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FEDERAL RESERVE BANK
OF NEW YORK
f e l s $a
ji
April 30, 1984
BOARD O F GOVERNORS9SEMIANNUAL AGENDA O F REGULATIONS
A PR IL 1,1984 — O CTO BER 1,1984
To All Depository Institutions
in the Second Federal Reserve District:
Printed below is the text o f the Board o f Governors’ Semiannual Regulatory Flexibility Agenda for the
period April 1, 1984 through October 1, 1984, which has been reprinted from the F e d e r a l R e g i s t e r of
April 19, 1984. The 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 have been proposed and that are under Board consideration; (2) major regu
latory reviews in progress under the Board’s Regulatory Improvement Project and other regulatory matters
the Board may consider during the next six months; and (3) regulatory matters from the Board’s previous
Semiannual Agenda on which final action has been taken.
Comments or questions regarding any o f the Agenda items may be submitted directly to the Board of
Governors or to the Regulations Division of this Bank.
A n t h o n y M. S o l o m o n ,
P r e s id e n t.
FEOIS^AL RESERVE SYSTEM
12 CPlni C h . i
S©mfeowios0 Keg
Acp3D(s)Q
Flexibility
Afssratgvs Board of Governors off the
Federal Reserve System.
A€VD©Kls Semiannual Agenda.
s u m m a r y : Pursuant
to the Regulatory
Flexibility Act, and 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 April 1 through
October 1, 1984. The Board’s next
Semiannual Agenda will b© published in
October 1984.
©ATI: Comments may be received any
time during the next six months.
ADDRESS: Comments should be
addressed to William W. Wiles,
Secretary off the Board, Board off
Governors off the Federal Reserve
System, Washington, D.C. 20551.
F©H5 FURTHER IHFOfi®0AYIOH ©©KHTA©?:
A staff contact for each item is indicated
wH2t the regulatory description bdow,
SUPPLEMENTARY INFORMATION: Th®
Board’s Semiannual Agenda is divided
into three sections: Section A reports on
regulatory matters that have been
proposed and that are under Board
conoid era tion; Section B reports on
major regulatory reviews in progress
under the Board’s Regulatory
Improvement Project and other
regulatory matter® the Board may
consider for public comment during the
next six months; and Section C report®
those regulatory matters from the
Board’s last Semiannual Agenda
(October 1,1983 through April 1,1984)
on which final action has been taken.
A double asterisk (**) in Sections A
and B indicates those matter® listed on
the Board’s previous Semiannual
Agenda; a dagger (t) indicate® a
proposal that i®likely to have a
significant economic impact on a
substantial number off small entities (see
Entries A.10, B.© and 7, and C.1).
A, Esgtalatory M a te s Tfeafi Dfevo B©3®
pgopcraed and WISH UnvoSvo IFtesnfess’
Board C onsideration
°°1. ISegulatioss: U S-Equal Q ssdit O fpaE tuaity
(12 CFR Port 202)
Action Taken: In June 1983, the Board
published notice of its intention t©
review Regulation B (48 FR 282©S, fupe
21,1083). This review to part off the
Board’s Regulatory Improvement
Project. (See Entry B.1).
In its review off Regulation B, the
Board will focus on ways to update the
regulation to more effectively carry oat
the provisioH® off tike Equal Credit
Opportunity Act, without diminishing
the consumer protection® contained in
the act and implementing regulation.
The Board”®notice asked oommenters
for information about any aspect off
Regulation B that they believe should be
examined. Hie Board also requested
comment on several technical issue©
identified by the staff concerning the
regulations’©sample adverse action
notice form, consideration of credit
history information shared with a
spouse, circumstances under which
adverse action notices must be sent
reappMcations for open-end credit, and
treatment off authorised users off openend credit
The Board will review the public
comments that were received and is also
conducting additional study off legal,
economic, and other issues in this area.
The Board expect® to publish for public
comment specific proposed revision® to
the regulation within the next six
months. The extent to which small
lenders would be affected will depend
largely on the nature off the revisions.
However, revisions that result in
reduced compliance burdens are
expected to apply to afi lenders equally,
regardless off size.
Authority: Equal Credit Opportunity
Act, 15 U.S.C. 1691b.
Docket Number: R-CM73.
Staff contacts: Lucy Griffin and fohm
Wood, Senior Attorneys,- Division off
Consumer and Community Affairs, (202452-3&12).
002. Regulations: D—Rsssrv© Requirement*
of Expository Institutions (12 CFR Part 2®4)
and Regulation Q—Interest on Esposito (12
CFK Part 21?)
