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NOTICE
BOARD OF GOVERNORS’ SEMIANNUAL REGULATORY AGENDA
OCTOBER 1,198® — APRIL 1,1987
The Board of Governors of the Federal Reserve System has issued its Sem iannual
Regulatory Agenda for the period October 1,1986 through April 1,1987. The Agenda
provides inform ation on those regulatory m atters that the Board now has under
consideration or anticipates considering over the next six months. It is divided into
three parts: (1) regulatory m atters th at the Board may consider for public comment
during the next six months; (2) m atters th at have been proposed and are under
consideration; and (3) regulatory m atters that the Board has completed or is not
expected to consider further.
The Agenda is published in the Federal Register twice a year -- in A pril and in
October. Comments regarding any of the Agenda items should be subm itted directly to
the Board of Governors.
We will be pleased to furnish a copy of the Agenda upon request (Tel. No.
212-720-5216).
C irculars Division
Federal Reserve Bank of New York
October 1986
Federal Reserve
System
Semiannual Regulatory Agenda
Oct. 1, 1 9 8 6 -Apr. 1, 1987
FEDERAL RESERVE SYSTEM
[12 CFR CHAPTER II]
Notice of Semiannual Regulatory Flexibility Agenda
AGENCY:
Board of Governors of the Federal Reserve System.
ACTION:
Semiannual Agenda.
SUMMARY:
The Board is issuing this Agenda under the Regulatory
Flexibility Act and the Boa rd ’s Statement of Policy‘•Regarding
Expanded Rulemaking Procedures.
The Board anticipates having
under consideration regulatory matters as indicated below during
the period from October
1, 1986, through April 1, 1987°
The next
Semiannual Agenda will be published in April 1987°
DATE:
Comments about the form or content of the Agenda may be
" >
submitted any time during the next six months.
ADDRESS:
Comments should be addressed to William W. .Wiles,
Secretary of the Board, Board of Governors of the Federal Reserve
System, Washington,
D.C.
SUPPLEMENTARY INFORMATION:
20551.
The Board is publishing its October
1986 Agenda as part of the October 1986 Unified Agenda of Federal
Regulations, which is coordinated by the Office of Management and
Budget under Executive Order 12291°
Participation by the Board
in the Unified Agenda is on a voluntary basis.
The Bo a r d ’s Agenda is divided into three sections.
The
first, Proposed Rule Stage, reports on matters the Board may
consider for public comment during the next six months.
The
second section, Final Rule Stage, reports on matters that have
been proposed and are under Board consideration.
A third
section, Completed Actions, reports on regulatory matters the
Board has completed or is not expected to consider further.
A dot (o) preceding an entry indicates a new matter that
was not a part of the Bo ard’s previous Agenda, and which the
Board has not completed.
*
(signed)
*
v . ...
Barbara R. Lowrey__________
Barbara R. Lowrey
Associate Secretary of the Board
Section 1
Proposed Rule Stage
-3“
O 1.
T IT L E :
Regulation: H - Membership of State Banking Institutions in the
Federal Reserve System
LEGAL AUTHORITY:
12 USC 321
CFR CITATION :
12 CFR 208.8(e)
ABSTRACT:
The Board will consider issuing for comment an amendment to
Regulation H designed to provide a decrease of approximately
20,000 burden hours in paperwork, as requested by the Office of
Management and Budget. The regulation would be amended to raise
the exemption from various record-keeping requirements in
Regulation H for securities transactions, conducted by banks,
from 200 to 1,000 transactions per year for customers over the
prior three-calendar^year period, exclusive of transactions in
U.S. government and federal agency obligations. This action would
diminish burdens on smaller state member banks; therefore, the
amendment would have no adverse effect on small banks.
TIMETABLE:
ACTION
DATE
Board will consider issuing for
comment a proposal to amend
Regulation H by 10/00/86
EFFECTS OH SMALL BUSINESS AND OTHER ENTITIES: No
AGENCY CONTACT:
Robert S. Plotkin
Assistant Director
Div. of Supervision and Regulation
202 452-2782
-4°
FR CITE
o 2.
TITLE s
Regulation: K - International Banking Operations
LEGAL AUTHORITY i
12 USC 601 et seq
CFR CITATION:
12 CFR 211
ABSTRACT s
The Board will consider an amendment to its regulation governing
the establishment of foreign operating subsidiaries by member
banks. The amendment would eliminate the requirement in section
211.3(b)(9) of Regulation K that a member ban k’s operating
subsidiary be established only where required by local law or
regulation. The revision is intended to promote the efficiency of
member banks’ foreign operations. Because the revision would
remove a restriction, it is not anticipated that comment will be
requested.
The proposal would not have a significant economic impact on a
substantial number of small businesses because it affects only
UoS. banks operating abroad.
TIMETABLE %
ACTION
DATE
Final action by 10/00/86
EFFECTS ON SMALL BUSINESS AND OTHER ENTITIES: No
AGENCY CONTACT:
Kathleen O ’Day
Senior Counsel
Legal Division
202
452=3786
FR CITE
°3.
TITLE:
Regulation: P ~ Minimum Security Devices and Procedures for
Federal Reserve Banks and State Member Banks
LEGAL AUTHORITY:
12 USC 1881 to 188
CFR CITATION;
12 CFR 216
OH
ABSTRACT:
During the next six months, the Board will conduct a zero-based
review of Regulation P, which implements the Bank Protection A
of 1968, and establishes minimum security standards for Federa
Reserve banks and for state member banks. The review will
consider whether any provisions of the regulation are outdated
and whether any substantive changes are necessary because of new
technological developments. The regulation will also be
reorganized and revised for simplicity and clarity. Public
comment will be requested following the zero-based review. It is
not anticipated that the revised regulation will have a
significant impact on a substantial number of small banks.
