Financial Update (January-March 1996)
The following is a summary of recent Federal Reserve Board actions. To obtain a copy of any of these announcements, contact the Atlanta Fed Service Department at (404) 498-8474. Information regarding the submission of public comment is included in the announcements.
On Dec. 12, the Board issued a communique from the Basle Committee on Banking Supervision amending the Basle Capital Accord of July 1988. The objective of the amendment is to provide an explicit capital cushion for the price risks to which banks are exposed, particularly those risks arising from banks' trading activities.
On Dec. 13, the Board published staff commentary to its Regulation C, Home Mortgage Disclosure. The commentary provides guidance on issues such as the treatment of prequalifications, loan applications received through a broker, and participations. Compliance is mandatory for data as of Jan. 1, 1996. These data must be submitted to supervisory agencies no later than March 1, 1997.
On Dec. 15, the Federal Financial Institutions Examination Council distributed the September 1995 Uniform Bank Performance Report to insured commercial banks and Federal Deposit Insurance Corporation Insured Savings Banks (FDIC-ISB). The report is also available to the public for sale. The quarterly report is designed for use by bank examiners, financial analysts, and bank managers and permits summary and in-depth analysis of commercial banks and FDIC-ISB financial performance and trends.
On Dec. 18, the Federal Financial Institutions Examination Council announced that it had approved the addition of Schedule E, Fiduciary Income Statement, to the Annual Report of Trust Assets (form FFIEC 001), effective Dec. 31, 1996. While the Annual Report of Trust Assets is completed each year by all financial institutions with trust powers that are supervised by the federal banking and thrift agencies, the new trust income statement must be completed only by those institutions with $100 million or more in total trust assets and by all nondeposit trust companies.
On Dec. 22, the Board issued a final rule amending its Regulation K to ease the burden on U.S. banking organizations seeking to make investments in foreign companies. The final rule expands the authority of strongly capitalized and well-managed banking organizations to make certain foreign investments. The rule became effective immediately.
On Dec. 29, the Federal Financial Institutions Examination Council issued answers to frequently asked questions about requirements of the Community Reinvestment Act. The topics include small business loan data collection and reporting, general reporting, general lending, small farm loan data collection and reporting, community development loan data reporting, and consumer loan data collection.
On Jan. 2, the Board released a final rule amending Subpart A of Regulation K, International Banking Operations. The rule became effective immediately. The final rule expands the authority of strongly capitalized and well-managed banking organizations to make certain foreign investments.
On Jan. 18, the Board, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Office of Thrift Supervision announced a final rule to make technical corrections and clarifications to their regulations concerning the Community Reinvestment Act. The final rule became effective Jan. 1.
On Jan. 19, the Basle Committee on Banking Supervision issued an amendment to its risk-based capital standard to address market risks for internationally active banks. The amendment covers risks in foreign exchange and commodities transactions and in traded debt and equity instruments.
On Jan. 22, the Board released a final amendment to its Regulation EE, Netting Eligibility for Financial Institutions, to clarify that, for the purposes of qualifying as a financial institution, the institution may represent in writing or orally that it is a financial market intermediary.
On Jan. 22, the Board released Rules of Practice and Procedure for Hearings and an updated Regulation H, Membership of State Banking Institutions in the Federal Reserve System.
On Jan. 24, the Treasury's Office of Foreign Assets Control announced the suspension of sanctions against the Federal Republic of Yugoslavia (Serbia and Montenegro). Sanctions remain in effect for Serb-controlled areas of Bosnia.
On Jan. 24, the Board issued a final rule implementing amendments to Regulation K, International Banking Operations, to permit certain foreign banks to establish U.S. representative offices through prior notice procedures, which eliminate the need to file an application with the Board. The rule became effective immediately.
The amendments clarify that only those foreign banking organizations subject to the International Banking Act and the Bank Holding Company Act may establish under general consent procedures a representative office to engage in limited administrative functions in connection with their existing U.S. banking operations.
The Board also decided to consider on a case-by-case basis inquiries by "special purpose government banks" seeking exemptions from regulation under the Foreign Bank Supervision Enhancement Act on the basis that they do not fall within the definition of "foreign bank" under Regulation K.
On Jan. 25, the Board announced policy changes to address Fedwire third-party access arrangements involving service providers located outside the United States. In general, foreign service provider arrangements should be subject to domestic service provider arrangements and to additional conditions related to information and examination access. The changes became effective Feb. 1.
On Feb. 1, the Board published an adjustment of the dollar amount that triggers additional disclosure requirements under Truth in Lending for mortgage loans that bear fees above a certain amount. The Board adjusted the dollar amount from $400 to $412.
On Feb. 1, the Board, along with other banking agencies, published a joint final rule to amend its risk-based capital guidelines to modify the definition of the Organization for Economic Cooperation and Development group of countries. The rule is effective April 1.
On Feb. 5, the Board announced a final rule simplifying the process for reporting suspected crimes and suspicious activities. The rule reduces reporting burdens but also enhances law enforcement's ability to investigate and prosecute crimes involving financial institutions. The final rule becomes effective April 1.