Full text of Federal Reserve Bank of New York Circulars : Board of Governors' Semiannual Agenda of Regulations, October 1, 1981-April 1, 1982

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FEDERAL RESERVE BANK
OF NEW YORK

O ctober 19, 1981

BOARD OF GOVERNORS’ SEMIANNUAL AGENDA OF REGULATIONS
OCTOBER 1, 1981 - APRIL 1, 1982
To the A ddressee:

Printed below is the text o f the Board o f Governors’ Semiannual Agenda o f Regulations and
Regulatory Flexibility Agenda for the period O ctober 1, 1981 through April 1, 1982, which has been
reprinted from the F e d e r a l R e g is te r . The Agenda provides you with inform ation on those regulatory
matters that the Board now has under consideration or anticipates considering over the next six m onths, and
is divided into three parts: (1) regulatory matters that the Board had considered during the previous period
on which final action has been taken; (2) regulatory matters that have been proposed for public com m ent
and are still under consideration; and (3) additional regulatory matters that the Board may consider proposing
for public comment during the next six months.
Comments regarding any o f the Agenda items may be submitted directly to the Board o f Governors or
to the Consumer A ffairs and Bank Regulations Department o f this Bank at any time during the next six
months.
A n th o n y M. So l o m o n ,

P r e s id e n t.

FEDERAL RESERVE SYSTEM
12CFR Ch. II
Semiannual Agenda of Regulations
and Regulatory Flexibility Agenda
AGENCY: Board of Governors of the

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
Federal Reserve System.
into three sections: Section A reports
ACTION: Semiannual Agenda.
those regulatory matters from the
Board’s last Semiannual Agenda (April
SUMMARY: Pursuant to the Regulatory
1,1981 through October 1,1981) on
Flexibility Act, and the Board’s
which final action has been taken:
Statement of Policy Regarding Expanded
Section B reports on regulatory matters
Rulemaking Procedures, the Board
that have been proposed and that are
anticipates having under consideration
under Board consideration; and Section
regulatory matters as indicated below
C reports regulatory matters the Board
during the period from October 1,1981
may consider proposing for public
through April 1,1982. The Board’s next
semiannual agenda will be published on comment during the next six months.
A double asterisk (**) in Sections B
April 1,1982.
and C indicates those matters listed on
DATE: Comments may be received any
the Board's previous Semiannual
time during the next six months.
Agenda: a dagger(f) indicates a proposal
ADDRESS: Comments sould be addressee^ that is likely to have a significant
to William W. Wiles, Secretary of the
economic impact on a substantial
Board, Board of Governors of the
number of small entities. The latter
Federal Reserve System, Washington,
designation applies to only those
matters proposed or expected to be
D.C. 20551.




proposed for public comment a fter the
January 1,1981, effective date of the
Regulatory Flexibility Act.
A. REGULATORY MATTERS FROM
THE APRIL 1,1981 THROUGH
OCTOBER 1,1981 SEMIANNUAL
AGENDA ON WHICH FINAL ACTION
HAS BEEN TAKEN
1. Regulation: C— Home Mortgage
Disclosure (12 CFR part 203)
ACTION TAKEN: In July 1981, the Board
adopted a revised regulation that
implements statutory changes to the
Home Mortgage Disclosure Act that
were enacted in October 1980 (Pub. L.
96-399), and that is written in a
simplified, concise form (46 FR 40679,
August 11,1981). This proposal was
published for comment in February 1981
(46 FR 11780, February 10,1981). The
regulation requires depository
institutions located in standard
metropolitan statistical areas (SMSAs)
and with assets over $10 million to

