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FEDERAL RESERVE BANK OF NEW YORK jnJino)u>-?76* February 22, 1980 BOARD OF GOVERNORS’ SEMIANNUAL AGENDA OF REGULATIONS To the A ddressee: Enclosed is a copy of the Board of Governors’ Semiannual Agenda of Regulations for the period February 4, 1980 through August 1, 1980. The Semiannual Agenda provides you with information on those regulatory matters that the Board now has under consideration or anticipates considering over the next six months, and is divided into three parts: (1) regulatory matters that the Board had considered during the previous six months on which final action has been taken; (2) regulatory matters that have been proposed for public comment and that require further Board consideration; and (3) regulatory matters that the Board may consider over the next six months. Comments regarding any of the agenda items may be submitted directly to the Board of Governors or to the Consumer Affairs and Bank Regulations Department of this Bank at any time over the next six months. T h o m a s M. T im l e n . F ir s t Vice P resident. FEDERAL RESERVE SYSTEM Board of Governors of the Federal Reserve System SEMIANNUAL AGENDA OF REGULATIONS February 4, 1980 through August 1, 1980 P R IN T E D IN NEW YO RK FROM FEDERAL REGISTER, V O L . 4 5 , N O . 24 FEDERAL RESERVE SYSTEM 12CFR Ch. II Semiannual Agenda of Regulations Board of Governors of the Federal Reserve System. AGENCY: ACTION: Semiannual Agenda. SUMMARY: Pursuant to the Board’s Statement of Policy Regarding Expanded Rulemaking Procedures, the Board anticipates having under consideration regulatory matters as indicated below during the period from February 4 through August 1,1980. DATE: Comments may be received any time during the next six months. ADDRESS: Comments should be addressed to Theodore E. Allison, Secretary of the Board, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. FOR FURTHER INFORMATION CONTACT: (A staff contact for each item is indicated with the regulatory description below.) SUPPLEMENTARY INFORMATION: The Board’s Semiannual Agenda is divided into three sections. Section I reports those regulatory matters from the Board’s last Semiannual Agenda (August 2,1979 through February 1, 1980) on which final action has been taken; Section II reports on regulatory matters that have been proposed, and will involve further Board consideration; and Section III reports regulatory matters the Board may consider during the next six months. A double asterisk in Sections II and III indicates those matters listed on the Board’s previous Semiannual Agenda. I. R egu latory M atters From th e A u g u st 2, 1979 T hrough F eb ruary 1 ,1 9 8 0 S e m i a n n u a l A g e n d a on W h ich F in al A c tio n H a s B e e n T a k en A . R egu latory A c tio n s R esu ltin g From R ecen t L egislation , or From R egu latory D e c isio n s o f O th er F ed eral A g e n c ie s 1. E. (E lectron ic Fund T ran sfers) Action taken. In May 1979, the Board issued for public comment sections of Regulation E to implement those provisions of the Electronic Fund Transfer Act that become effective on May 10,1980. The proposals dealt with disclosure of terms and conditions of EFT services, documentation of transfers, error resolution procedures, and procedures of stopping payment of preauthorized transfers. In October 1979, the Board adopted certain provisions of Regulation E dealing with initial and subsequent disclosures, preauthorized transfers from a consumer’s account, relation to state law, and administrative enforcement, among others (44 FR 59464, October 15,1979). At that time the Board also published for further comment a revised proposal regarding error resolution procedures, documentation requirements, and miscellaneous other provisions. Based on the comments received, final rules implementing the remainder of the Act were adopted in January 1980. Authority. Electronic Fund Transfer Act, 15 U.S.C. 1693b. Staff contact. Dolores S. Smith, Section Chief, Division of Consumer and Community Affairs, (202-452-2412). 2. R u le w ritin g requ ired u n d er T itle XI (R ight to F in a n cia l P rivacy) o f th e F in an cial In stitu tio n s R egu latory an d In terest R ate C on trol A c t Action taken. In September 1979, the Board adopted proposed Regulation S (Reimbursement to Financial Institutions for Assembling or Providing Financial Records) to implement Title XI which provides for reimbursement to financial institutions for reasonably necessary and direct costs incurred in providing customers’ financial records to Federal agencies (44 FR 55812, September 28, 1979). Authority. Right to Financial Privacy Act—Cost Reimbursement, 12 U.S.C. 3415. Staff contact. MaryEllen A. Brown, Senior Counsel, Legal Division, (202452-3608). 