TIMETABLE:
ACTION
DATE
Board will consider revisions to
Regulation P during the next 04/00/87
six months
EFFECTS ON SMALL BUSINESS AND OTHER ENTITIES: No
AGENCY CONTACT s
Barbara Lowrey
Associate Secretary
Office of the Secretary
202 452-3742
-6°
FR CITE
°
TITLE:
Regulation: T - Credit by Brokers and Dealers
LEGAL AUTHORITY:
15 USC ?8g "Securities Exchange Act of 1934, as amended"
15 USC 78 w "Securities Exchange Act of 1934, as amended"
CFR CITATION:
12 CFR 220
ABSTRACT:
During the next six months the Board will consider issuing for
comment an amendment to the definition of "OTC margin bond" in
Regulation T, The purpose will be to permit marginability of all
securities designated as "mortgage-related securities" in the
Secondary Mortgage Market Enhancement Act of 1984.
It is not anticipated that any proposals in this area would
affect a significant portion of the overall lending activities of
a substantial number of small firms.
TIMETABLE:
ACTION
DATE
Board may review a proposal to
amend Regulation T by 04/00/87
EFFECTS ON SMALL BUSINESS AND OTHER ENTITIES: No
AGENCY CONTACT:
Laura Homer
Securities Credit Officer
Divo of Banking Supervision and Regulation
202 452-2781
“ 7=
FR CITE
5o
TITLE s
Regulation: T = Credit by Brokers and Dealers
*
LEGAL AUTHORITY i
15 USC 78g 'Securities Exchange Act of 193^ 9 as amended”
’
15 USC ?8w 'Securities Exchange Act of 193^ s as amended”
’
CFR CITATION s
12 CFR 220
ABSTRACT s
During the next six months the Board may review a proposal
submitted by several broker/dealers calling for an amendment to
Regulation T to permit broker/dealers to facilitate the exercise
of valuable employee stock options by employees. The method
suggested would allow the broker/dealer to advance funds on a
good faith basis for the exercise.
It is not anticipated that any proposals in this area would
affect a significant portion of the overall lending activities of
a substantial number of small firms.
TIMETABLE %
ACTION
DATE
Board will consider a proposal
to amend Regulation T by 0^/00/87
EFFECTS OH SMALL BUSINESS AMD OTHER ENTITIES z No
AGENCY CONTACT s
Scott Holz
Attorney
D i v . of Banking Supervision and Regulation
202
*152-2781
=8°
FR CITE
o 6o
TITLE:
Regulation: T - Credit by Brokers and Dealers
LEGAL AUTHORITY:
15 USC 78g "Securities Exchange Act of 1934, as amended"
15 USC 78 w "Securities Exchange Act of 1934, as amended"
CFR CITATION:
12 CFR 220
ABSTRACT:
During the next six months the Board may consider proposing
amendments to Regulation T to accommodate settlement and
clearance of foreign securities in accounts covered by Regulation
To A request has been made that amendments be proposed because of
the growing internationalization of the securities markets.
It is not anticipated that any proposals in this area would
affect a significant portion of the overall lending activities of
a substantial number of small firms.
TIMETABLE:
ACTION
DATE
Board may review a proposal to
amend Regulation T by 04/00/87
EFFECTS ON SMALL BUSINESS AND OTHER ENTITIES: No
AGENCY CONTACT:
Laura Homer
Securities Credit Officer
Div. of Banking Supervision and Regulation
202 452-2781
-9-
F$ CITE
7.
TITLE o
Regulation: Y - Bank Holding Companies and Change in Bank Control
LEGAL AUTHORITY;
12 USC 18-43 "Bank Holding Company Act"
12 USC 1844(b) "Bank Holding Company Act"
CFR CITATION:
12 CFR 225
ABSTRACT s
A provision of Regulation Y permi ts a state bank subsidi
on
eng age th rough a nonbank subsidi ry m
rmis sible under stat e law for the bank
subsidiary itself,
ank
ect to the same limi ts as if the
to
dir ectly. (A simila r rule applie
ies regard ing a ctivi ties permissi
such banks under federal law.) The tsoara receivea comments on
1 law.) Th e Board re ceived commen
this provision in connection with its general request for
comments in May 1983 regarding the proposed revision of
Regulation I. Some of the commenters challenged the Board's
authority to issue this provision, although it has been part of
Regulation Y since 1971. In taking final action on the revision
of Regulation Y, the Board deferred consideration of the comments
on this provision and allowed the existing rule to remain in
effect in the interim (49 FR 794, January 5? 1964).
The Board plans to review this provision of the regulation in the
near future. A determination to reverse the rule could have an
adverse impact on many small banks that are subsidiaries of
holding companies because they might be required to restructure
their nonbanking activities or to take other action.
TIMETABLE i
ACTION
DATE
Board requested comments 05/25/83
Board allows existing rule to 01/05/84
remain in effect
Board will review further by 04/00/87
IFFECYS OH SMALL BUSINESS AMD OTHER ENTITIES: Yes
AGENCY CONTACT s
Jo Virgil Mattingly
Deputy General Counsel
Legal Division
202
452-3^30
B I N : 7100-AA41
-10-
FR CITE
48 FR» 23520
49 FR 794
8.
T IT L E o
Regulation: Y - Bank Holding Companies and Change in Bank Control
(Docket Number: R-0537)
LEGAL
12
12
12
AUTHORITY:
USC 1841 "Bank Holding Company Act"
USC 221 "Federal Reserve Act"
USC 3901 "International Lending Supervision Act of 1983"
CFR CITATION:
12 CFR 225
ABSTRACT:
In January 1985, the Board requested comment regarding whether,
and to what extent, the Board should exercise its authority under
the Bank Holding Company Act, the Federal Reserve Act, and the
International Lending Supervision Act to authorize or limit the
conduct of real estate investment activities by bank holding
companies and their nonbank subsidiaries (50 FR 4519, January 31,
1985)o The Board has not proposed a specific regulation at this
time, and has only requested comment on the general question of
whether, and in what direction Board regulation in this area is
appropriate. If the Board determines to propose a regulation, the
public will be invited to comment.
