ELECTRONIC BENEFITS I: A Treasury proposal is expected by early August on how the government will deliver Social Security and other federal benefits electronically to the 10 million recipients who do not have bank accounts. A 1996 law requires the federal government to send all government payments, except tax refunds, electronically by Jan. 1, 1999.

INTERSTATE II: The three banking agencies are expected by late summer to consider a final rule preventing out-of-state branches from draining deposits from communities. The proposed rule would require branches of out- of-state banks to lend at least half as much as the average home-state bank. It was published March 17, and comments were due May 2. The final rule was supposed to have been adopted by June 1 when full-scale interstate branching took effect.

FOREIGN BANKS: The rewriting of Regulation K is now more than seven months late. The rule, which governs the overseas operations of domestic banks and the U.S. operations of foreign banks, now is not expected until late summer.

The proposal would relax limits on 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 would make it easier for foreign banks to expand their operations here. Observers believe the Fed is holding up release until Congress completes work on financial modernization legislation.

MONEY LAUNDERING II: The Fed expects to issue know-your-customer rules by August. 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.

RECOURSE: The Federal Financial Institutions Examination Council's supervision task force is still grappling with a long-delayed proposal that would reduce the amount of risk-based capital banks must hold against some assets sold with recourse. The plan, which regulators may issue for comment as early as July, also may require banks to hold more capital in recourse arrangements involving letters of credit, warranties, and other direct credit substitutes.

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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