3. In itia tiv es req u ired un d er T itle s VIII (C orresp on d en t A c c o u n ts) a n d IX (D isc lo su r e o f M aterial F acts) o f th e F in a n cia l In stitu tio n s R egu latory an d In terest R ate C on trol A ct Action taken. In November 1979, the Board adopted proposed amendments to its Regulation O (Loans to Executive Officers, Directors and Principal Shareholders) to implement the prohibitions pertaining to insider loans involving correspondent banking relationships under Title VIII and the reporting requirements contained in Title IX which relate to loans of insiders at their own banks (44 FR 67973, November 28,1979). Authority. Correspondent Accounts and Disclosure of Material Facts, 12 U.S.C. 1817 and 1972. Staff contact. Michael Bleier, Senior Counsel, Legal Division, (202-452-3721). B. A c tio n s In ten d ed T o R e d u c e R egu latory B urden or T o C larify E x istin g R e g u la tio n s 1. Z (Truth in L ending) Action taken. Based on responses to a wide range of questions published for comment in January 1979, the Board in 2 July 1979, invited public comment on specific regulatory changes to Regulation Z that would clarify the computation and disclosure of the annual percentage rate (APR) and several other credit terms. In December 1979, the Board adopted amendments to Regulation Z together with revisions to Supplement I. The most important changes are: (1) adoption of a tolerance of Vs of 1 percentage point in either direction from the exact annual percentage rate, in place of the existing rounding rule; (2) adoption of simplified rules for treating minor payment schedule variations; and (3) expansion of the protection available to creditors who have relied in good faith on faulty calculation tools. Although the new rules are effective on January 10,1980, creditors need not comply with the revised provisions until October 1,1980, and may instead continue to operate under the previous rules in the interim (44 FR 77139, December 31,1979). Authority. Truth in Lending Act, 15 U.S.C. 1604 and 1606. Staff contact. Dolores S. Smith, Section Chief, Division of Consumer and Community Affairs, (202-452-2412). 2. R u le s o f P ractice for Form al H earin gs Action taken. In October 1979, the Board revised its Rules of Procedure for Formal Hearings to simplify and clarify the rules applicable to formal administrative hearings conducted pursuant to section 554 of the Administrative Procedure Act (44 FR 56685, October 2,1979). The revision also expanded the coverage of the Rules to cover administrative proceedings required by certain provisions of the Financial Institutions Regulatory and Interest Rate Control Act of 1978 (FIRA). Pursuant to the authority of 5 U.S.C. 553, these proposals were not issued for public comment. Authority. Federal Reserve Act, 12 U.S.C. 248(i). Staff contact. James V. Mattingly, Assistant General Counsel, Legal Division (202-452-3430); Michael Bleier, Senior Counsel, Legal Division, (202452-3721). C. O th er R eg u la to ry A c tiv ity 1. D (R e se r v e s o f M em b er B a n k s) Action taken. Following public comment on a proposed amendment to Regulation D to apply a 3 percent reserve requirement to member banks on certain borrowings from nonmember banks, other depository institutions and the United States Government and to certain repurchase agreements involving U.S. Government and agency securities, the Board in October 1979, adopted the proposal in part when it imposed marginal reserve requirements on managed liabilities of institutions subject to reserve requirements (44 FR 60071, October 18,1979). Authority. Federal Reserve Act, 12 U.S.C. 461(a) and (b). Staff contact. Gilbert T. Schwartz, Assistant General Counsel, Legal Division (202-452-3625). 2. E (E lectron ic Fund T ran sfers) Action taken. In August 1979, the Board adopted an amendment to Regulation E to provide that written notice of loss or theft of an access device or possible unauthorized electronic fund transfers is effective at the time the consumer mails or otherwise sends the notice to the financial institution (44 FR 46432, August 8,1979). Authority. Electronic Fund Transfer Act, 15 U.S.C. 1693b. Staff contact. Lynne B. Barr, Senior Attorney, Division of Consumer and Community Affairs, (202-452-2412). 3. H (M em b ersh ip o f S ta te B an k in g In stitu tio n s in th e F ed eral R e se r v e S y ste m ) Action taken. In June 1979, the Board adopted amendments to Regulation H to require that State member banks that effect certain securities transactions for customers provide confirmation and maintain records with respect to such transactions. At the same time the Board invited public comment on areas dealing with confirmation requirements as they apply to transactions in U.S. Government, federal agency and municipal securities and on the bank officers and employees reporting requirements as they apply to transactions in U.S. Government or federal agency obligations. Following review of the comments received, the Board in December 1979, adopted a final rule substantially similar to that adopted in June 1979 (44 FR 76481, December 27, 1979). Authority. Federal Reserve Act, 12 U.S.C. 248(a) and (i), and 321. Federal Deposit Insurance Act, 12 U.S.C. 1818(b). Staff contact. Robert S. Plotkin, Assistant Director, Division o f Banking Surpervision and Regulation, (202-4522782); Robert A. Wallgren, Chief, Trust Activities Program, Division of Banking Supervision and Regulation, (202-4522717). 