Basel Committee

The Basel Committee on Banking Supervision on July 30 issued a working paper on the capital treatment of expected losses and future margin income. The paper addresses some of the most controversial elements of the committee's proposal to rewrite international capital standards. There is no deadline for comment, but the Basel Committee is expected to produce its next version of the proposal for comment in early 2002. Available at

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. 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. Published July 19. Comments due Oct. 17.

Additionally, the regulators have revised their "Questions and Answers on Community Reinvestment" document. The new version amends several questions and adds new ones. Published July 12.

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 the bank has experience managing, 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. Compliance deadline extended to May 12, 2002. Published May 11, with comment deadline extended to Sept. 4.

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.


Electronic Disclosures

The Fed on Aug. 3 postponed indefinitely the compliance deadline for its interim rule governing the electronic delivery of mandatory loan disclosures that are permitted by the digital signatures law enacted last year. According to the central bank, comments from industry representatives persuaded regulators that the original Oct. 1 deadline did not allow banks sufficient time to prepare. The Fed will announce a new compliance deadline when it issues the final rule.

Risk-Based Capital

A risk-based capital rule for Fannie Mae and Freddie Mac was issued July 19. The Office of Federal Housing Enterprise Oversight, which is responsible for regulating Fannie and Freddie, said that the rule will not take effect until one year after it is published, which may take several months. Meanwhile, the rule is available at

Bank Operations

The OCC adopted a series of changes to its rules governing investment securities, bank activities and operations, and leasing. The rule, per Gramm-Leach-Bliley, allows well-capitalized national banks to more broadly underwrite, deal in, and purchase certain municipal bonds. It also establishes the conditions under which a school where a national bank participates in a financial literacy program will not be considered a branch under the McFadden Act, and clarifies the statute that governs the rate of interest that national banks may charge. Published July 2. Effective Aug. 1.

Fiduciary Activities

The OCC issued a rule that defines the terms "trust office" and "trust representative." It also allows a national bank that has already been granted fiduciary power in one state to offer the service in other states without prior approval. Published July 2. Effective Aug. 1.


Merchant Banking Capital

The Fed is expected to release a rule this fall that will finalize the regulatory capital treatment of banks' equity investments. The rule is required because the Gramm-Leach-Bliley Act eased restrictions that had barred banks from investing in nonfinancial companies.

Subprime Residuals

The banking and thrift agencies are expected to issue a final rule this fall that would impose higher capital requirements on subprime residual assets, the interest retained after subprime loans are bundled and sold. In September, the agencies proposed requiring banks to hold $1 of capital for each of their $1 of residual interest in these loan pools, and limiting banks' holdings in such assets to no more than 25% of Tier I capital.

Money Laundering

The Treasury and Justice departments are expected to release the National Money Laundering Strategy for 2001 within the next few months. The plan, issued annually by the two agencies, lays out the administration's plans for combating financial crime in the year ahead. Originally expected in the first quarter, the plan had been delayed by the change of administrations.

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


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 were due July 31.

State Bank Definition

A proposal by the FDIC 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 were 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 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.

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.

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.

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.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.