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F

edera l

R

e se r ve

B

ank

O F DALLAS
R O B E R T H. B O Y K I N
PRESIDENT

January 15, 1991

DALLAS, TEXA S 7 5 2 2 2

Notice 91-01

TO:

The Chief Executive Officer of each
member bank and others concerned in
the Eleventh Federal Reserve District
SUBJECT
Federal Financial I n s t i t u t i o n s Examination Council
Study o f Regulatory Treatment o f Recourse Arrangements
DETAILS

The Federal Financial Institutions Examination Council (FFIEC) has
announced the currently projected timetable for its study of the regulatory
treatment of recourse arrangements and has defined the stu dy ’s immediate
scope. The FFIEC’s request for public comment on recourse arrangements was
presented in this Ba n k ’s Circular 90-51, dated July 27, 1990.
ATTACHMENT

A copy of the FFIEC’s recent press release is attached.
MORE INFORMATION

For further information, please contact Jane Anne Schmoker at (214)
651-6228. For additional copies of this notice or Circular 90-51, please
contact the Public Affairs Department at (214) 651-6289.
Sincerely yours,

For additional copies, bankers and others are encouraged to use one of the following toll-free numbers in contacting the Federal Reserve Bank of Dallas:
Dallas Office (800) 333-4460; El Paso Branch Intrastate (800) 592-1631, Interstate (800) 351-1012; Houston Branch Intrastate (800) 392-4162,
Interstate (800) 221-0363; San Antonio Branch Intrastate (800) 292-5810.

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

Federal Financial Institutions Examination Council

&

1776 G Street, N W , Suite 850B • W ash in gton , D C 200 0 6 • (202) 3 5 7 -0177 • FAX (202) 357-0191

Press Release

For immediate release

December 10, 1990

The Examination Council at its December

7, 1990 meeting

reviewed the status of its study of the regulatory treatment of
recourse

arrangements.

public of the

This

announcement

is

to advise

the

currently projected timetable for the study and to

define its immediate scope.
On June 25, 1990, the Council issued a Request for Public
Comment

on

Recourse

Arrangements

which was

published

60-day comment period in the Federal Register.
was

solicited

appropriate
arrangements.
treatment

of

on

the

reporting

definition
and

Comment was

capital

of

also solicited

recourse arrangements

for

and

the

recourse

on the appropriate

under thelending

applicable to banks and savings associations.

a

Public comment

"recourse"

treatments

for

limits

The five agencies

represented on the Council originally targeted year-end 1990 as
the effective date for any regulatory changes arising from the
study.

Board of G o v ern o rs o f the Federal R eserve S ystem , Federal D ep o sit Insurance C o rp o ra tio n , N a tio n a l Credit U n io n A dm inistrate-:'
O ffice of the C om p troller of the Currency, O ffice o f Thrift S upervision

The Council has received approximately 145 comment letters
from a wide range of depository institutions and the public in
response to the publication.

Many commenters expressed concern

that the December target date might not allow sufficient time
for the development of optimal solutions to the numerous issues
presented.

In

view

of

the

project's

significance

and

complexity, the Council has narrowed the scope of the immediate
study, as explained below, and is now targeting year-end 1991 as
the

earliest

Council

or

effective
the

date

agencies

for

any regulatory

will

publish

changes.

notices

of

The

proposed

rulemaking in the Federal Register for public comment prior to
adopting any final rules or guidelines.
The primary and immediate focus of the Council’s study is
on the capital and reporting treatments of recourse arrangements
that

expose

Among

other

financial
issues,

institutions
the

Council

to
is

credit-related
actively

risks.

considering

appropriate treatments for limited recourse arrangements and for
recourse that supports a third party’s assets.
also

considering

options

for

addressing

The Council is

implicit

recourse,

including the possibility that this matter should be addressed
on a case-by-case basis.
The

Council

continues

to

believe

that

all

quantifiable

risks to financial institutions should be supported by capital.
At this stage, however, the Council does not propose to address
the risk-based capital treatment of recourse arrangements that
expose

financial

institutions to

interest rate risk

or other

-

distinctly

non-credit

risks.

3 -

The

overall

risk-based

capital

treatment of interest rate and certain other non-credit risks is
under

consideration

Committee

on

by

the

Banking

individual

Supervision,

international

framework

for

agencies

decided

await

areas

have

before

treatment

for

to

jointly
recourse

agencies
which

bank

capital

further

considering

the Basle

established

the

standards.

The

developments

the

arrangements

and

appropriate

that

institutions to non-credit-related risks.

in these

expose

capital
financial

In the meantime,

the

agencies will continue to apply their current capital standards,
which

include

minimum

capital

requirements

and

additional

capital requirements for individual institutions when warranted.

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