4. Z (Truth in L ending) Action taken. In September 1979, the Board revoked an amendment and interpretation of Regulation Z which reduced the obligation of creditors to provide a right of recission for each transaction under open end accounts secured by consumer’s residences (44 FR 55553, September 27,1979), The revocation will be effective March 31, 1980. Authority. Truth in Lending Act, 15, U.S.C. Section 1604. Staff contact. Robert S. Plows, Assistant Director, Division of Consumer and Community Affairs, (202452-3667). will review the comments received on the draft amendments and is expected to take final action on the proposal during the next six months. Authority. Securities Exchange Act of 1934,15 U.S.C. 78(i). Staff contract. Thomas A. Sidman, A ssistant Director, Division of Banking Supervision andi Regulation, (202-4523503); Richard M . Whiting, Senior Attorney, Legal Division, (202-452-3779). II. R egu latory M a tters T hat H a v e B e e n P ro p o sed a n d W ill In v o lv e Further B oard C o n sid era tio n * * 3. L (M a n a g em en t O ffic ia l In terlo ck s) A . R egu latory A c tio n s R esu ltin g From R ecen t L egislation , or From R egu latory D e c isio n s o f O th er F ed eral A g e n c ie s * * 1. D (R e se r v e s o f M em b er B a n k s) Q (In terest o n D e p o sits) Action taken. In July 1979, the Board, pursuant to provisions of the International Banking Act (IBA), approved publishing for public comment proposed amendments to Regulations D and Q to make United States branches and agencies of foreign banks subject to reserve requirements and interest rate ceilings currently applicable to member banks (44 FR 44876, July 31,1979). The Board’s proposals to implement the provisions of IBA w ill facilitate the conduct of monetary policy and will promote fair competition by treating branches and agencies like member banks to the fullest extent possible. Tfte Board will review the comments received on the draft amendments and is expected to take final action within the next six months. Authority. International Banking Act, 12 U.S.C. 3105. Staff contract. Edward C. Ettin, Deputy Staff Director, Office of Staff Director for Monetary and Financial Policy, (202-452-3762). * * 2. F (S ecu ritie s o f M em b er S tate B an k s Action taken. In December 1979, the Board issued for public comment proposed amendments to certain portions of Reglation F concerning form and content of financial statements included in registration statements, annual reports and other periodic reports (44 FR 76551, December 27, 1979). T hese changes are required, in part, to make the Board’s Regulation F substantially similar to regulations of the Securities and Exchange Commission. Concurrently, the proposed incorporation by reference of instructions for the preparation of supervisory financial reports is an undertaking to reduce the reporting burden of registrant banks. The Board 3 Action taken. In June 1979, the Board and the other Federal agencies supervising federally insured depository institutions adopted final regulations under the Depository Institutions Management Interlocks Act that prohibit certain management official interlocks between depository organizations (44 FR 42212, July 19,1979). The Board and the other agencies at the same time proposed clarifying amendments to the final regulations (1) to define the term "representative or nominee” under the Act, (2) to add provisions regarding grandfather rights and changes in circumstances, and (3) to request comment on the issue whether a corporation is a management official under the Act. In addition the Board and the other agencies invited public comment on the final regulation; following review of the comments received on both the proposed amendments and the final regulation, the Board will determine during the next six months what further action should be taken. Authority. Depository Institutions Management Interlocks Act, 12 U7S.C. 3207. Staff contact. Bronwen Mason, Senior Attorney, Legal Division, (202-452-3564). * * 4. O (Loans to Executive Officers of Member Banks) Action taken. In February 1979, the Board adopted regulations to implement certain additional requirements imposed on loans by member banks to certain persons under the Financial Institutions Regulatory and Interest Rate Control Act of 1978 (44 FR 12959, March 9,1979). The additional requirements relate to loans by a member bank to executive officers, directors and principal shareholders of the member bank and of its holding company affiliates. At the same time the Board invited public comment on the final regulation; following review of the comments received, the Board will determine during the next six months whether further action should be taken. Authority. Section 22(h) of the Federal Reserve Act, 12 U.S.C. 375b. Staff contact. James V. Mattingly, A ssistant General Counsel, Legal Division, (202-452-3430). •* 5. T (C redit b y B rok ers an d D e a le r s) Action taken. In December 1976, April 1977, and August 1979 the Board issued for public comment a proposed amendment to Regulation T to permit options specialists to both purchase and sell short stock underlying the options in which they specialize, with a 25 percent margin requirement (41 FR 55552, December 21,1976, 42 FR 22894, May 5, 1977, and 44 FR 47775, August 15,1979). The proposed amendment also recognizes exchange rules approved by the Securities and Exchange Commission which allow trading inputs and calls by specialists on their specialty stock, and provides comparable relief for such hedging activities. The Board w ill review the comments received on the draft amendments and is expected to take final action on the proposal during the next six months. Authority. Securities Exchange Act of 1934,15 U.S.C. 78g. Staff contact. Laura Homer, Chief Attorney; Theodore W. Prush, Senior Securities Regulation Analyst, Securities Regulation Section, Division of Banking Supervision and