Action taken: In A ugust 1982, the
Board requested public om m ent on a
proposal to am end R egulations D and Q
to increase the m axim um size lim itation
on b u sin ess savin gs accounts at m em ber
banks t® $250,000 (47 FR 38137, A ugust
30,1982). Currently, m em ber banks are
not perm itted to accep t savin gs d ep osits
in e x c e s s o f $150,000 per d epositor from
organizations operated for profit. The
Board also invited com m ent on the
possib ility o f elim inating this lim itation
com pletely. Sm all b ank s w ould b enefit
from either a liberalization or
elim ination o f this limit b eca u se the
change w ould allo w these institutions to
com pete more effectiv ely w ith thrift
institutions, w hich currently are subject
to no such lim itation. Further, sm all
b u sin esses should be aid ed by the
opportunity to p lace larger cash
b alan ces in interest-bearing accounts.
The Board w ill review the pubHc
com m ents and is ex p ected to take
further action during the n ext six
months.
Authority: Section 19(a) o f the Federal
R eserve A ct, 12 U.S.C. 461(a).
Docket Number: R-0420.
Staff contacts: Gilbert T. Schwartz,
A sso cia te General Counsel, (202-4523625); and Paul S. Pilecki, Senior
C ounsel (202-452-3281), Legal D ivision.
3. Regulation: E—Electronic Fund Transfers
(12 M Part
Action taken: In January 1984, the
Board published for com m ent tw o
proposed am endm ents to R egulation E,
the Board’s regulation im plem enting the
Electronic Fund Transfer A ct (49 CFR
2204, January 18,1984). T h e first
proposed am endm ent w ould bring
w ithin the definition o f an electronic
fund transfer, and thus w ithin the
coverage o f the act and regulations,
transfers resulting from point-of-sale
transactions that are p rocessed
electronically but do not in volve an
electronic terminal at the point of sale.
A ction is need ed b eca u se of current
uncertainty about coverage of these
transfers, and inquiries h ave b een
received by the Board from financial
institutions, state agen cies, and others.
The proposed action also takes into
account the fact that an increasing
number o f debit cards are being u sed for
point-of-sale transactions; currently
there are over six m illon cards
outstanding. The point-of-sale proposal,
if adopted, w ill provide clarification and
guidance to finan cial institutions in the
treatm ent to be given these transfers,
and w ould provide ad ditional time in
these c a se s for error resolution. The
proposal w ould a lso provide clear
protection for consum ers in areas such
as liability for unauthorized transfers
and resolution o f error allegations.
The secon d proposed am endm ent
w ould give financial institutions the
option to d isclo se charges for electronic
fund transfers— on periodic
statem ents— either on a transaction-bytransaction b asis, or a s a total sum. The
proposal is in resp onse to requests from
financial in stitutions for such flexibility.
T h ese proposals w o u ld affect all
financial institutions, as that term is
defined in the Electronic Fund Transfer
A ct and Regulation E— that is, any
person that, directly or indirectly, h olds
a consum er a sse t account, such as a
checking a c c o u n t savin gs account, or
m oney market fund account, and any
person that issu e s an a c c e ss d evice and
agrees w ith a consum er to provide
electronic fund transer services.
The Board w ill rev iew the public
com m ents and con sid er further action
w ithin the n ext three m onths. The
p roposals are not ex p ected to h ave a
significant econom ic im pact on a
substan tial number o f sm all en tities
b eca u se the com pliance requirem ents of
the p roposals are unlikely to be very
burdensom e. R elatively few -institutions
currently issu e debit cards, and the large
credit and debit card a sso cia tio n s are
ex p ected to help stream line com pliance
for m ost o f the institutions that are
affected.
Authority: Electronic Fund transfer
A c t 15 U.S.C. 1003b.
Docket Number. R-0502.
Staff Contact: G erald H u rst Staff
A ttorney, D ivision o f Consum er and
Community A ffairs (202-452-3667).
4. Regulations: G -to ffilfiffl Credit by
Persons Other Than Banks, Brokers, ©r
EXalers (12 CFR Port ^57); Regulation T—
Credit by Brokers QEEd Sealers (12 CFR Part
220); and Regulation U—Credit by Banks For
The Purpose of PusAasing or Carrying
Margin Stacks (12 CFR Part m )
Action taken: In M arch 1984, the
Board proposed for public com m ent a
change in the d efinition o f "margin
security" to include th ose stock s
d esign ated b y the S ecurities and
E xchange C om m ission a s qualified for
trading in the N ational M arket System
(49 FR 9741, M arch 15,1984). these
stock s w ou ld b ecom e m arginable upon
the publication o f their d esign ations by
the Securities and Exchange
C om m ission in the Fedors! Register. The
Board w ould continue to publish its List
o f OTC Margin Stock® three tim es
annually to reflect the m arginability o f
the other OTC securities.
- 2 -
The Board w ill review the public
com m ents and is ex p ected to take
further action during the n ext six
m onths. It is not ex p ected that the
proposal w ould h ave a significant
im pact on a substan tial num ber o f sm all
firms. The proposal should be beneficial
sin ce it w ill exp ed ite the determ ination
o f the eligibility o f certain securities on
w hich broker-dealers m ay extend credit.