Comment in this area was requested in response to enactment of a
number of state laws that have recently authorized state banks to
conduct a broad array of nonbanking activities that previously
were not authorized for state banks or bank holding companies,
including real estate investment activities.
Until the Board reviews the comments, it is unclear whether the
Board will act in this area or what specific action it may take.
Therefore, the effect on small entities cannot be accurately
predicted. However, if the Board should take restrictive
measures, bank holding companies of all sizes and their
subsidiaries participating in this activity would be affected.
TIMETABLE:
ACTION
DATE
ANPRM 01/31/85
Further Board action during the
next six months 04/00/87
EFFECTS QM SMALL BUSINESS AND OTHER ENTITIES: Yes
AGENCY CONTACT:
J. Virgil Mattingly
Deputy General Counsel
Legal Division
202 452-3^30
BIN: 7100-AA52
FR CITE
50 FR 4519
9.
TITLE o
Rules Regarding Availability of Information
LEGAL AUTHORITY:
5 USC 552
CFR CITATION :
12 CFR 261
ABSTRACT §
The Bo a r d ’s Rules Regarding Availability of Information are
intended in part to fulfill the requirement of section 552 of
Title 5 of the United States Code that every Federal agency
shall publish in the Federal Register how the public may
obtain information, make submittals or requests, and obtain
decisions; how the age ncy ’s functions are channeled and
determined; its rules of procedure and descriptions of forms
available and the places where they may be obtained.
The Board will consider issuing for comment revisions to
simplify and improve these rules. The review will focus on
clarifying the procedures for requesting access to documents
and information, the processing and disposition of such
requests, and the discretionary release of confidential
inf orroation.
It is not expected that the proposal, if adopted, will have a
significant economic impact on a substantial number of small
entities that would be subject to the regulation.
TIMETABLE:
ACTION
DATE
CITE
Board will consider issuing for
comment revisions to the
Rules by 10/00/86
EFFECTS ON SMALL BUSINESS AND OTHER ENTITIES: No
AGENCY CONTACT s
Stephen L» Siciliano
Special Assistant to the General Counsel
Legal Division
202 452°3920
FR
Section 2
Final Rule Stage
°13=
10.
TITLE:
Regulation: D - Reserve Requirements of Depository Institutions
(Docket Number:
R-0571)
LEGAL AUTHORITY:
12 USC 248(k )
12 USC i46l (a)
CFR CITATION:
12 CFR 204
ABSTRACT:
In May 1986, the Board issued for comment rules to clarify the
definition of "deposit” in Regulation D to include the interest
or liability associated with a borrowing in the form of certain
sales of assets and related transactions by a depository
institution (51 FR 16655, May 7, 1986). These transactions
include a sale of assets that involves a full guarantee by the
institution that, in effect, substitutes the institution’s
credit standing for that of the ultimate borrower and in which
the institution retains the risk of borrower default after the
asset is sold.
Further, the regulation currently treats obligations of an
affiliate as deposits of the depository institution to the
extent the proceeds are provided to the depository institution.
The Board proposes to exclude proceeds received from a sale of
assets without recourse to the affiliate.
The proposal also would clarify the application of Regulation D
to certain of these transactions involving organizations
effectively controlled by the depository institution even though
not formally affiliated. Finally, the proposal would clarify how
the Board measures the "maturity” of an obligation for the
purposes of Regulation D.
The proposal requests comment on any alternatives that the
public believes may be preferable to the Boa rd ’s proposed
amendments. Suggested alternatives will be considered when
comments are analyzed.
The proposed rule would apply to all depository institutions. It
is not anticipated that the proposal will have a negative impact
on the ability of small depository institutions to attract
deposits.
The Board will review the comments and take further action
within the next six months.
TITLE:
Regulation: D = Reserve Requirements of Depository Institutions
■
(Docket Number:
R-0571)
TIMETABLE:
ACTION
DATE
Board proposed revisions to
Regulation D 05/07/86
Comment period extended 07/10/86
Further Board action by 04/00/87
EFFECTS ON SMALL BUSINESS AND OTHER ENTITIES: No
AGENCY CONTACT:
John Harry Jorgenson
Senior Attorney
Legal Division
202
452=3778
RIN: 7100-AA62
“ 15°
FR CITE
51 FR 16855
.51 FR 25069
11.
TITLE :
Regulation: E - Electronic Fund Transfers
R-0578)
(Docket Number
LEGAL AUTHORITY:
15 USC 1693 et seq "Electronic Fund Transfer Act"
CFR CITATION:
12 CFR 205
ABSTRACT:
In August 1986, the Board proposed for comment amendments to
Regulation E to address the responsibilities of persons that
issue access devices and provide electronic fund transfer
services to consumers absent an agreement with the financial
institutions holding the consumer account (51 FR 2 8 5 8 9 ,
August 8, 1986).
The amendments would clarify the
responsibilities of these service-providers and the institutions
holding the consumer accounts for electronic fund transfers
initiated through the service-providers. The amendments would
(1) eliminate the requirement that service-providers furnish
periodic statements to consumers; (2) require service-providers
to provide the transaction identification to account-holding
institutions; and (3) require account-holding institutions to
identify electronic fund transfers initiated through the
service-provider on periodic statements, in accordance with
Regulation E. The amendments would also make changes in the
initial disclosures required of the service-provider and extend
the time allowed for giving notice to the service-provider of
the loss or theft of an access device.
Although the proposed amendments are primarily intended to
eliminate duplication of certain documentation currently
provided to consumers, some small financial institutions may
incur relatively large additional costs in providing customers
with periodic statements that comply with Regulation E for the
first time. The Board is soliciting comment on the extent of
this expense,,
The Board will review the comments and is expected to take
further action during the next six months.