Regulation (202-4522781). ** 6. Y (B an k H o ld in g C o m p a n ies C h an ge in B an k C ontrol) Action taken. In February 1979, the Board adopted regulations to implement the Change in Bank Control Act, under which any person seeking to acquire control of any insured bank or bank holding company must provide 60 days’ prior written notice to the appropriate Federal banking agency. At the same time the Board invited public comment on the final regulations (44 FR 7229, February 6,1979); following review of the comments received, the Board will determine whether further action should be taken. Authority. Change in Bank Control Act of 1978,12 U.S.C. 18176(j). Staff contact. James McAfee, Senior Attorney, Legal Division, (202—452—3707); Jack M. Egertson, Assistant Director, Division of Banking Supervision and Regulation, (202-452-3408). * • 7. P r o p o sa l to b e m a d e part o f th e n e w B oard reg u la tio n go v ern in g in tern a tio n a l b an k in g o p e r a tio n s (R e g u la tio n s K, In tern ation al B an k in g O p era tio n s) Action taken. Under the International Banking Act (IBA), the Board in November 1979 issued for public comment proposals relating to the selection of a “home State” by foreign banks with U.S. offices (44 FR 62903, November 1,1979). The IBA provides for the determination of a foreign bank’s “home State.” Criteria for determining a foreign bank’s home State and procedures for changing the home State once it is determined require Board regulation. The Board will review the comments received on the draft proposals and is expected to take final action within the next six months. Authority. International Banking Act of 1978,12 U.S.C. 3101. Bank Holding Company Act, 12 U.S.C. 1844. Staff contact. C. Keefe Hurley, Jr., Senior Counsel, Legal Division (202-4523269). B . A c tio n s In ten d ed T o R e d u c e R egu latory B urd en or to C larify E xistin g R eg u la tio n s ** 1. B (E qual C redit O p p ortu n ity) Action taken. In April 1979, the Board, in response to requests for clarification, requested public comment on how the specific rules of Regulation B should apply to various credit scoring practices (44 FR 23865, April 23,1979). The Board will decide within the next six months what regulatory action appears appropriate. Authority. Section 703(a) of the Equal Credit Opportunity Act, 15 U.S.C. 1691b(a). Staff contact. Dolores S. Smith, Section Chief, Division of Consumer and Community Affairs (202-452-2412). ** 2. B (E qual C redit O p p ortu n ity) Action taken. In October 1978 the Board proposed for comment several amendments to the regulation. In April of 1979 one of the proposals w as adopted (44 FR 23813, April 23,1979). The amendment clarified that persons who regularly refer consumers to creditors were subject to the general proscriptions against discrimination but were not subject to the mechanical and recordkeeping provisions of the regulation. Three proposals have yet to be acted upon. These proposals would extend record-keeping and adverse action notification requirements to business loans of under $100,000. Inquiries as to marital status of applicants would be prohibited in all business credit applications. It is expected that these matters will be considered by the Board during the next six months. Authority. Equal Credit Opportunity Act, 15 U.S.C. 1691b. 4 Staff contact. Dolores S. Smith, Section Chief, Division of Consumer and Community Affairs, (202-452-2412). •* 3. T (C redit B y B rok ers a n d D ea lers) Action taken. In August 1979 the Board issued for public comment a proposed amendment to Regulation T to permit brokers and dealers to extend credit on fully paid for shares of openend investment companies that are registered under the Investment Company Act of 1940. The amendment would remove the competitive disadvantage placed upon brokers and dealers as compared to banks and other lenders (44 FR 47776, August 15,1979). Because of the restrictions contained in section 11(d)(1) of the Securities Exchange Act of 1934 a broker or dealer would not be permitted to extend credit on the initial purchase of such shares. The Board w ill review the comments received on the draft amendment and is expected to take final action on the proposal during the next six months. Authority. Securities Exchange Act of 1934,15 U.S.C. 78g. Staff contact. Patsy Abelle, Senior Attorney; Theodore W. Prush, Senior Securities Regulation Analyst, Securities Regulation Section, Division of Banking Supervision and Regulation, (202-4522781). **4. Y (B an k H o ld in g C o m p a n ie s an d C h a n g e in B a n k C ontrol) Action taken. Following a review of its policies toward foreign bank holding companies, in April 1979 the Board issued for public comment a change in the definition of “foreign bank holding company” for purposes of section 4(c)(9) of the Bank Holding Company Act and section 225.4(g) of Regulation Y (44 FR 24864, April 27,1979). Under current regulations, foreign bank holding companies are afforded certain exemptions from the nonbanking prohibitions applicable to bank holding companies. The proposed rule would amend the definition of “foreign bank holding company” to include only those foreign organizations principally engaged in banking outside the United States. The Board w ill review the comments received on the proposed amendment and is expected to take final action during the next