Authority: S ecurities Exchange A ct of
1934, as am ended 15 U.S.C. 78 g, h and
w.
Docket Num ber R-0512.
Staff contacts: Robert S. Plotkin,
A ssista n t Director; Laura Homer,
S ecurities Credit Officer; and Jamie
Lenoci, Financial A nalyst, D ivision of
Banking Supervision and Regulation
(202-452-2781).
°°S. Regulation: J—Collection of Chock and
Other Items and Wire Transfer of Funds (12
CFR Part 21@)
Action taken: In M ay 1981, the Board
issu ed for public com m ent p roposals to
am end Subpart A o f R egulation J b y (1)
redefining the term s "sender” and
“bank” to include a d epository
institution a s d efined in 12 U.S.C. 461(b),
nam ely, b anks and thrift institutions; (2)
im posing on a paying bank that returns
an item an indem nity for lo ss or ex p en se
resulting from return o f the item beyon d
the d ead lin es provided in the regulation;
(3) incorporating p rovisions for
collecting cou p ons and other securities
sim ilar to p rovisions regarding the
paym ent and return o f cash item s; and
(4) im posing a w arranty and related
indem nity regarding w ire ad vice o f
nonpaym ent on a paying bank w hich
returns a cash item (40 FR 24578, M ay 1,
1981). A fter considering the com m ents
received, the Board ad opted the first
proposal in su bstan tially the form
p roposed (46 FR 42059, A ugust 19,1981)
Final action on the other three item s h as
b een deferred pending further study. In
its con sid eration o f th ese proposals, the
Board hoe con clud ed that none o f the
p rop osals is ex p ected to h ave a
significant econ om ic im pact on a
substantial num ber o f sm all entities. It is
anticipated that the Board w ill consider
this m atter during the n ext six months.
Authority: S ectio n s 1 3 ,1 0 and l l ( i ) o f
the Federal R eserve A ct, 12 U.S.C. 342,
248(o), 360 an d 248(i).
Docket number: R-0357.
Staff contact: Joseph R. A lexander,
attorney, Legal D ivision, (202-452-2489).
®. Regulation: K—International Banking
Operations (12 CFR Fart 211F)
Action taken: Jn February and March
1984, the Board ad opted regulations
im plem enting the International Lending
Supervision A ct o f 1983 (Title DC, Pub. L
98-181)(the A ct) w ith resp ect to
maintenance of reserves against certain
international assets, disclosure of
information on international assets, and
accounting rules for fees on certain
international loans. In publishing these
regulations the Board requested
comment on whether and to what extent
the Act should apply to U.S. branches,
agencies and commercial lending
company subsidiaries of foreign banks.
By action of February 13,1984 (49 FR
5587, 5591), the Board left open the
comment period on this issue in order to
allow for further public comment.
If the Board determines to propose
regulations affecting foreign banks
under the Act, such regulations would
not have a significant economic impact
on a substantial number of small
businesses since the rules would affect
only international banks.
Authority: International Lending
Supervision Act of 1983,12 U.S.C. 3901
et seq.
Docket number: R-0498.
Staff contacts: Nancy P. Jacklin,
Assistant General Counsel, (202-4523428); and Kathleen G’Bay, Senior
Counsel, (202-452-3788), Legal Division.
7. Regulation: Q—Interest on Deposits (12
CFR Part 217)
Action taken: In March 1984 the Board
proposed amendments to its rales
concerning advertising interest on
deposits to incorporate a policy
statement concerning advertisements for
split rate time deposits and for deposits
used as Individual Retirement account
(IRA) investments (49 FR 11642, March
27,1904). Under the proposal, in the case
of a split rate account where a schedule
of fixed rates to be paid is established in
advance and the first rate to be paid is
higher than subsequent rates, the Board
would regard any advertisement of a
rate as misleading unless the
advertisement includes each rate to be
paid in equal size type together with a
conspicuous statement as to how long
each rate will be in effect and a
conspicuous statement of the average
effective annual yield. In addition,
advertisements should refer to IRAs as
tax deferred and not as “tax exempt” or
“tax free.” The proposal would not
adversely affect small businesses
because no additional reporting or
recordkeeping requirements are
imposed.
Authority: 12 U.S.C. 371b.
Docket Number: R—0 514.
Staff contact: Paul S. Pilecki, Senior
Counsel, Legal Division, (202-452-3281).
°°®. Regulation: Y— B ank IHMdiiag C om panies
aad Chang® fa 0ansk Coutenl (12 CFR Part
225F)
Action taken: In March 1984 the Board
proposed for public comment an
amendment to Regulation Y that would
list certain additional nonbanking
activities as generally permissible for
bank holding companies under section
4(c)(8) of the Bank Holding Company
Act and that may be applied for under
thr procedures of that section (49 FR
9215, March 12,1984). The activities
proposed to be included in Regulation Y
for the first time include:
1. Commodity trading advisory
services.
