Community Reinvestment Act

A proposal from bank and thrift regulators seeking comments in advance of next year's scheduled review of Community Reinvestment Act compliance rules. The FDIC issued it July 10, and the other agencies are expected to follow suit shortly. Regulators are considering, among other things, whether to: make examinations of lending practices at nonbank affiliates mandatory; more thoroughly scrutinize CRA loans for predatory terms; permit more banks to qualify for streamlined exams; revamp the investment test; or redefine assessment areas to account for Internet banks. Expected to be published soon, with comments to be due 90 days afterward.

Strategic Plan

A proposal from the Federal Deposit Insurance Corp. issued July 2 that seeks comments on its strategic plan for the next five years. The plan addresses areas of insurance, supervision, and receivership management. Available at Comments due July 31.

National Bank Powers

A proposal by the Office of the Comptroller of the Currency that would establish criteria for national banks to engage in broader electronic activities. They would include whether the activity is a logical outgrowth of a recognized banking activity, strengthens the bank by benefiting customers and its business, presents a risk that banks have experience managing, or is permissible for state-chartered banks. The proposal would update rules authorizing national banks to act as finders, and seeks comment on the risks involved in authorizing banks to issue digital certificates, and to what extent banks intend to use that authority. Published July 2. Comments due Aug. 31.

Online Banking

A request for comment by the Federal Reserve Board on how to update regulations to fit the demands of online banking. The Gramm-Leach-Bliley Act of 1999 required federal banking regulators to review rules that affect online banking services and to report to Congress on any needed legislative or regulatory changes. The Fed is to work with the other regulators on the report, which is due to Congress on Nov. 12. Published May 21. Comments due Aug. 20.

Broker-Dealer Registration

An interim rule from the Securities and Exchange Commission that outlines exemptions for banks from registering as broker-dealers. The interim rule establishes exemptions in 15 areas, including certain trust and fiduciary activities, banking products, securities transactions, sweep accounts, affiliate transactions, and third-party brokerage arrangements. Published May 11, with compliance optional until Oct. 1. Comments due July 17.

Bank-Affiliate Transactions

A proposal by the Fed that would codify past interpretations of rules 23a and 23b, which govern transactions between affiliates.

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.

Both were published May 11, with comments due Aug. 15.

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.


Loan-Loss Reserves

Federal bank and thrift regulators on July 6 finalized a policy statement for loan-loss reserving that places significant emphasis on management judgment and historical data. The rule clarifies that a bank's board of directors is responsible for maintaining proper reserves; states that the process must be thorough, disciplined, and consistently enforced; and says reserves should be supported by documentation that is consistent with generally accepted accounting principles and applicable supervisory guidelines. The statement includes several examples of how banks should calculate reserves.

Internet Banking

The OCC issued guidelines July 3 warning national banks about the risks associated with linking their Web sites to unrelated companies that offer goods and services via the Internet. The guidelines advise banks to provide clear and concise disclosure statements on their Web sites that they do not endorse or guarantee the products, information, or recommendations of third parties. Expected to be published soon in the Federal Register, and available at

Subprime Guidelines

Bank and thrift regulators have agreed to report each quarter to the Senate Banking financial institutions on the application of subprime guidelines issued in January. Sen. Tim Johnson, D-S.D., disclosed the agreement July 2. Regulators have said the examiner guidelines apply to approximately 150 institutions with large targeted subprime lending programs, but have raised concerns among industry officials that they will be enforced more broadly and spark a credit crunch.

Analyst Independence

The Securities and Exchange Commission issued a warning June 28 about investor decisions based solely on analyst recommendations. The SEC outlined the potential for conflicts of interests among analysts who work for firms that underwrite or own securities they cover. The agency recommended that investors consult multiple and independent sources of information, including a company's own financial filings.

Meanwhile, the National Association of Securities Dealers on July 2 proposed making analysts disclose if they own stock in companies they cover, and requiring securities firms to disclose if they hold more than 5% of companies tracked by their analysts.

Thrift Liquidity Risk

The Office of Thrift Supervision issued guidelines June 25 for liquidity management at savings associations, recommending strong board oversight, comprehensive written policies, and other safeguards against liquidity risk.

Actions Expected Soon

Risk-Based Capital

A risk-based capital rule for Fannie Mae and Freddie Mac is expected to be issued as early as Monday. The Office of Management and Budget is currently reviewing the rule that had been expected by the end of last month. It was submitted in March by the Office of Federal Housing Enterprise Oversight, which is responsible for regulating Fannie and Freddie.

Basel Capital Standards

The Basel Committee on Banking Supervision is expected during the first quarter of 2002 to issue a revised proposal to update international capital rules. The committee announced June 25 that it would delay issuing final rules until late next year. Implementation was pushed back to 2005. The Basel Committee said it needs more time to process the large number of detailed comments it has received, and indicated that significant changes to the plan are being contemplated. The committee still intends to let banks use their internal rating systems to set regulatory capital levels as outlined in its January 2001 proposal. That plan, for which comments were due May 31, and the committee's announcement explaining its decision to delay are available at


Exam Fees II

A proposal by the OTS that would increase exam fees for thrifts rated Camels 3, 4, or 5. Published April 30. Comments were due May 30.

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 on acquisitions to include any branch of a bank controlled by an out-of-state bank holding company. Published April 9. Comments were due June 8.

Electronic Disclosures

Five interim rules by the Fed that establish uniform standards for the electronic delivery of required disclosures by banks. Published April 4. Comments were due June 1.

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.

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 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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