six months. Authority. Bank Holding Company Act, 12 U.S.C. 1844. International Banking Act of 1978,12 U.S.C. 3106. Staff contact. C. Keefe Hurley, Jr., Senior Counsel, Legal Division, (202452-3269). •* 5 . Z (Truth in L ending) Action taken. In August 1978, the Board issued for public comment a p r o p o sed in terp retation o f R egu lation Z regarding an in te re st r ed u ctio n on a tim e d e p o sit u s e d to se c u r e a lo a n (43 FR 38849, A u g u st 3 1 ,1 9 7 8 ). U n der R egu lation Q, In terest on D e p o sits, the in terest rate on a lo a n se c u r e d b y a d e p o s it m ust b e at le a s t 1% a b o v e the in terest rate p aid on the d e p o sit. W h ere a sta te usury c eilin g m a k e s it n e c e s s a r y for a cred itor to lo w e r the in te re st on the d e p o s it in order to m a in ta in the rate d iffe re n tia l req uired b y R egu lation Q, the p r o p o sed in terp retation w ill require d isc lo su r e o f the red u ction , but the am ou n t n e e d n o t b e in c lu d e d a s part o f the ''fin an ce c h a r g e.” T he B oard is e x p e c te d to ta k e fin al a c tio n during the n e x t six m on th s. Authority. Truth in L endin g A ct. 15 U .S.C. 1604. Staff contact. Dolores S. Sm ith. Section Chief, Division of Consumer and Community Affairs, (202-452-2412). C. O th er R egu latory A c tiv ity **1. B (E qual C redit O p p ortu n ity) Action taken. In July 1978, the five F ed eral fin a n c ia l regu latory a g e n c ie s — C om p troller o f the C urrency, F ed eral D e p o sit In su ran ce C orporation, F ed eral H om e Loan B ank Board, N a tio n a l C redit U n io n A d m in istra tio n , a n d the F ed era l R e se rv e B oard— issu e d for p u b lic co m m e n t p r o p o se d uniform g u id e lin e s for en fo r ce m en t o f the E qual C redit O p p ortu n ity an d Fair H o u sin g A c ts (43 FR 29256, July 6 ,1 9 7 8 ). T he g u id e lin e s sp e c ify the kin d o f co rr ec tiv e a ctio n a cred itor w ill b e req uired to tak e for v io la tio n s o f the m ore su b sta n tiv e p r o v isio n s o f the E qual C redit O p p ortu n ity A ct (R egu lation B) a n d the Fair H o u sin g A ct. B a se d on the c o m m e n ts r e c e iv e d , the a g e n c ie s are r ev iew in g a r e v ise d draft an d further a c tio n is e x p e c te d w ith in the n e x t six m on th s. Authority. E qual C redit O p p ortu n ity A ct, 15 U .S.C . 1691. et seq. F ed eral D e p o sit In su ran ce A c t, 12 U .S.C . 1818(b). Staff contact. Jerauld C. Kluckman, Associate Director, Division of Consumer and Community ATfairs, (202452-3401). **2. H (M em b ersh ip o f S tate B an k in g In stitu tio n s in th e F ed era l R e serv e S y ste m ) Action taken. In A p ril 1977, the B oard is s u e d for p u b lic co m m en t a p r o p o sa l to a m e n d R eg u la tio n H to prohib it S ta te m em b er b a n k s from p u rch a sin g lo a n s on im p ro v ed real e s ta te or m o b ile h o m e s lo c a te d in flo o d h a za rd a r e a s if the prop erty is n o t c o v e r e d b y flo o d in su ra n ce (42 FR 20815, A p ril 2 2 ,1 9 7 7 ). T h is p r o p o sa l w a s is s u e d un d er the F lo o d D isa s te r P ro te ctio n A c t, a s a m e n d e d , w h ic h p r e se n tly req uired flood in su ra n ce o n im p ro v ed real e sta te that se c u r e s a lo a n o f the prop erty is lo c a te d in a R ood h a za rd area o f a co m m u n ity that p a r ticip a te s in the N a tio n a l F lo o d In su ran ce Program . T he c o m m e n ts r e c e iv e d o n the p r o p o sed a m e n d m e n ts h a v e b e e n r e v ie w e d b y staff, an d it is e x p e c te d that the B oard w ill tak e fin al a c tio n during the n e x t s ix m onth s. Authority. F lo o d D isa s te r P ro tectio n A ct, 42 U .S.C . 4012a(b) an d 4128. Staff contact: Daniel Rhoads, A tto rn ey , L egal D iv isio n , (2 02-452-3711). * * 3. J (C o llectio n o f C h e c k s an d O ther Item s an d T ran sfers o f F u n d s) Action taken. In N o v e m b e r 1979, the B oard is s u e d for p u b lic co m m en t a p r o p o sed S u bp art C to R eg u la tio n J. T he p u rp ose o f p r o p o se d Su bp art C is to se t forth a sy s te m o f rights an d r e s p o n s ib ilitie s gov ern in g the r eceip t an d u se o f F ed era l R e se rv e e le c tr o n ic c le a rin g a n d se ttle m e n t se r v ic e s through a u to m a te d c le a rin g h o u se s. A t the p r e se n t tim e in d iv id u a l a g r ee m en ts are in p la c e w ith e a c h o f the 36 a u to m a te d clea rin g h o u se a s s o c ia tio n s for w h ic h th e F ed era l R e se r v e p r o v id e s clea rin g an d se ttle m e n t se r v ic e s . T h is p r o p o sa l is n e e d e d in v ie w o f the co n tin u in g in c r e a se in th e v o lu m e o f A C H tr a n sa c tio n s a n d the b e n e fits that w o u ld b e d e r iv e d from th e e sta b lish m e n t o f a uniform se t o f ru les an d r e s p o n s ib ilitie s a p p lic a b le to a ll p a r ticip a n ts in F ed era l R e se rv e A C H o p e r a tio n s. T h e B oard w ill r e v ie w the c o m m e n ts r e c e iv e d o n the p r o p o sa ls an d is e x p e c te d to tak e fin al a c tio n w ith in th e n e x t six m on th s. Authority. Federal Reserves A ct, 12 U .S.C . 