2. Check guaranty services.
3. Consumer financial counseling.
4. Armored car services.
5. Tax planning and tax preparation.
6. Operating a credit agency and
credit bureau.
Consumer financial counseling and
check guaranty services have been
permitted previously by Board order on
individual applications.
In addition the Board has proposed to
expand the activities of propertyappraisal and providing advice in
connection with future commission
merchant activities. These activities
have been included previously in the list
of permissible activities in Regulation Y,
althrough in a more restricted manner.
The Board has also proposed to define
and clarify the insurance agency and
underwriting activities generally
permissible for bank holding companies
so as to conform the regulation to Title
VI of the Gara-Bt Germain Depository
Institutions Act, which was adopted in
Qctobes>1982.
Adoption of the proposal would
enable bank holding companies to
engage in additional activities and
would impose no additional burden on
any bank holding company.
Authority: Bank Holding Company
Act, 12 U.S.C. 1843(c)(8).
Docket number: R-0511.
Staff contact: James Scott, Attorney,
Legal Division. (202-452-3779).
Regulation: Y=IEteimlk Holding. ConapsuaisB
©ad Chang© fa Bank Control (12 CFR Part
0.
225)
Action taken: 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 (4® FR 53125,
November 25,1983). The Board took this
action as a result of the suggestions of
several commenters to the Board’s
-3 -
recent revision of Regulation Y, who
advocated elimination of the rate
reduction requirement from the
regulation. These commenters stated
that in their view the requirement puts
bank holding companies at a
competitive disadvantage with respect
to other providers of this service, and
that they knew of no significant
evidence that the performance of this
activity has resulted in the adverse
effects on the public considered by the
Board in its 1972 decision approving this
activity.
It is expected that adoption of this
proposal would lead to a relaxation of
the regulatory burden on bank holding
companies which engage in this activity.
Authority: Bank Holding Company
Act, 12 U.S.C. 1843(c)(8).
Docket number: R-0491.
Staff contacts: J. Virgil Mattingly,
Associate General Counsel, (202-4523430); and Michael J. O’Rourke,
Attorney, (202-452-4388), Legal Division.
fl®. Regulation: Z—Truth in Lending (12 QFR
Part 22®)
Action taken: In January 1984, the
Board published for comment a
proposed amendment to Regulation Z,
which would clarify that all credit cards
issued for use in transactions that are
generally exempt from Regulation Z are
still subject to the Regulation Z
provisions that prohibit the unsolicited
issuance of credit cards and that limit
the cardholder’s liability for
unauthorised use to a maximum of $50
(49 FR 2210, January 1®, 1984). The
regulation already makes clear that
these two provisions apply to cards
issued for obtaining business-purpose
credit, a class of credit that is otherwise
exempt from Regulation Z.
The proposal is in response to
questions from both the public and
private sectors about the applicability of
these two credit card provisions to cards
used for other types of generally exempt
transactions. The Board is concerned
that, unless the credit card provisions
apply to these cards, consumers who
use them will not have any federal
protections restricting unsolicited
issuance of such cards and limiting their
liability for the authorized use of cards.
Although there i® no evidence of a
pattern of abuse at this time, this lack of
legal protection may have a serious
impact in the future in light of the scope
of these programs and the indications of
their continued growth.
The vast majority of the credit cards
that will be affected by this amendment
are telephone credit cards; therefore, th®
entities most affected will be in the
telecommunications industry. However,
cards issued for use with other types of
exempt transactions (such as those
issued for use with fixed credit lines
over $25,000 that are not secured by real
estate or a dwelling] would also be
subject to the provisions on issuance
and liability for unauthorized use.
Because there are many small
companies in the telecommunications
industry, the Board specifically solicited
comment on small companies or other
potentially affected industries that
currently have credit card programs, or
that might develop them in the future.
The Board also requested comment on
other regulatory, operational, or cost
factors that might be relevant to the
proposal. If the amendment is adopted,
the Board will also consider appropriate
action to minimize initial compliance
costs associated with the amendment.
The Board will review the public
comments and take further action during
the next six months.
Authority: Truth in Lending Act, 15
U.S.C. 1(804 as amended.
Docket number: SR-0501.
S tu ff contact: Ruth R. Amberg, Senior
Attorney, Division of Consumer and
Community Affairs (202-452-3667].
