FOREIGN BANKS: The Fed continues to struggle with its overhaul of Regulation K, which governs the overseas operations of domestic banks and the U.S. operations of foreign banks. The rewrite is five months late, and Fed associate general counsel Kathleen O'Day has said she does not expect the rule to surface until this summer.

The proposal is expected to relax rules limiting the amount of income foreign banks may earn outside the United States from insurance and securities activities. It also would eliminate scores of duplicative filing requirements, and it would make it easier for foreign banks to expand their operations here. Release of the rule has been delayed several times as Fed officials worked on changing Regulation Y and the section 20 rules.

MONEY LAUNDERING: Know-your-customer rules are on schedule for a summer release by the Fed. The regulation is expected to require banks to take specific steps to verify the identity of each customer. Regulators have been working on draft rules since May 1996.

CALL REPORTS: The examination council is expected to announce shortly whether it will require all banks to file call reports electronically. The agencies had planned to begin phasing in electronic filing June 30 but are likely to push back the starting date until early next year.

RECOURSE: The exam council's supervision task force is weighing a proposal that would reduce the amount of risk-based capital banks must hold against some assets sold with recourse. The plan, which regulators are expected to issue for comment by June 30, also may require banks to hold more capital in recourse arrangements involving letters of credit, warranties, and other "direct credit substitutes."

Regulators have been wrestling with the plan for more than five years. The major cause of the delay: determining how much capital a bank should hold when pieces of its loan pool are securitized and sold to different buyers. An advance notice of proposed rulemaking was issued for comment in May 1994. Comments were due that July.

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