TIMETABLE:
ACTION
DATE
Board issued for comment a
proposal to amend
Regulation E 08/08/86
Further Board action by 0^/00/87
-16°
FR CITE
51 FR 28589
TITLE:
Regulation: E - Electronic Fund Transfers
EFFECTS ON SMALL BUSINESS AND OTHER ENTITIES: Yes
AGENCY CONTACT:
Gerald P„ Hurst
Senior Attorney
Division of Consumer and Community Affairs
202 1452= 3667
RIN: 7100-AA60
“ 17“
TITLE i
Regulation: K - International Banking Operations (Docket Number:
R-0550)
LEGAL AUTHORITY:
12 USC 611 et seq
CFR CITATION:
12 CFR 211
ABSTRACT i
In August 1985, the Board published for comment proposed
regulations that would restrict lending by an Edge Corporation to
its affiliates where the Edge Corporation is not subject to the
restrictions of section 23A of the Federal Reserve Act (12 USC
371c) because it is not owned by a U.S. insured bank (50 FR
35238, August 30, 1985). In taking this action, the Board noted
the increasing number of owners of Edge corporations that are not
subject to federal banking supervision and the potential adverse
effects that might result from such affilations, such as the
impairment of the Ed ge’s ability to act as an impartial arbiter
of credit. The Board requested comment on the effect of the
proposal on existing Edge Corporations, especially those owned by
foreign banks and whether any exemptions from the restrictions
are appropriate.
It is not expected that the proposal would have a significant
economic impact on a substantial number of small businesses,
because it applies only to organizations involved in
international banking.
The Board will review the comments and take further action within
the next two months.
TIMETABLEs
ACTIONDATE
Board proposed revisions to
Regulation K 08/30/85
Further Board action by 10/00/86
EFFECTS ON SMALL BUSINESS AND OTHER ENTITIES 1 No
AGENCY CONTACT:
Kathleen O ’Day
Senior Counsel
Legal Division
202
*i52-3786
BINo 7 1 0 0 - A A 5 8
-18=
FR CITE
50 FR 35238
13.
TITLE:
Regulation: Q - Interest on Deposits (Docket Number R-0514)
LEGAL AUTHORITY :
12 USC 371b
CFR CITATION:
12 CFR 217
ABSTRACT s
In January 1986, the Board issued for comment proposals to
clarify, update, and simplify the advertising provisions of
Regulation Q (51 FR 1379, January 13, 1986). The revisions
incorporate and supersede the proposals of March 198^ concerning
advertising of split-rate deposits and IRA/Keogh (HR 10) Plan
accounts. The proposal is not expected to have a significant
adverse effect on small banks.
The Board will review the comments and is expected to take
further action within the next two months.
It is also anticipated that the Board will consider at that time
various options with regard to providing written disclosures to
consumers about their accounts.
TIMETABLE:
ACTION
DATE
Board proposed revisions 01/13/86
Further Board action by 10/00/86
EFFECTS OH SMALL BUSINESS AND OTHER ENTITIES: No
AGENCY CONTACT:
Daniel L. Rhoads
Senior Attorney
Legal Division
202 452=3711
BIN: 7100-AA56
= 19=
FR CITE
51 FR 1379
1 H.
TITLE i
Regulations Y ( D o c k e t Number:
Bank H o l d i n g C o mp a n i e s and Change i n Bank C o n t r o l
R-0536)
LEGAL AUTHORITY;
12 USC 18^1 et seq "Bank Holding Company Act”
GFR CITATION:
12 CFR 225
ABSTRACT s
In January 1985, the Board requested comment as to whether it
should permit bank holding companies that own nonbank banks to
provide them with internal administrative services and to
establish management interlocks with them (50 FR 2057, January
15, 1985). ("Nonbank banks” are institutions that are chartered
as banks but either do not accept demand deposits or do not make
commercial loans.) The Board took this action to resolve a number
of questions that had been raised regarding the appropriate scope
of relationships between nonbank banks and their affiliates.
It is likely that any action the Board might take would primarily
affect larger bank holding systems and would relax a requirement
or prohibition. Therefore, it is expected that any Board action
would not have a significant economic impact on a substantial
number of small entities.
In view of pending litigation involving the legality of nonbank
banks, the Board has suspended further consideration of nonbank
bank applications by bank holding companies pending a definitive
resolution of the status of nonbank banks. Final action on the
proposal for comment thus is not likely until this issue is
resolved.
TIMETABLE:
ACTION
DATE
Board requested comment 01/15/85
Awaiting Court Action 00/00/00
EFFECTS ON SMALL BUSINESS AND OTHER ENTITIES; No
AGENCY CONTACTs
Melanie Fein
Senior Counsel
Legal Division
202
^52=359^
IRINs 7 1 0 0 - AA5 1
~20~
FR CITE
50 FR' 2057
15.
TITLE:
R e g u l a t i o n : Y - Bank H o l d i n g C o mp a n i e s and Change i n Bank
C o n t r o l ( D o c k e t Number: R - 0 5 6 7 )
LEGAL AUTHORITY:
12 USC 3907
12 USC 3909 "International Lending Supervision Act of 1983"
CFR CITATION:
12 CFR 225, Appendix A
ABSTRACT:
In January 1986, the Board proposed for comment an amendment to
its Capital Guidelines that would provide for a supplemental
adjusted capital measure designed to be more systematically and
explicitly sensitive to the risk exposure of individual banking
organizations (51 FR 3976, January 31, 1986). This measure would
be based on a ratio of primary capital to total assets adjusted
to account for certain types of risks, including many kinds of
off-balance-sheet risk. The Board is considering replacement of
the total capital zones in its current Guidelines with zones
based upon the proposed supplemental adjusted capital ratio.