Regulatory Matt®!® t o Board May
Consider During t o Mext Six Months
°°i. Eeguliiitoify Improvement l?E®J(S$!io
Anticipated action: The Board’s
Regulatory Improvement Project
involves, among other things, a
substantive, zero-leased review of all
Federal Reserve regulations that affect
the public to determine: (1} the
fundamental objectives of the regulation
and the extent to which it is meeting
current policy goals, [2] nonregulatory
alternatives that would accomplish the
objectives,- [3] costs and benefits of the
regulation, (4] unnecessary burdens
imposed by the regulation, and (§) the
clarity of th© regulation.
Since publication of the last
semiannual agenda, the revision of
Regulation Y ("Bank Holding Companies
and Change in Bank Control’"] was
finalized. (See Entry C.3] In addition, a
revision of Regulation X ("Borrowers of
Securities Credit”] was proposed for
comment (43 FR 49295, October 25,1983]
and adopted in final form (4® FR 56271,
December 22,1983). It contains
simplified language and two substantive
changes: (i) exclusion from the
regulation of purely domestic
borrowings unless the borrower willfully
causes a lender to extend credit in
violation of the Board’s other margin
credit regulations (Regulations G, T, and
U); and (ii) an increase from $5,000 to
$100,000 in the exemption applicable to
U.5. persons residing abroad. These
.changes relaxed regulatory burdens.
During the next twelve months, the
staff plans to ensgqp m t o review of
tw© major rag^afeaes
(1) A proposed reviefom of Rspdattom
EC(“International Banking Operations”]
will be issued for comment The
regulation was completely revised in
1979 to reduce burdens and t@improve
•the ability of U.S. banking organizations
to compete with foreign banking
organization©. The forthcomimg review is
due by 1©S4 under ii® International
Banking Act ©f 29?® (12 U.S.C. 011s) and
under t o Board's 5-year sctadul© for
regulatqjy reviews. The focus wiH be to
detennine whether further
improvements can be made to reduce
regulatory burdens.
(2) A proposed revision of Regulation
B (“Equal Credit Opportunity”) may be
issued for comment. In June 1§®3, the
Board issued an advanced notice of
proposed rulemaking asking for
suggestions for specific issues m the
regulation that should be addressed.
(See Entry A.1]
The Project will also participate in
other regulatory actions listed in this
agenda to ensure that the objectives of
the Project air® must
Authority: Financial Regulation
Simplification Act of I960,12 U.S.C.
3501.
S ta ff contact: Barbara R. Lowrey,
Associate Secretary, Office of t o
Secretary (202-452-3742).
°°§. RopakhsM F—SecuHiw ©f State
°°S. leg e± 2 fca
©jp^mtaMQ (J512 Q M fouS 222$
Baefeag
Anticipated action: The Board may
consider publishing for csssaGnS a
revised proposal t o t would permit Edge
Corporations to provide a feeider range
of tanking services fee® is now
permissible to a UsnMed daes of
customers. ^JMle
Corporations are
in most instances owned by major
banks, t o proposal would also afford
scope for smaller tanks to compete
more dffeeffvdly In development and
supply of services to support U.S. trade.
Pursuant to the International Banking
Act, a similar proposal was published
for comment in-February 1979 to
improve fee competitive position of
Edge Corporations (44 FR 1052®,
February 21,1979]. If t o Board
determines to reconsider t o proposal, it
will fa®token up in comrection with fee
revision of Regulation IS in 19S4. (See
Entry B.I.]
Action on this matter would represent
a relaxation of regulatory burden on
Edge Corporations and would permit a
shift to a more cost-effective method of
supervision of Edge Corporatism
Authority: IMemaMomal Banking Act
of 197®, 12 U.S.C. 3101; Federal Reserve
Act, 12 U.&C. @01 and @95.
S ta ff contacts: Nancy P. Jaeklm,
Asristaafl General Counsel (202-452=
342®]; and Kathleen Q’Bay, Senior
Counsel (20CMSS-S7TO), Legal Mvisios.
4. Regulation U==Or3dlE2 fey laako for the
Rfesmfa? EBmfcs (IS (DIMIPout 2ES3)
Purpose c? IPsratosekaQor Ckunrytag SMtegi®
Stodko p2 (SIM221).
Anticipated acMon: The Board will
Anticipated/ action: In 1984, t o Board
consider issuing for comment a proposal
may review a proposal submitted on
to amend Regulation F to conform, t o t
behalf of a banking institution ©allng for
regulation with a series of recent
an amendment to Regulation U that
changes in the securities disclosure
would permit banks to extend eredit for
regulations of t o Securities Exchange
options teanoacti@E3 m t o sam© manner
Commission. Pursmapt t® section 12(1) of
that broker-dealers may do so under
the Securities Exchange Act ef 1934, t o
Regulation T (Credit by Brokers and
Board is required to periodically update
Dealers]. In particular, fe© petitioner has
its securities disclosure regulations t®
requested t o Board to change, if
make them substantially identical to •
necessary, what is perceived to'be a
comparable regulations of the Securities
regulatory disparity between the
Exchange Commission or to publish
treatment of banks and broker-dealers
reasons why they should not be so
with respect to fee financing of options
revised.
transactions.