248(i)(j) and (o), 342 and 360. Staff contact. Lee S. Adams, Senior A ttorn ey, Legal Division, * * 5. Y (B an k H o ld in g C o m p a n ie s and C h a n g e in B a n k C ontrol) Action taken. In M arch a n d M a y 1978, the B oard is s u e d for p u b lic c o m m e n t p r o p o sa ls to a m e n d its R e g u la tio n Y r elatin g to p e r m issib le in su ra n ce a c tiv itie s for b an k h o ld in g c o m p a n ie s (43 FR 14970, A p ril 1 0 ,1 9 7 8 a n d 43 FR 23588, M a y 3 1 ,1 9 7 8 ). T h e se p r o p o sa ls w o u ld con form th e r eg u la tio n w ith th e F ed era l court d e c is io n , Alabama Association of Insurance Agents v. Board of Governors of the Federal Reserve System, 553 F. 2d 224 (5th Cir. 1976), reh earin g d e n ie d , 558 F. 2d 729 (1977), cert, d e n ie d 435 U .S. 904 (1978). In N o v e m b e r 1979, the B oard a c te d up on the la tter o f th e se p r o p o sa ls b y a m e n d in g R eg u la tio n Y so a s to (1) perm it, u n d er c er ta in c ir c u m sta n c e s, b a n k h o ld in g c o m p a n ie s to e n g a g e in the a c tiv ity o f se llin g g e n e ra l in su ra n ce in to w n s w ith a p o p u la tio n o f 5,000 or le s s , a n d (2) p roh ib it b a n k h o ld in g c o m p a n ie s from actin g a s g e n e r a l in su ra n ce agen t in to w n s w ith in a d e q u a te in su ra n ce a g e n c y fa c ilitie s (44 FR 65051, N o v e m b e r 9 ,1 9 7 9 ). T h e B oard w ill c o n sid e r tak in g fin al a c tio n on th e form er o f the tw o p r o p o sa ls during the n e x t six m on th s. Authority. Bank Holding Company A ct, 12 U .S.C . 1843(c)(8). Staff contact. Richard M. Whiting, Senior Attorney, Legal Division, (202452-3779). (2 02-452-3623). * * 4. J (C o lle c tio n o f C h e c k s an d O ther Item s an d T ran sfers o f F u n d s) Action taken. In April 1979, the Board requested public comment on the handling by Federal Reserve Banks of payment instruments that are not payable on demand (44 FR 24929, April 27,19*79). After consideration of the comments received, the Board will consider issuing for public comment during the next six months an amendment to Regulation J dealing with the treatment by Federal Reserve Banks in their check collection procedures of such instruments. This proposal will be considered in view of a recent court case in the Commonweath of Pennsylvania where State-chartered savings banks are authorized to issue to their depositors noninterest bearing negotiable orders of withdrawal (NINOWs). The Pennsylvania Supreme 5 Court r ec e n tly d e te rm in e d that th e se in stru m en ts are n o t p a y a b le on d em a n d , an d thus R eg u la tio n J n e e d s to b e a m e n d e d if R e se r v e B an k s are to c o n tin u e to c o lle c t th e s e a s c a sh item s, Authority. F ed era l R e se r v e A ct, 12 U .S.C . 248(i), 248(o), 342 a n d 360. Staff contact. L ee S. A d a m s, S en io r A tto rn ey , L egal D iv isio n , (2 0 2 -4 52-3623). III. R eg u la to ry M atters th e B oard M a y C o n sid er D uring th e N e x t 6 M o n th s A . R egu latory A c tio n s R e su ltin g From R e c e n t L eg isla tio n , or From R egu latory D e c is io n s o f O th er F ed era l A g e n c ie s * * 1. A A (U n fair or D e c e p tiv e A c ts an d P ra ctices) Anticipated action: The Board is required by the Federal Trade Commission Act, subject to certain exceptions, to adopt trade regulation rules applicable to banks that are substantially similar to those adopted by the FTC with regard to other creditors. The Board will consider issuing for public comment a new proposal to adopt a rule governing the preservation of consumers’ claims and defenses (commonly known as the “creditor holder in due course rule”) in response to a rule proposed by the FTC. The Board’s rule was originally p r o p o se d on F eb ru ary 1 7 ,1 9 7 6 (41 FR 7110, F eb ru ary 17, 1976) b efo re R eg u la tio n A A w a s ad op ted ; the B oard w o u ld c o n sid e r the r e v ise d p r o p o sa l as an a m e n d m e n t to R eg u la tio n A A . T his p r o p o sa l w o u ld require th e in se r tio n in cer ta in cred it co n tr a cts o f a n o tic e p reserv in g a c o n su m er ’s c la im s an d d e fe n s e s a g a in st a se lle r o f g o o d s or s e r v ic e s a g a in st all h o ld e r s o f the con tract. It is e x p e c te d that the FTC w ill c o n sid e r its p r o p o se d cred itor rule o n or a b o u t M arch 1 5 ,1 9 8 0 . A u t h o r i t y . S e c tio n 18(f) o f F ed era l T rad e C o m m issio n A ct, 15 U .S.C . 41 e t . seq . S ta f f c o n ta c t. Dolores S. Smith, Section Chief; David A. Myers, A tto rn ey , D iv isio n o f C on su m er an d C om m u n ity A ffairs, (202-452-2412). ** 2. Proposal to be made part of the new Board regulation governing international banking operations (Regulation K, International Banking Operations) A n t i c i p a t e d a c t i o n . U n d er the In tern a tio n a l B ank ing A c t (IBA) the B oard w ill c o n sid e r issu in g for p u b lic co m m en t p r o p o sa ls r elatin g to the n o n b a n k in g a c tiv itie s o f foreign b a n k h o ld in g c o m p a n ie s. A p en d in g ru lem ak in g p r o c ee d in g w o u ld red efin e th e term “foreign b an k h old in g c o m p a n y ” and, thus, a ffe c t the e lig ib ility o f foreign o r g a n iza tio n s for e x e m p tio n s from the n o n b a n k in g p ro h ib itio n s o f th e B ank H o ld in g C o m p a n y A c t. T he IBA p r o v id e s a n e x e m p tio n from the n o n b a n k in g p r o h ib itio n s o f the B ank H old in g C o m p a n y A c t for certa in q u a lify in g b a n k s. T h is e x e m p tio n w o u ld perm it foreign b a n k h o ld in g c o m p a n ie s an d foreign b a n k s to en g a g e in c er ta in n o n b a n k in g a c tiv itie s in d ir ec tly in the U n ite d S ta te s an d w ill b e the su b je ct o f further B oard regu lation . A u t h o r i t y . In tern a tio n a l B ank ing A c t o f 1 9 7 8 ,1 2 U .S.C . 