prohibition to include any branch of a bank controlled by an out-of-state bank holding company. Published April 9. Comments due June 8.

Electronic Disclosures

Five interim rules by the Fed 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 guide the timing and delivery of electronic disclosures so that consumers have adequate opportunity to access and retain the information. Published April 4. 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 Monday.

Basel Committee

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


Payday Lenders

The Comptroller's Office issued a rule Tuesday that permits it to charge banks for special exams of third-party service providers, such as payday or title lenders in partnerships with banks. It takes effect June 7.

Bank-Affiliate Transactions II

The Fed issued a rule May 2 that exempts banks from a ban on buying certain assets from their brokerage affiliates and eases restrictions on banks' ability to lend to customers for the purpose of buying securities from a bank affiliate.

ID Theft

The Fed and the Comptroller's Office issued customer information security guidelines on April 30 to combat identity theft. The guidelines advise bankers to verify customer account information with third-party sources such as consumer reporting agencies, to verify change-of-address requests, to maintain adequate security standards, and to use encryption technology when storing or transmitting electronic information. The guidelines were required by the Gramm-Leach-Bliley Act.

Risk Disclosures

The Multidisciplinary Working Group on Enhanced Disclosure, made up of officials from the Basel Committee on Banking Supervision, released a report April 26 calling for increased public disclosure of the risks faced by financial services companies. The findings are intended to apply to banks, securities firms, insurance companies, and hedge funds.

Hacker Threats

The Comptroller's Office outlined steps April 24 that national banks should take to protect electronic network data from hackers and other cyberthreats. The recommendations included identifying system vulnerabilities; applying software fixes in a timely way; ensuring that exploitable files and services are assessed, removed, or disabled; and updating scanning and intrusion detection tools.

Broker-Dealer Registry

The Securities and Exchange Commission on April 18 announced that provisions of Gramm-Leach-Bliley requiring some banks to register as broker-dealers will not be enforced until Oct. 1. That provision of the law was originally intended to take effect May 12.

GSE Debt

Federal regulators ruled April 17 that banks and thrifts investing in subordinated debt securities issued by Fannie Mae and Freddie Mac need set aside just 1.6% of their value as capital. The decision was announced in letters sent to both government-sponsored enterprises by the Fed, the Comptroller's Office, the OTS, and the FDIC.


Pooling of Interests

The Financial Accounting Standards Board is scheduled to vote at a board meeting next Wednesday on a proposal to abolish the pooling-of-interests method of accounting for mergers and acquisitions. The plan would require all such transactions to be accounted for using the purchase method, which requires the buyer to recognize goodwill on its balance sheet.

Goodwill would be counted as an asset unless it declines in value. The plan would require that goodwill be tested periodically for "impairment," or loss of value, and that any such change be recognized on the company's books.

However, the board voted April 12 to water down a proposed requirement that companies specify the amount of goodwill allocated to each reporting unit and to do impairment tests at that level. The revised definition of a reporting unit would let goodwill be allocated and tested at a higher level in the corporate hierarchy.

A final rule is expected by the end of June.

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.


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 it to lend beyond its current regional boundaries. Published Feb. 16. Comments were due March 19.

Merchant Banking Capital

A joint proposal by federal banking regulators that would institute capital requirements for banks' merchant banking activities. The plan, which reverses 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 were due April 16.

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 OCC for seven revisions of regulations governing 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

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. Comments were due May 1.

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