Adoption of the proposal is mot
It i®not anticipated that this proposal
expected to have a significant economic
would affect a iiprificant portion of the
impact on a substantia! number ®f small
overall lending activities of a substantial
member banks, sin©® only a few banks
are subject to the Board’s regulation and .number of ©mall firms.
the revisions of t o disclosure
Authority: Securities Exchange Act of
requirements are not likely t© be severe.
1934, as amended 1&U.S.C. 7Sg, h and w.
Authority: Securiffeo Ixctainge Act of
Docket number: R-8510.
1034,15 U.S.C. 7®(s).
S ta ff contacts: Laura Homer,
S ta ff contact®: Walter Mslwen,
Securities Credit Officer; Robert Lord
Attorney (202=452”@321]s and f„ Virgil
and Douglas J. Blass, Attorneys, 1
Mattingly, Associate General Counsel
Division of BanMmg Supervision and
(202-452-3430); Legal Division.
oRegulation (202-452-2781).
-4 -
OG§. ESegrfaftloia: Y—le a k Hoildissg Cfenajpaaiisa
a a d (EkSsgo in B ank C osted! p f C M Pof8
225)
A nticipated action: The Board will
consider issuing for public comment a
proposal to amend Regulation Y by
adding authority for member banks to
invest individually or jomtiy in bank
service corporations under an
am entoent to t o Sank Service
Corporation Act made by section 709 of
the Gana-St Germain Depository
Institutions Act ©f 1932.
Under the new law, banks may invest
without any prior regulation approval in
corporations offering “back office’”
clerical service to other depository
institutions. In addition, if they obtain
the prior approval of the Board, member
banks may invest in corporations that
offer to any person services that the
bank may offer under state or federal
law or services that have been found by
regulation to be permissible imder
section 4(c)(8) of the Bank Holding
Company Act.
Adoption of ragntatioas to smpksieEt
the change would saafefe all bank®, large
and sm alt to engage m certain activities
that prevtously were not available to
them. It m bM expected t o t adoption of
tMs proposal w®sM have a d^M kant
ecGmssric imf^st on a Gg^aati&I
number of small banka,
Authority: Beak Service Corporatioa
Act, 22 U.S.CL SGSL,
Staff cosS sst $. ¥no$
A em sate Qsssmdi Geewsel, Legal
DivM$3i (2® =«=gSSi).
f i . Stggpalatiso Y = B a a k ftBlshfflg Com paM es
m i (ShaiBgo fa Borik CteaatesS fS§ C M P o rt
225)
A nticipated Action: A provision of
Regulation. Y psm ite a state bank
subsidiary of ©bank bolding company to
engage through a aenbank subsidiary in
any activity that is permissible under
state few for the bask subsidiary itself,
subject to the same Marita.as if the bank
engages in the activity directly. (A
similar rale applies to national bank
subsidiaries regarding activities
percferiM® for sscfe b ssto uade? federal
law.) Th© Board received eoafflieats on
this provision in connection with its
general request for comments in May
1£3S rsgsffidliig th® proposed revision of
Regulation ¥ . Some of the commenters
challenged the Bosrd’o authority to issue
this provieten, although it has been part
of Regulation Y sine® 1971. In taking
fined setioh m t o revision of Regulation
Y, the Board deferred eondderation of
the coEsneists on tMs provision and
allowed the ©Mating rale to remain in
©ff@@i in the interim (49 FR 794, January
5,1984).
The Board plans to review this
provision of the regulation in the near
future. A determination to reverse the
rale 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 ©r to take other
action.
Authority: Bank Holding Company
Act, 12 U.S.C. 1843,1844(b).
S taff co n ta ct J. Virgil Mattingly,
Associate General Counsel, Legal
Division, (202-442-3430).
|7 . RogaakSiams AA~4Uisfair <ss D eceptive Ae&o
■m IF ta e te n (12 O F ! ^ 7 )
A nticipated action: The Federal Trad©
Commission (FTC) Act requires that
whenever the FTC enacts a rule
covering unfair or deceptive acts or
practices, the Federal Resere Board
must within 00 days of the rale’s
effective date, promulgate a
substantially similar rale governing
banks. The Board may decline to issue
such a rale only if the Board determines
that such acts or practices of banks are
not unfair ©r deceptive or that
implementation of the rale with respect
to banks would seriously conflict with
essential monetary and payment
systems policies of the Board.
In Mareh 1S34, fee FTC polished a
trade regulations rale known ao the
Credit Practices M e (4® M 7740, March
1,1984), which will prohibit certain
provisions that sometimso appear in
consumer credit conteacts to aid in the
collection of unpaid debts. It will also
impose certain specific disclosure and
contracted requirements on creditors.