3101. B ank H o ld in g C o m p a n y A c t, 12 U .S.C . 1844. S t a f f c o n t a c t . C. Keefe Hurley, Jr., Senior Counsel, Legal Division, (202— 452-3269). B. Actions Intended To Reduce Regulatory Burden or To Clarify Existing Regulations ** 1. K (International Banking Operations) A n t i c i p a t e d a c t i o n . T h e B oard w ill c o n sid e r r ep u b lish in g for c o m m e n t a p r o p o sa l that w o u ld perm it Edge C o rp o ra tio n s to p r o v id e full b a n k in g se r v ic e s to a lim ite d c la s s o f cu sto m e rs. P ursuan t to the In tern a tio n a l B ank ing A ct, a sim ila r p r o p o sa l w a s p u b lish e d for c o m m e n t in F eb ru ary 1979, (44 FR 10509, F eb ru ary 2 1 ,1 9 7 9 ) to im p rove the c o m p e titiv e p o s itio n o f E dge C orp oration s. A u t h o r i t y . In tern a tio n a l B ank ing A c t o f 1 9 7 8 ,1 2 U .S.C . 3101. F ed era l R e se rv e A ct, 12 U .S.C . 601 a n d 615. A u t h o r i t y . F reed om o f In form ation A ct, 5 U .S.C . 552. S t a f f c o n t a c t . S te p h en L. S ic ilia n o , S e n io r C ou n sel, L egal D iv isio n (202-452 3920). S t a f f c o n t a c t . C. Keefe Hurley, Jr., Senior Counsel, Legal Division, (202- **5. R egu latory Im p rovem en t P roject 452-3269). 2. Q (Interest on Deposits) A n t i c i p a t e d a c t i o n . In r es p o n s e to a r eq u e st from the p u b lic, th e B oard w ill c o n sid e r issu in g for p u b lic co m m en t an a m e n d m e n t to R egu lation Q (an d R eg u la tio n D, R e se r v e s o f M em b er B an k s) to in c r e a se the am ou n t that b u s in e s s o r g a n iza tio n s m a y m a in ta in in s a v in g s a c c o u n ts at m em b er b a n k s from the p r e se n t c eilin g o f $150,000. In c o n sid e r in g th is req u est, the B oard w ill e v a lu a te the p o te n tia l e ffe c ts su ch in c r e a se s c o u ld h a v e up on the co n d u ct o f m o n e ta ry p o licy . A u t h o r i t y . F ed era l R e se r v e A ct, 12 U .S.C . 461(a) a n d (b) an d 3 7 lb . S t a f f c o n t a c t . G ilbert T. S c h w a rtz , A s s is ta n t G en eral C o u n sel, L egal D iv isio n , (2 02-452-3625). 3. T (Credit by Brokers and Dealers) A n t i c i p a t e d a c t i o n . In r e s p o n s e to r eq u e sts from the N e w York S to c k E x c h a n g e an d the N a tio n a l A s s o c ia tio n o f S e c u r itie s D e a ler s, Inc., the B oard w ill c o n sid e r issu in g for p u b lic co m m en t p r o p o se d a m e n d m e n ts to R e g u la tio n T regarding the tim e w ith in w h ic h p a y m e n t m u st b e m a d e for se c u r itie s tr a n sa c tio n s in c a sh a n d m argin a c c o u n ts. T h e r e q u e ste d a m e n d m e n ts w o u ld lib e r a liz e the tim e for p a y m e n t p r o v isio n s in the m argin a c c o u n t an d p r o v id e so m e fle x ib ility to n a tio n a l se c u r itie s e x c h a n g e s or a s s o c ia tio n s p r o c e s sin g a p p lic a tio n s for e x te n s io n s o f tim e w ith in w h ic h p a y m e n t is d u e un d er th e regu lation . A u t h o r i t y . Securities Exchange Act o f 1 9 3 4 ,1 5 U .S.C . 78g. S t a f f c o n t a c t . Patsy Abelle, Senior Attorney; Theodore W. Prush, Senior Securities Regulation Analyst, Securities Regulation Section, Division of Banking Supervision and Regulation, (2 0 2 -4 5 2 - 2781). **4. Rules Regarding Availability of Information A n t i c i p a t e d a c t i o n . T he B oard w ill c o n sid e r issu in g for p u b lic c o m m e n t c er ta in a m e n d m e n ts to its R u les R egard ing A v a ila b ility o f In form ation in order to bring th em into co n fo rm ity w ith e x is tin g in form ation d isc lo su r e la w a s it h a s d e v e lo p e d sin c e the reg u la tio n w a s la st a m e n d e d , a n d a ls o in order to tak e a d v a n ta g e o f the s t a f f s e x p e r ie n c e w o rk in g w ith the F reed om o f In form ation A ct. 6 A n t i c i p a t e d a c t i o n . T he B oard ’s R egu latory Im p rovem en t P roject in v o lv e s , am on g oth er things, a su b sta n tiv e , z e r o -b a se r e v ie w o f all F ed eral R e se rv e reg u la tio n s that a ffe c t the p u b lic to d eterm in e (1) the fu n d a m e n ta l o b je c tiv e s o f the reg u la tio n an d the e x te n t to w h ic h it is m eetin g current p o lic y g o a ls, (2) n on regu latory a lte r n a tiv e s that w o u ld a c c o m p lish the o b je c tiv e s, (3) c o s ts an d b e n e fits o f the regu lation , (4) u n n e c e ss a r y b u rd en s im p o se d b y the regu lation , and (5) the cla rity o f the regu lation . D uring the p a st six m on th s, r e v ie w s w e r e c o m p le te d o f R egu lation O (L oans to E x e c u tiv e O fficers, D irectors, an d P rincipal S h a reh o ld ers), an d o f m e th o d s o f co m p u ta tio n a n d d isc lo su r e o f a n n u al p e r ce n ta g e ra tes un der R egu lation Z (Truth in L ending). A lso , p u b lic co m m en t w a s r eq u e sted on a red rafted v e r sio n o f R eg