disclose data about their home mortgage
and home improvement loans each year.
No significant new burdens were
imposed on any covered institutions.
Some of the principal changes in the
revised regulation are as follows: (1)
disclosures are no longer required at a
branch office in the SMSA where the
institution’s home office is located. (A
disclosure statement will continue to be
available at the home office and will
contain complete data for all SMSAs in
which the institution has offices.); (2)
disclosures at other branch offices are
only required to give data about loans
on property in the SMSA where the
branch is located; (3) the “total
residential mortgage loans" category is
no longer required; (4) geographic
breakdowns must be given in terms of
census tracts or counties and not by ZIP
codes; (5) an institution may use either
1970 or 1980 census tract boundaries in
geocoding loans, until the 1980 census
tract outline maps for the SMSA are
issued by the U.S. Census Bureau; (6) a
lobby notice is required regarding the
availability of home mortgage data; (7)
an institution that has exempt status
and that subsequently loses its
exemption must begin to compile and
report data only, in general, for the
calendar year following the loss of
exemption; and (8) an institution must
send a copy of its disclosure statement
to its supervisory agency.
The lobby notice requirement became
effective on September 30,1981. The
remaining requirements went into effect
on August 11,1981. The Board also
adopted a revised version of the
HMDA-1 form for reporting and
disclosure of loan data. The form will be
published after review by the U.S. Office
of Management and Budget.
AUTHORITY: Home Mortgage
Disclosure Act of 1975,12 U.S.C. 2804(a).
DOCKET NUMBER: R-0350.
STAFF CONTACT: John C. Wood,
Senior Attorney, Division of Consumer
and Community Affairs, (202-452-2412).
2. Regulation: D—Reserve Requirements
of Depository Institutions, Q— Interest
on Deposits (12 CFR Parts 204, 217)
ACTION TAKEN: In response to
requests from the banking community, in
December 1980 the Board issued for
public comment proposed amendments
to its Regulations D and Q to permit the
establishment in the United States of
International Banking Facilities (EBFs)
by depository and other institutions to
promote international banking activity
in the United States. IBFs would make
loans to and accept deposits from
foreign residents free of reserve
requirements and interest-rate




limitations (45 FR 84070, December 22,
1980). This proposal would affect
principally the major banks already
engaged in international banking
transactions. Following review of the
public comments, the Board adopted the
proposal in substantially the form
proposed (46 FR 32426, June 23,1981).
AUTHORITY: Federal Reserve Act, 12
U.S.C. 461.
DOCKET NUMBER: R-0214.
STAFF CONTACT: Robert F. Gemmill,
Associate Director, Division of
International Finance, (202-452-3733);
Gilbert T. Schwartz, Associate General
Counsel, Legal Division (202-452-3625).
3. Regulation: T—Credit by Brokers and
Dealers (12 CFR 220.6(j))
ACTION TAKEN: In response to a
request on behalf of a registered brokerdealer, the Board in December 1980
denied permission to allow the
acceptance of bank depository receipts
for gold by a broker or dealer to meet
the margin requirements specified by the
rule. At the same time the Board issued
for public comment a proposed
amendment to Regulation T deleting
§ 220.6(j) which permits the use of
foreign currency to meet margin
requirements (45 FR 83510, December 19,
1980). In June 1981, after reviewing
comments received on the draft
amendments, the Board deleted
§ 220.6(j) from Regulation T (46 FR
31250, June 15,1981).
AUTHORITY: Securities Exchange Act
of 1945,15 U.S.C. 78g and w.
DOCKET NUMBER: R-0250.
STAFF CONTACT: Laura Homer,
Securities Credit Officer, Robert Lord,
Attorney, Securities Regulation Section,
Division of Banking Supervision and
Regulation, (202^452-2781).
4. Regulation: Y—Bank Holding
Companies and Change in Bank Control
(12 CFR 225.4(a)(9))
ACTION TAKEN: In March 1978 the
Board issued for public comment a
proposal to amend its Regulation Y
relating to permissible insurance
activities for bank holding companies
(43 FR 14970, April 10,1978). The
proposed amendments were required in
order to conform the regulation to an
opinion of the United States Court of
Appeals for the Fifth Circuit. The first
amendment deletes the authority of
bank holding companies to act as an
agent for the sale of insurance sold as a
matter of convenience to the public.
Another amendment removes the
authority for bank holding companies to
act as agent for the sale of insurance for
themselves or for their subsidiaries. In
July 1981, the Board adopted the

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proposals in substantially the form
proposed (46 FR 38493, July 28,1981).
AUTHORITY: Bank Holding Company
Act, 12 U.S.C. 1843(c)(8).
DOCKET NUMBER: R-0050.
STAFF CONTACT: Richard M. Whiting,
Senior Attorney, Legal Division, (202452-3779).
B. REGULATORY MATTERS THAT
HAVE BEEN PROPOSED AND WILL
INVOLVE FURTHER BOARD
CONSIDERATION
**1. Regulation: B—Equal Credit
Opportunity (12 CFR Part 202)
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 23385, April 23,1979).
In August 1980, the Board published a
revised proposal in the form of two
proposed interpretations, the first
dealing with consideration of income in
credit scoring systems and the second
with the selection and disclosure of
reasons for adverse action (45 FR 56818
August 26,1980). Both proposals would ’
affect creditors that use credit scoring
systems. The Board will review the
comments received on the draft
proposals and is expected to take
further action during the next six
months.
AUTHORITY: Section 703(a) of the
Equal Credit Opportunity Act, 15 U S C
1691b(a).
DOCKET NUMBER: R-0203.
STAFF CONTACT: Dolores S. Smith,
Assistant Director, Division of
Consumer and Community Affairs (202452-2412).
**2. Regulation: B—Equal Credit
Opportunity (12 CFR Part 202)
ACTION TAKEN: In October 1978, the
Board proposed for comment several
amendments to the regulation. In April
of 1979 one of the proposals was
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, which
would affect creditors that extend credit
to small businesses, have yet to be acted
upon. These proposals would extend
recordkeeping 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