The rale will go into effect on March i,
1885 and will apply only to gson-finandal
.institution creditors.
When-the FTC published the pro^bsed
Credit Practices Rule in i®7i, the Board
published a substantially similar
proposal (40 FR 18405). Th® Board
received public comments and made
them available to the FTC. The final rale
promulgated by the FTC Covers only
half m many practices m the 1©7§
proposals.
The Board is presently examining its
responsibilities under t o FTC Act and
will be taking appropriate .actio® in t o
future. To t o extent t o So@rd publishes
a substantially similar ragulai©®, some
banks, including small banks, may have
to change their practices and incur costs
in redrafting formo and contracts.
Authority: Federal Trade Commission
A ct 1§ U.S.C. 57®.
D ocket number: R-0006,
S taff contacts: Steven Zeisel and
Richard Garabedian, Staff Attorneys,
Division of Consumer and Community
Affairs, (202-452-3887).
-5 -
C, Regulatory Matters From t o October
1 ,1£3S Through April I» £983
Semiannual Agenda ®n Which Fin®!
Action Has Been Taken
fi. lepaktiosi". F==C®l!eBti(saa ©f Checks oiad
CMhor^tssao mi. W in Transfer @ffFuiado (32
(CM Fori 218)
Action taken: In September 1983, the
Board issued for public comment a
proposal that would permit Federal
Reserve Banks to charge a paying bank
for cash items mad® available to it by ©
Reserve Bank on a day that is ©banking
day for t o Reserve Bank but not for th©
paying bank (48 FR 4177®, September 1®,
1983). The purpose of the proposed
amendment was to eliminate the float
resulting from t o closing of these
depository institutions on days that the
Reserve Banks or® ©pen. The proposal
would give these paying banks A®
option of paying for t o float generated
by their closings rather than paying for
items made available on days t o y ©re
closed. TMs would be consistent with
the requirement of 12 U.S.C. 248(a) that
Federal Reserve float be priced.
After considering t o comments, t o
Board adopted t o proposal but decided
t o t it should not apply to those
instances where a paying bank is dosed
because of a state ®r local holiday not
observed by its Reserve Bank. With
regard to float arising from to@®
““nonstandard holiday closings,1™t o
Board decided to permit Reserve Banks
to defer credit to depositing institutions
for checks draw® on Institutions dOsed
©n nonstandard holidays. Tho value ©f
float generated by nonstandard holiday
dosing not eliminated by deferred
posting ©f credits t© depositing
Institutions will be added to th® cost
base for check collection services (4® FR
4198, February S, 1984).
Th® Board considered alternatives to
reduce t o impact of t o amendment m
small institutions, and believes t o t t o
option to allow institutions th© option of
paying for th® float generated by their
dosing will minimize t o impact of the
amendment on small institutions by
allowing to m to avoid t o operational
costs that might otherwise fes t e t r a d .
Authority: Sections IS, 1®, osi] 11(e) @f
t o Federal Reserve A ct 12 \UUUC. S42,
248(o), 880, and 24©®.
Docket HumbsE R-0481.
Staff contacts: Gilbert T. Schwarfe,
Associate General Counotsb (2i2=4§2=
8825)? and Joseph R, Alexander,
Attorney (202-452-24E9), Legal Division.
2= R eg u latio n (QM kssffis to E xecutive O ffic e s ,
D irectors qe J Prfadpd ©SkEshaMsso d i
Memfeis Eaako (22
Port 228)
A ction taken: Th© Gam-St. Germain
Depository Institutions Act, Pub. L §7320, (Gam Bill) amended 12 U.S.C.
1972(b)(2)(G) and 1817(K) to delete
specific reporting and disclosure
requirem ents w ith resp ect to loan s to
executive officers and principal
shareholders of insured banks from the
insured bank and an y correspondent
bank o f the insured bank. The G am Bill
granted each regulatory agen cy the
authority to issu e rules and regulations
to require the reporting and public
disclosure o f such loan s.
Effective D ecem ber 31,1983, follow ing
review o f public com m ents, the Board
am ended R egulation O to provide for
the public disclosure of information
concerning such loan (48 FR 56934,
D ecem ber 27,1983). Upon receipt of a
written request from the public, a
member bank sh all m ake a vailab le the
nam es o f its ex e cu tiv es officers and
principal shareholders w h o have
exten sion s o f credit outstanding either
from the bank itse lf or an y of the bank’s
correspondents in am am ount that equals
or ex ceed s $500,000 or 5 percent o f the
member bank ’s capital and unim paired
surplus, or w h ich ever is le ss. This action
relaxed regulatory requirem ents and is
not likey to h a v e an y significant
econom ic im pact on a substantial
number o f sm all banks.
Authority: 12 U.S.C. 1972(b)(2)(G) and
1817(K).
Docket Number. R-048®.