u la tio n J (C o llec tio n o f C h ec k s an d O th er Item s an d T ran sfers o f F unds). O v er the n e x t six m o n th s r e v isio n s lik ely to b e c o n sid e r e d b y the B oard w ill in clu d e, bu t are n o t n e c e s s a r ily lim ite d to: G (S e c u r ities C red it b y P erso n s O ther th an B ank s, B rokers or D e a ler s), H (M em b ersh ip o f S ta te B anking In stitu tio n s in the F ed era l R e se rv e S y stem ), I (Issu e an d C a n c e lla tio n o f C ap ital S to c k o f F ed era l R e se rv e B ank s), J (C o llec tio n o f C h ec k s an d O ther Item s a n d T ra n sfers o f F und s), N (R e la tio n s w ith F oreign B an k s an d B an k ers), P (M inim um S ecu rity D e v ic e s a n d P ro ced u res for F ed eral R e se rv e B an k s an d S ta te M em b er B ank s), T (C redit b y B rokers an d D e a ler s), U (C redit b y B an k s for the P urpose o f P u rch asin g or C arrying M argin S to ck s), X (R u les G overn in g B orrow ers W h o O b ta in S e c u r itie s C redit), Y (Bank H o ld in g C o m p a n ies a n d C h ange in B ank C ontrol), a n d Z (Truth in L ending). R e q u ests for p u b lic c o m m e n t on p r o p o sa ls c o n cern in g m a n y o f th e se reg u la tio n s w ill b e m a d e over the co m in g s ix m on th s. S t a f f c o n t a c t . R ichard H. P uckett, M anager, R egu latory Im p rovem en t P roject (2 0 2 -4 52-3742). C. O ther R egu latory A c tiv ity **1. H (M em b ersh ip o f S tate B an k in g In stitu tio n s in the F ed eral R e se r v e S y stem ) A n t i c i p a t e d a c t i o n . T h e B oard w ill c o n sid e r issu in g for p u b lic co m m en t an am en d m en t to R egu lation H to im p lem en t se c tio n 23(e) o f the S ecu rities E x ch a n g e A ct o f 1934 w h ich authorized F ed eral regu latory a g e n c ie s to require a ban k w h ic h e x e r c is e s in v e stm e n t d isc r etio n w ith r esp e ct to an a cco u n t to d is c lo s e its p o lic ie s an d p r a c tic es w ith r esp e ct to c o m m issio n s that w ill be paid for effe c tin g se c u r itie s tr a n sa c tio n s. T he am en d m en t w o u ld p rescrib e the m ann er an d freq u en cy o f m aking su ch d isc lo su r e s b y S ta te m em b er banks. Sim ilar reg u la tio n s are e x p e c te d to be c o n sid e r e d by the C om p troller o f the C u rren cy and the F ed eral D e p o sit In su ran ce C orporation. Authority. S e c u r ities E x ch a n g e A ct o f 1934, 15 U .S.C . 78b(e)(2). Sta ff contact. R obert S. Plotkin, A s sista n t D irector, D iv isio n o f B anking S u p erv isio n an d R egu lation (2 0 2 -4 5 2 2782); R obert A. W allgren , C hief, Trust A c tiv itie s Program , D iv isio n o f B anking S u p e rv isio n and R egu lation (2 0 2 -4 5 2 2717). **2 . Q (In terest Authority. S e c u r ities E x ch a n g e A ct o f 1934, 15 U .S.C. 78g. S ta ff contact. Laura H om er, C h ief A ttorney; T h eo d o re W . Prush, S en io r S e c u r ities R egu lation A n a ly st, S e c u r ities R egu lation S e c tio n , D iv isio n o f B anking S u p e rv isio n and R egu lation (2 0 2 -4 5 2 2781). C om m en ts on this a g e n d a sh o u ld be su b m itted in w ritin g to the Secretary. B oard o f G overn ors o f the F ed eral R e se rv e S y stem , W a sh in g to n , D.C. 20551. Board of Governors of the Federal Reserve System. January 28, 1980. Theodore E. Allison, Secretary of the Board. (FR Doc. 80-3422 Filed 2-1-80; 8:45 am) BILLING CODE 6210-01-M on Deposits) Anticipated action. T he B oard h as statu tory auth ority to prohib it unfair or d e c e p tiv e a c ts or p r a c tic es e n g a g e d in by ban ks. T he B oard's sta ff currently is r e v ie w in g p r a c tic e s o f b a n k s that m ay be regard ed a s unfair or d e c e p tiv e , inclu d in g the failu re to m ake a d e q u a te d isc lo su re o f a cco u n t term s to d e p o sito r s. T h is r e v ie w w ill in clu d e c o n sid e r a tio n o f w h eth er ad d itio n a l regu lation is n e c e s s a r y or a d v isa b le and c o n su lta tio n w ith the other fin an cial regu latory a g e n c ie s. T he resu lts o f this r e v ie w w ill b e c o n sid e r e d by the Board in determ in in g w h eth er it is app rop riate to issu e for p u b lic com m en t an am en d m en t to its R egu lation Q to require b a n k s to m ak e a d d itio n a l d isc lo su r e s o f a c co u n t term s. Authority. F ed eral R e se rv e A ct. 12 U .S.C . 371b. F ed eral T rade C o m m issio n A ct, 15 U.S.C. 41 et seq. S ta ff contact. A n th o n y F. C ole, S en ior A ttorn ey, L egal D iv isio n , (202-452-3612); D o lo r es S. Sm ith, S e c tio n C hief, D iv isio n o f C on su m er an d C om m u nity A ffairs (202-452-2412). 3. T (Credit by Brokers and Dealers) Anticipated action. In r e sp o n se to a req u est on b e h a lf o f a reg istered brokerd ealer, the B oard w ill c o n sid e r w h eth er it h a s the auth ority under the S e c u r ities E x ch a n g e A c t o f 1934 to am en d R egu lation T to perm it the a c c e p ta n c e o f b an k d e p o sito r y r ec eip ts for gold by a broker or d e a ler to m eet the m argin req u irem en ts sp e c ifie d b y the rule. The B oard w ill a lso c o n sid e r a p o s sib le am en d m en t to se c tio n 220.6(j) o f R egu lation T regarding the u se o f foreign cu rren cy to m eet m argin req uirem en ts. 7
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