These new zones would apply only to large banking organizations
with assets in excess of $1 billion. Consequently the proposal
is not likely to have a significant impact on smaller banking
organizations.
The Board will review the comments and coordinate with other
banking agencies. Further action is expected after January 1,
1987.
TIMETABLE:
ACTION
DATE
Board requested comment 01/31/86
Comment period extended 04/11/86
Further Board action by 04/00/87
EFFECTS ON SMALL BUSINESS AND OTHER ENTITIES: No
AGENCY CONTACT:
James E, Scott
Senior Counsel
Legal Division
202 452-3513
RIN: 7 1 0 0 - A A 6 6
-21-
FR CITE
51 FR 3976
51 FR 12865
16.
TITLE o
R e g u l a t i o n : Y *» Bank H o l d i n g C o mp a n i e s and Change i n Bank C o n t r o l
=
( D o c k e t Number: R ° 0 5 7 2 )
LEGAL AUTHORITY :
12 USC 1841 "Bank Holding Company Act”
CFR CITATION:
12 CFR 225
ABSTRACT:
In May 1986, the Board requested comment on whether it should
modify, eliminate, or retain the current restrictions it imposes
on the operation by a bank holding company of a thrift
institution in tandem with the holding company’s other
subsidiaries (51 FR 18797, May 22, 1986). These conditions were
initially imposed after public comment and are designed to
maintain the distinction and separation between thrifts and
banks. The Board has received requests for relief from these
conditions to permit thrifts acquired by bank holding companies
to jointly market and sell products and services with other
holding company affiliates, cross-advertise the services and
products of affiliates, and conduct certain transactions with
affiliates.
Few small banks and holding companies are subject to the
conditions on tandem operations, and action in this area will not
directly affect the operation of a significant number of small
entities. However, the Board has requested comment on whether
relief from the conditions will affect competition between
thrifts owned by bank holding companies and banks and bank
holding companies, including small entities, located in the same
mark et .
The Board will review the comments and is expected to take *
further action within the next six months.
TIMETABLE:
ACTION
DATE
Board requested comment 05/22/86
Further Board action by 04/00/87
FR CITE
51 FR 18797
EFFECTS OH SMALL BUSINESS AHD OTHER ENTITIES: Undetermined
AGENCY CONTACT:
Jo Virgil Mattingly
Deputy General Counsel
Legal Division
202 452=3430
=22°
17.
TITLE:
Regulation: Z - Truth in Lending (Docket Number R-0545)
LEGAL AUTHORITY:
15 USC 1604, as amended "Truth in Lending Act”
CFR CITATION:
12 CFR 226
ABSTRACT:
Regulation Z currently requires that creditors provide
information to consumers regarding variable rate features in
credit transactions. Concern has been expressed in Congress and
elsewhere as to whether Truth in Lending disclosures adequately
convey to consumers the terms and potential costs of adjustable
rate mortgages.
The Board has proposed that creditors make more extensive
disclosure of the variable rate feature in transactions secured
by the consumer’s home (50 FR 20221, May 15, 1985). The
proposal would amend the regulation to require that creditors
make available to consumers general descriptive material about
adjustable rate mortgages as well as provide a more detailed
description of their variable rate feature along with an
example showing the effect of a rate increase of two percentage
points for each of the first three years of the transaction.
Finally, the proposal would eliminate a provision of the
regulation that currently permits creditors to substitute the
disclosures required by other federal agencies for those
required by Regulation Z. The Board is concerned about creditor
burdens of compliance with the overlapping and duplicative
disclosures in this area, and believes that eliminating
substitution could encourage the agencies to develop uniform
disclosure requirements.
If the Board adopts this proposal, mortgage creditors, including
small businesses engaged in mortgage lending, could incur some
costs in revising and reprinting forms, and changing certain
procedures to comply with the requirement. Before any final
action, the Board would consider appropriate actions to minimize
the burdens and costs of compliance.
The Federal Financial Institutions Examination Councial (FFIEC)
has recently agreed upon a proposal for uniform disclosure
requirements among the agencies, and the Board will therefore
take further action in the near future.
°23“
TITLE o
Regulation;
TIMETABLE:
Z * Truth in Lending (Docket Number R = 05^5)
=
ACTION
DATE
Board proposed amendment 05/15/85
Further Board action by 10/00/86
EFFECTS ON SMALL BUSINESS AND OTHER ENTITIES: Yes
AGENCY CONTACT s
Michael Bylsma
Staff Attorney
Division of Consumer and Community Affairs
202
^52=3667
HIMs 7100-AA50
FR CITE
50 FR 20221
® 18 .
TITLE:
Regulation: Z - Truth in Lending (Docket Number R-0577)
LEGAL AUTHORITY:
15 USC 1604, as amended "Truth in Lending Act"
CFB CITATION:
12 CFR 226
ABSTRACT:
In August 1986, the Board proposed for comment an amendment to
Regulation Z to exempt from the rescission provisions of the
regulation refinancings by creditors other than the original
creditor where consumers are not increasing their exposure to
risk in using their homes to secure a debt (51 FR 28245,
August 6, 1986). Regulation Z currently requires that consumers
be given the right to rescind certain credit transactions where
an extension of credit is secured by a consumer’s principal
dwelling. An exemption applies to refinancings by the original
creditor if no new advances of money are obtained by the
consumer.
The proposal would exempt from the right of rescission
refinancings by creditors other than the original creditor if
certain conditions are met. The Board requests comment on whether
the proposed exemption should have the following conditions or
other conditions: (1) no new advances of money are obtained by
the consumer; (2) the annual percentage rate on the new
transaction is not subject to increase and is the same as or
lower than the annual percentage rate on the obligation being
refinanced; and (3) the new transaction does not have a balloon
payment feature.