Staff contact: Jennifer Johnson, Senior
Counsel, Legal D ivision, (202-452-3584),
S. Regulation Y—Bank Holding Companies
and ChangQ in Bank Control (12 CFR Bart
22S)
Action taken: In D ecem ber
1983, the
Board finalized the revision of
Regulation Y conducted under the
Board’s Regulatory Im provem ent Project
(49 FR 794, January 5,1984). The revision
w a s proposed for com m ent in M ay 1983
(48 FR 23520, M ay 25,1983).
The primary purposes o f the revision
are to: (i) reduce the num ber o f required
applications b y bank holding com panies
for Board approval o f nonbanking
activities, (ii) Simplify procedures for
filing such applications, and (iii)
expedite the p rocessin g o f all
applications. The form at o f the
regulation h a s b een changed
substantially in the revision by
incorporating all the important statutory
provisions as they h ave b een interpreted
by the Board (e.g., the definition of
bank), in order to m ake the revised
regulation a self-contained,
com prehensible docum ent.
M any o f th ose com m enting on the
revision had argued that one o f the
proposed ch an ges w ou ld h ave a
significant ad verse im pact on a
substantial num ber o f sm all banking
organizations. That proposal related to
the rules for determ ining w heth er a bank
holding com pany w ill be perm itted to
redeem its o w n stock b eyon d a m inim al
am ount. The Board responded to these
ob jections by retaining a n otice
procedure for stock redem ptions that is
sim ilar to the procedure that h as been in
effect sin ce 1973.
It w a s a k o argued that the proposed
revision did not contain an an alysis
regarding the im pact o f the definition of
“bank” on sm all entities. In taking final
action, the Board upon an a ly sis
con cluded that the definition w ould not
h ave a significant econom ic im pact on a
substantial number o f sm all entities. To
m inim ize the im pact o f the regulatory
definition, the Board adopted a
procedure for a com pany to obtain an
exem ption from certain requirem ents if
it relied on the Board’s former
interpretations o f the term.
M any of the eom raenters asked the
Board to add n ew Activities to the list of
nonbardcmg activities generally
perm issible for bank holding com panies.
The Board h as issu ed such p roposals in
a separate regulatory proceeding. (See
Entry A.8.)
Finally, the Board received a number
of com m ents challenging its authority to
adopt a provision relating to perm issible
activities for su bsidiaries o f banks. The
Board p ostponed consideration o f these
com m ents but p lans to review this
provision ki the near future. (S se Entry
B.0.)
Authority: S ection 5(b) o f the Bank
H olding C om pany A ct o f 1956, as
am ended 12 U.S.C. 1844(b); sectio n 8 of
the International Banking A ct o f 1978,12
U.S.C. 310®; and section 7(j)(13) off the
Federal D ep osit Insurance Act, as
am ended b y the Change in Bank Control
A ct of 1978,12 U.S.C. 1817(j)(13).
Docket number R-G470.
Staff contacts: D avid Kulig, Senior
C ounsel, R egulatory Im provem ent
Project, (202-452-2347); and J.Virgil
M attingly, A sso c ia te G eneral Counsel,
Legal EMvision, (202J-452-343O).
4. Miscellaneous Interpretations (12 CFR Part
25®)
Action taken: In D ecem ber 1983, the
Board clarified the m eaning o f
participations in bankers’ accep ta n ces
(“BA") for p u rposes o f the BA
lim itations o f to® Bank Export Services
A ct ("BESA”) (48 FR 57107, D ecem ber
2 8 ,1 9 ® ). The BE SA d oes.n ot d efin e the
term participations. The Board’s
d efinition in clu d es the follow ing
minimum requirements: (1) the
depository in stitution that creates the
BA and conveyo fee participation
(“senior bank’*) acquires a claim against
the institution receiving the participation
-6 -
("jiffliioE' bank”); and (2) the junior bank
acquires a claim against the account
party. T h ese claim s are enforceable in
the even t that the account party fails to
perform in accord ance w ith the terms of
the BA. The Board b eliev es that its
action w ill provide sm all institutions
that are covered by the BESA
lim itations w ith in creased flexibility
w ith regard to the u sage of eligible BAs.
N o n ew recordkeeping or reporting
requirem ents w ill be im posed as a result
o f this action.
The effective date o f this action is
June 10,1984.Authority: S ection 13 of the Federal
R eserve A ct, 12 U.S.C. 372.
D ocket number: R-0474.
Staff contacts: Gilbert T.
Schwartz,
A sso c ia te General C ounsel, (202-4523625); and Robert G. Ballen, Attorney,
(202-452-3265), Legal D ivision.
Boasd of G overnors of the F ederal Reserve
System, A pril 2,1984.
Barbara It. Lmwray,
Associate Secretary of the Board.
[FR Doc. 84-0835 Filed 4-18-84; 8:45 am)
@FedFRASER