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F ed er a l Re se r v e Ba n k DALLAS. TEXAS of Dallas 75222 C irc u la r No. 80-29 F e b ru a ry 19, 1980 POLICY STATEMENTS Interagency Coordination of Inspections and Examinations of Bank Holding Companies and their Subsidiary Banks And Formal Corrective Actions Against Bank Holding Companies and Commercial Banks TO ALL MEMBER BANKS, BANK HOLDING COMPANIES, AND OTHERS CONCERNED IN THE ELEVENTH FEDERAL RESERVE DISTRICT: The Board of Governors of the Federal Reserve System has adopted two policy statements recommended by the Federal Financial Institutions Examination Council. The first policy statement is intended to promote interagency coordination of bank holding company inspections and the examinations of subsidiary banks. The second policy statement deals with the coordination of formal corrective actions and will enhance supervision of institutions requiring special supervisory attention. For your information, the policy statements a re printed on the following pages. Any questions concerning the documents should be directed to Mr. D. Charles Ratliff, Director of Inspections, of our Holding Company Supervision Department, Ext. 6258. Sincerely yo urs, Robert H. Boykin First Vice President Banks and others are encouraged to use the following incoming W A T S numbers in contacting this Bank: 1-800-442-7140 (intrastate) and 1-800-527-9200 (interstate). For calls placed locally, please use 651 plus the extension referred to above. This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) INTERAGENCY COORDINATION OF BANK HOLDING COMPANY INSPECTIONS AND SUBSIDIARY BANK EXAMINATIONS Bank supervisory o ffic ia ls a t each of the fed eral a gen cies' R egions or D istricts shall hold periodic planning session s in order to p rioritize and schedule the coordination o f bank holding com pany in sp ection s and subsidiary bank exam inations. These planning sessions shall be held at le a st sem iannually or more frequently as n ecessary in order to provide for a coordinated schedule th at w ill m axim ize the e f f ic ie n t use o f exam ination resources and enhance the integration o f bank and holding com pany exam inations. Coordination o f in sp ection s and exam inations should focu s on the use of com m on financial statem en t d ates w here possible and allow for joint discussions of exam ination findings w ith m anagem ent. It need not alw ays involve absolute concurrency, com m on "as of" dates or sim ultaneous starting d ates. Staggered starting d a tes may be called in for c a se s where the bank exam ination is likely to take sign ifican tly longer than th e bank holding com pany in sp ection s, and for other reasons. The a g en cies shall be required to conduct coordinated bank holding com pany in sp ection s/lea d bank exam inations for: (1) any bank holding com pany with (2) any consolidated a sse ts in ex ce ss o f $10 billion; bank holding com pany or bank holding company subsidiary lead bank rated co m p o site ^ or 5 under th e Bank Holding Company R ating System or the Uniform Interagency R ating System for banks; and (3) any bank holding com pany or bank holding com pany subsidiary lead bank rated com p osite 3 whose financial condition appears to have worsened sign ifican tly sin ce th e last in sp ection /exam in ation . -2 - The a g en cies w ill a ttem p t, to the e x te n t possible and where resources perm it, to coordinate exam inations and inspections for a ll other bank holding com panies w ith priority given to th ose holding com panies and/or subsidiary banks where circu m stan ces in d icate th at such coordination is particularly desirable. Bank exam inations for additional subsidiary banks within a multibank holding com pany covered above should be coordinated w ith th e parent inspection to th e ex ten t p racticab le and where resou rces w ill perm it. In th ose multibank com panies w ithout a designated lead bank, th e largest bank based on to ta l a sse ts shall be considered th e lead bank for purposes o f this policy sta tem en t. In order to keep the State bank regulators aw are o f coordinated e ffo r ts by th e fed era l banking a gen cies and to encourage participation by th e State regulators, th e Federal R eserve or FDIC, resp ectiv ely , should inform th e appropriate S tate bank regulator o f coordinated fed eral e ffo r ts a ffe c tin g either a bank holding com pany or State bank under th e jurisdiction o f the S tate bank regulator. Although this statem en t o f policy is intended to enhance interagen cy e ffo r ts a t coordinating supervision o f bank holding com panies, including their bank and nonbank subsidiaries, it is not intended to preclude or prohibit any fed eral agency from using its authority to exam ine organizations "affiliated" in stitu tion s for which it has primary fed eral supervisory responsibility. with financial INTERAGENCY COORDINATION OF FORMAL CORRECTIVE , ACTION BY THE FEDERAL BANK REGULATORY AGENCIES^' Any fed eral banking regulatory agency th at in itia tes form al en forcem en t action against a bank holding com pany or a com m ercia l bank shall n otify th e other tw o fed eral banking regulatory a g en cies th at such action is being taken. All such n o tifica tio n s shall be in w riting and shall take p lace a t both the regional and head o f f ic e s o f the banking a g en cies. In the ev en t "com plementary" action (e.g ., action involving a bank(s) and th e parent holding com pany) is considered appropriate by tw o or more fed eral ag en cies, th e preparation, processing, and follow -up of th e co rrectiv e action shall be coordinated by th e a g en cies d irectly involved. In th e even t d ifferen ces o f opinion arise b etw een the fed eral agen cies' s ta ffs concerning such m atters a s the appropriateness o f a sp e c ific action , th e need for com plem entary action , or the sev erity or co n ten t o f such a ctio n s, th e circu m stan ces shall be review ed on a tim ely b asis by a c o m m itte e con sistin g of th e directors o f bank supervision, and leg al counsel a s appropriate, for each o f the fed eral a gen cies. If th e co m m itte e is unable to resolve th e d iffere n c es, th e m atter w ill be referred to th e Council Members of the agen cies involved. With r esp ect to F ed eral-S tate agency coordination, th e Federal R eserve provides th e appropriate S ta te supervisory authority w ith n o tice of its intent to in stitu te a form al c o r r e c tiv e action against a bank holding com pany. U .S.C . 1818(m), th e fed eral regulatory a g en cies are required Pursuant to 12 to provide the appropriate S tate supervisory authority with n o tice o f their in ten t to in stitu te a form al co rr ectiv e action against a S tate chartered bank. This requirem ent is made applicable to bank holding com panies by 12 U .S.C . 1818(b)(3). These procedures are not intended to preclude or fo resta ll any federal agency from in itiatin g a form al c o r r e c tiv e action alone and on a tim ely basis against an in stitu tion for which it has primary supervisory jurisdiction. This policy pertains to form al ad m in istrative a ction s taken by the Federal banking a g en cies pursuant to th e Financial Institutions Supervisory A ct o f 1966 a s am ended.