If the Board adopts this proposal, its effect would be to reduce
the number of transactions for which creditors would need to
provide consumers with a notice of their rescission rights and an
opportunity to rescind. Therefore, it is likely that creditors,
including small entities, would not incur any additional costs as
a result of the proposed change.
The Board will review the comments and is expected to take
further action within the next two months.
TIMETABLE:
ACTION
DATE
Board requested comment 08/06/86
Further action by 10/00/86
EFFECTS ON SMALL BUSINESS AND OTHER ENTITIES: No
AGENCY CONTACT:
Leonard Chanin
Staff Attorney
Division of Consumer and Community Affairs
202 452-3667
-25=
FR CITE
51 FR 28245
TI TLE:
F u r t h e r P r o p o s a l s t o Re d u c e R i s k s on L a r g e - D o l i a r Wire T r a n s f e r
S y s t e m s ( D o c k e t Number: R - 0 5 1 5 A , R - 0 5 1 5 B , R - 0 5 1 5 C )
LEGAL AUTHORITY:
12 USC 221 et seq
ABSTRACT:
In May 1985, the Board adopted a statement of its policy on
reducing risks on large-dollar wire transfer systems (50 FR
21120, May 22, 1985). The Board determined, however, that certain
aspects of this topic require further study and issued the
following three requests for comments: (1) Book-entry securities
transfer (R-0515A). In formulating its policy on risk reduction,
the Board has been concerned about the impact that overdraft
restrictions could have in the U.S. government securities market,
which is vital to the conduct of monetary policy and the funding
of the federal debt. Consequently, the Board has exempted
daylight overdrafts resulting from the transfer of such
securities from these restrictions. Instead, the Board is seeking
comment on a proposal to reduce risks associated with transfers
of book-entry securities that would require institutions to
choose between treating book-entry related overdrafts the same as
funds overdrafts or pledging collateral to secure book-entry
overdrafts. (2) Automated Clearing Houses (R-0515B). The Board
has previously regarded automatic clearing houses (ACHs) as
low-dollar networks. Recently, however, ACHs have begun
processing large-dollar payments, thus presenting many of the
same risks as large-dollar networks. Accordingly, the Board is
requesting comment on risks associated with ACH payments and how
such risks can be controlled. (3) Net Settlement Arrangements
(R-0515C). The Board did not consider risks associated with the
many net settlement services offered by the Federal Reserve^ (ATM,
POS, check, and credit cards). The Board has determined to
consider these risks, and requested comment on various aspects of
these services, and the risks they entail, to aid it in its
study.
It is not expected that these proposals, if adopted, would have a
significant economic impact on a substantial number of small
entities, because small entities do not usually participate in
large-dollar wire transfer systems.
The Board will review the comments and take further action within
the next three months.
TIMETABLEs
ACTION
DATE
Board requested comment 05/22/85
Board extended comment period until 09/30/85
Further Board action by 11/00/86
-26-
FR CITE
50 FR 21130
TITLE:
Further Proposals to Reduce Risks on Large-Dollar Wire Transfer
Systems (Docket Number: R-0515A, R-0515B, R-0515C)
EFFECTS ON SMALL BUSINESS AND OTHER ENTITIES: No
AGENCY CONTACT:
Edward C. Ettin
Deputy Director
Division of Research and Statistics
202 452-3368
RIN: 7100-AA59
-27-
Section 3
Completed Actions
=28-
20.
TITLE:
Regulation: D - Reserve Requirements of Depository Institutions
and Regulation: Q - Interest on Deposits (Docket Numbers: R-0565
and R-0566)
LEGAL AUTHORITY:
12 USC 371b
12 USC 1161(b)
CFR CITATION:
12 CFR 204
12 CFR 217
ABSTRACT:
On March 31, 1986, the authority transferred to the Depository
Institutions Deregulation Committee expired, and interest
paid on deposits generally no longer is subject to regulation.
The Board, therefore, in January 1986 proposed for comment
amendments to its Regulations D and Q to reflect this expiration
and to make other technical changes (51 FR 27, January 2, 1986).
It is not expected that the changes in the regulations will have
a significant adverse effect on small entities.
Following review of the public comments, the Board adopted the
proposals in March 1986.
TIMETABLE:
ACTION
DATE
Board issued for comment proposals
to amend Regulations D and Q 01/02/86
Board adopted final rule amending
Regulations D and Q 03/20/86
FR CITE
51 FR 27
51 FR 9629
EFFECTS ON SMALL BUSINESS AND OTHER ENTITIES: No
AGENCY CONTACT:
John Harry Jorgenson
Senior Attorney
Legal Division
202 452-3778
ADDITIONAL AGENCY CONTACT: Patrick McDivitt, Attorney, Legal
Division, (202) 452-3818
BIN: 7 100-AA57
-29-
21 .
TITLE :
Regulation: H = Membership of State Banking Institutions in the
Federal Reserve System
LEGAL AUTHORITY:
USC I 001 et seq
I
CFR CITATION:
12 CFR 208o8(e)
ABSTRACT:
Age nd a th e Board indi cat ed that it might rev iew
ndme nt s to the floo d insu ra nee provisions of
to pr ovid e a decre ase in P aperwork, as re qui red
sta ff rev iew of th is iss ue has indicated th at th
Id res ult in only a mi nim al burden reducti on g ive
utor y requ irements. Th ere fo re, other provi son s of
are being reviewed to id en tify those chan ges tha
in th e de sired dec rea se in reporting or
recordkeeping burdens on State member banks.
TIMETABLE:
ACTION
DATE
Board review not expected 08/00/86
EFFECTS ON SMALL BUSINESS AND OTHER ENTITIES: No
AGENCY CONTACT:
Daniel L. Rhoads
Senior Attorney
Legal Division
202 1*52-371 1
BIN: 7100-AA61
30~
FR CITE
22 o
TITLE %
R e g u l a t i o n : J - C o l l e c t i o n o f C h e c k s and O t h e r I t e m s and Wire
T r a n s f e r s o f Funds ( D o c k e t Number: R■ 0 5 ^-4 )
=
LEGAL
12
12
12
12
AUTHORITYs
USC
342 ’Federal Reserve Act"
’
USC 248(o) "Federal Reserve Act"
USC
360 "Federal Reserve Act”
USC 248(i ) "Federal Reserve Act”
CEB CITATION 1
12 CFR 210
ABSTRACT §
In March 1985, the Board issued for comment proposed amendments
to Regulation J intended to clarify certain issues that have
arisen regarding Federal Reserve payments mechanism activitieso
Following review of the comments, the Board adopted final rules
in June 1986 (51 FR 21740, June 16, 1986)» The amendments include
(1) permitting the owner or other subsequent holder injured by a
Reserve Bank's alleged failure to exercise ordinary care in
handling a check to bring suit against the Reserve Bank; (2)
establishing a two-year limitation for actions against a Reserve
Bank for alleged mishandling of the collection of checks or
processing wire transfers and for actions against payor
institutions for failure to follow the notification of nonpayment
requirement; (3) permitting Reserve Banks to require any prior
indorser to defend a suit even if the Reserve Bank has not been
sued directly; (4) authorizing depository institutions to deposit
with Reserve Banks for collection checks drawn on institutions in
foreign countries where Reserve Banks have mad^ arrangements for
their collection; (5) clarifying that Reserve Banks are not
liable for consequential damages in handling wire transfers; (6)
adding the northern Mariana Islands to the Twelfth District for
check collection purposes; and (7) clarifying the definitions in
subpart A by incorporating by reference definitions of the
Uniform Commercial Code. All amendments are effective August 1,
1986j except the two-year limitation period for action against
Reserve Banks, which takes effect on January 1 , 19900
It is not expected that the proposals will have a significant
economic impact on a substantial number of small entities.
TIMETABLES
ACTION
DATE
Board requested comment 03/28/85
Board adopted amendments 06/16/86
-31-
FR CITE
50 FR 12310
51 FR 21740
TITLE:
R e g u l a t i o n : J - C o l l e c t i o n o f Ch e c k s and O t h e r I t e m s
T r a n s f e r s o f Funds ( D o c k e t Number: R - 0 5 ^ )
EFFECTS ON SMALL BUSINESS AND OTHER ENTITIES: No
AGENCY CONTACT:
Joseph Ro Alexander
Senior Attorney
Legal Division
202
452-2^89
RIN: 7 100-AA55
-32=
and Wire
TITLE :
R e g u l a t i o n : J - C o l l e c t i o n o f C h e c k s and O t h e r I t e m s and Wire
T r a n s f e r s o f Fu n d s ( D o c k e t Number: R - 0 5 5 2 )
LEGAL AUTHORITY:
12 USC 342 "Federal Reserve Act"
12 USC 248(o) "Federal Reserve Act"
12 USC 360 "Federal Reserve Act”
12 USC 248 Ci ) "Federal Reserve Act"
CFR CITATION:
12 CFR 210
ABSTRACT:
In October 1985, the Board adopted a temporary amendment to
Regulation J creating a standard holiday schedule to be applied
to the recently adopted notification of nonpayment provision (50
FR 41335, October 10, 1985). Although the rule was effective
immediately, the Board requested comment prior to adopting the
rule permanently. Following review of the comments, the Board
adopted a final rule which modifies the temporary rule slightly
(51 FR 21740, June 16, 1986).
The regulation is not expected to have a significant impact on a
substantial number of small entities.
TIMETABLE:
Board
Board
ACTION
DATE
requested comment 10/10/85
adopted amendment 06/16/86
EFFECTS ON SMALL BUSINESS AND OTHER ENTITIES: No
AGENCY CONTACT:
Joseph R. Alexander
Senior Attorney
Legal Division
202 452-2489
RIWs 7100-AA63
°33~
FR CITE
50 FR 41335
51 FR 21740
TITLE:
R e g u l a t i o n : J - C o l l e c t i o n o f C h e c k s and O t h e r I t e m s and Wire
T r a n s f e r s o f Fu nds ( D o c k e t Number: R - 0 5 5 8 )
LEGAL AUTHORITY:
12 USC 3*42 "Federal Reserve Act"
12 USC 2*48(o) "Federal Reserve Act"
12 USC 360 "Federal Reserve Act"
12 USC 2*48(i ) "Federal Reserve Act"
CFR CITATION:
12 CFR 210
ABSTRACT:
In November 1985, the Board proposed several measures to reduce
Federal Reserve float (50 FR *17752, November 20, 1985). The
proposals would: (1) amend Subpart A of the B o a r d ’s Regulation J
which governs the collection of checks and other items, to
require paying banks that close voluntarily on days that are
banking days for their Reserve Banks to pay on such days for
cash items that Reserve Banks make available to them on such
days; (2) modify the procedures used by Reserve Banks to recover
the value of float generated in automated clearing house ("ACH")
operations due to nonstandard holiday closings; (3) reduce
financial risks to the Federal Reserve by changing procedures in
handling ACH credit transactions on days that the originator is
closed; and (*4) establish a uniform holiday schedule to be
followed by the Reserve Banks.
In June 1986, following review of the comments, the Board
adopted the amendment to Subpart A of Regulation J, adopted a
modified policy for recovering ACH float, and adopted a standard
holiday schedule for Reserve Banks. The Board deferred action on
the ACH risk issue until after the Board considers the larger
issues of ACH risk (51 FR 217*40 and 21*421, June 16 and 12,-
1986) o
It is not expected that the proposals would result in any
significant economic impact on a substantial number of small
entities.
ACTION
DATE
Board requested comment 11/20/85
Board extended comment period
until 02/03/86
Board adopted proposals 06/12/86
06/16/86
TIMETABLE:
C
FR I ITE
50 FR *47752
51 FR 613
51 FR 21*421
51 FR 217*40
TITLE:
R e g u l a t i o n : J - C o l l e c t i o n o f C h e c k s and Ot h e r I t e m s and Wire
T r a n s f e r s o f Funds ( D o c k e t Number: R - 0 5 5 8 )
EFFECTS 0M SMALL BUSINESS AND OTHER ENTITIES: No
AGENCY CONTACT:
Florence Young
Advisor
Division of Federal Reserve Bank Operations
202 *152 3955
=
RIN: 7100-AA6M
“ 35°
25 o
TITLE:
R e g u l a t i o n : Y - Bank H o l d i n g
( D o c k e t Number: R - 0 5 1 1 )
LEGAL AUTHORITY:
12 USC 18**3( c ) ( 8 )
C o mp a n i e s and Change i n Bank C o n t r o l
’Bank Holding Company Act”
’
CFR CITATION:
12 CFR 225
ABSTRACT:
In March 198*4, the Board proposed for comment an amendment to
Regulation Y that would list certain additional nonbanking
activities as generally permissible for bank holding companies
under section 4(c) C8) of the Bank Holding Company Act (*49 FR
9215, March 12, 198*0. Following review of public comments, the
Board on June 25, 1986, adopted the proposal by adding the
following activities to the list of activities permissible in
Regulation Y for bank holding companies: (1) commodity trading
advisory and additional futures commission merchant services; (2)
check guaranty services; (3) consumer financial counseling; ( 4
*)
personal property appraisal; (5) tax planning and tax
preparation; and (6) operating a credit agency and credit bureau.
The Board also adopted a proposal to define and clarify the
insurance agency and underwriting activities generally
permissible for bank holding companies so as to conform the
Bo ar d’s Regulation Y to Title VI of the Garn-St Germain
Depository Institutions Act, which was adopted in October 1982.
The proposal enables bank holding companies to engage in
additional activities and imposes no additional burden on any
bank holding company.
TIMETABLE:
DATE
ACTION
Board requested comment 03/12/8U
Board adopted proposals 06/25/86
IFFECTS ON SMALL BUSINESS AND OTHER ENTITIES: No
AGENCY CONTACT:
James Scott
Senior Counsel
Legal Division
202
*452=3513
BIN s 7 1 0 0 - A A 1 7
= 36=
FR CITE
* 9 FR 9215
4
I
TITLE:
R e g u l a t i o n : Y = Bank H o l d i n g C o mp a n i e s and Change i n Bank C o n t r o l
( D o c k e t Number: R - 0 4 9 1 )
LEGAL AUTHORITY:
12 USC 1843(c)(8) ’Bank Holding Company Act”
’
CFR CITATION:
12 CFR 225
ABSTRACT:
In November 1983, the Board published for comment a proposal to
eliminate the requirement in Regulation Y that bank holding
companies engaging in credit life and credit accident and health
insurance underwriting provide rate reductions or increased
policy benefits in order to engage in this activity (48 FR 53125,
November 25, 1983). Following review of public comments, the
Board on June 25, 1986, adopted the proposal to delete the rate
reduction requirement. The Board took this action because the
requirement involved the Board in insurance rate setting, a
prerogative of the states. The Board also cited the fact that the
requirement was inequitably imposed only on bank holding company
lenders, and because the potential adverse effects on the public
that prompted the Board to impose this requirement in 1972 have
become less significant and are not addressed by the rate
reduction requirement.
This proposal relaxes the regulatory requirements on bank holding
companies that engage in this activity.
TIMETABLE:
ACTION
DATE
Board requested comment 11/25/83
Board adopted proposal 06/25/86
FR CITE
48 FR 53125
EFFECTS ON SMALL BUSINESS AND OTHER ENTITIES: No
AGENCY CONTACT:
Jo Virgil Mattingly
Deputy General Counsel
Legal Division
202 452=3430
ADDITIONAL AGENCY CONTACT: Michael J. O'Rourke, Senior Attorney,
Legal Division, (202) 452-3288
BINs 7 1 0 0 - A A 4 0
-37-
27 c
TITLE:
R e g u l a t i o n : Y - Bank H o l d i n g C o mp a n i e s and Change i n Bank
C o n t r o l ( D o c k e t Number: R - 0 5 5 7 )
LEGAL AUTHORITY:
12 USC 3907
12 USC 3909 nInternational Lending Supervision Act of 1983"
CFR CITATION:
12 CFR 225, Appendix A
ABSTRACT s
In November 1985, the Board proposed for comment an amendment to
its Capital Guidelines that would define as primary capital
perpetual debt securities issued by state member banks and bank
holding companies, if such perpetual debt securities met
specific criteria intended to make perpetual debt the functional
equivalent, for capital purposes, of preferred stock (50 FR
4775^, November 20, 1985).
The Board also proposed to limit the amount of preferred stock,
perpetual debt, and mandatory convertible securities that could
qualify as primary capital to 33-1/3 percent of primary capital
exclusive of such instruments.
On July 11, 1986, the Board, following review of public
comments, adopted this proposal with certain changes in the
criteria of perpetual debt and with an increased limit on
preferred stock (50 percent of primary capital exclusive of such
instruments).
The proposal is not expected to have a significant effect on
small banking organizations, particularly in view of the revised
limits on preferred stock and since such institutions are not
likely to issue perpetual debt.
TIMETABLEs
ACTION
DATE
Board requested comment 11/20/85
Board adopted proposal 07/11/86
EFFECTS ON SMALL BUSINESS AND OTHER ENTITIES § No
AGENCI CONTACT s
James E 0 Scott
Senior Counsel
Legal Division
202 452=3513
BINo 7 1 0 0 - A A 6 5
-38
FR CITE
50 FR 47754
@FedFRASER