1. Eliminate “equity building” devices;
consolidate bond accounts with the
General Account; and require in certain
circumstances, an off-setting adjustment
to any highly leveraged GeneraL
Account by transfers from the
customer’s Special Miscellaneous
Account.
2. Relax the restriction on the
arranging of credit for customers by
investment bankers to permit
investment banking services that may
be otherwise prohibited.
For Regulation U, the Board proposed
to change the collateral test to exempt
**3. Regulation: D— Reserve
from quantitative limitation all bank
Requirements of Depository Institutions
credit not secured by margin equity
(12 CFR Part 204)
securities. At the present time a purpose
ACTION TAKEN: The Board will
loan that is collateralized by any stock
consider further during the next six
is subject to the margin regulation.
In a second announcement (46 FR
months a proposal to adopt
contemporaneous reserve accounting. In
37516, July 21, 1981), the following
August 1980, the Board stated that it is
principal changes in the Board’s margin
disposed toward returning to
regulations were proposed:
contemporaneous reserve accounting if
1. Regulation T would be amended to
reduce the number of types of securities
investigation indicates that such a
and other accounts subject to Regulation
system is practical (45 FR 56009, August
T from eleven to seven and to
22,1980). The proposal would change
the reserve maintenance schedule of
restructure the accounts along
depository institutions to coincide with
functional lines. Four of the accounts
reserve computation periods as a means
would be used for public customer
of improving the System’s ability to
transactions and three for transactions
meet its monetary policy objectives.
between industry members.
Such a proposal would affect the reserve
2. The terminology of Regulation T
management practices of all depository
would be revised to prescribe the
institutions with $15 million or more in
amount of margin required rather than
the maximum loan value of securities
total deposits.
used as collateral. This would conform
AUTHORITY: 12 U.S.C. 461 et seq.
to the terminology generally used by the
DOCKET NUMBER: R-0306.
securities industry.
STAFF CONTACT: David Lindsey,
3. The definition of “indirectly
Assistant Director, Division of Research
secured" margin loans in Regulations U
and Statistics, (202-452-2601); Gilbert T.
and G would be amended to achieve
Schwartz, Associate General Counsel,
more objective standards. This action
Legal Division, (202-452-3625).
would affect principally lending
arrangements, by banks and insurance
f4. Regulation: G—Securities Credit by
companies with corporate borrowers,
Persons Other than Banks, Brokers or
that contain restrictions on disposition
Dealers (12 CFR Part 207); T—Credit by
of the borrower’s assets.
Brokers and Dealers (12 CFR Part 220);
4. Regulation G would be amended to
and U—Credit by Banks for the Purpose
broaden the types of credit which may
of Purchasing or Carrying Margin Stocks
be extended by lenders subject to that
(12 CFR Part 221)
regulation, chiefly insurance companies
ACTION TAKEN: In June and July 1981,
and credit unions.
proposals to revise the Board’s margin
The Board will review comments on
regulations were published for comment
these proposals and is expected to take
as part of the Board’s Regulatory
further action during the next six
Improvement Project. The objectives of
months.
the proposed revisions, as described
AUTHORITY: Securities Exchange Act
below and in the proposal’s Initial
of 1934, 15 U.S.C. 78g, w.
Regulatory Flexibility Analysis, are to
DOCKET NUMBER: R-0362.
simplify the regulations and to reduce
STAFF CONTACT: Laura Homer,
the burden of compliance wherever
Securities Credit Officer, Division of
possible for individual and business
Banking Supervision and Regulation,
borrowers.
(202—452—2781); Robert Rewald, Division
In its first group of proposed
of Research and Statistics, (202-452amendments (46 FR 32592, June 24,1981)
3637) Board of Governors of the Federal
to its margin regulations, the Board
Reserve System, Washington, D.C.; or
proposed to amend Regulation T to:

applications. It is expected that these
matters will be considered by the Board
during the next six months in
conjunction With action on the proposed
credit-scoring interpretations that are
also outstanding. (See entry B.l.)
AUTHORITY: Equal Credit Opportunity
Act, 15 U.S.C. 1691b.
DOCKET NUMBER: R-0185.
STAFF CONTACT: Dolores S. Smith,
Assistant Director, Division of
Consumer and Community Affairs, (202452-2412).




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Mindy R. Silverman, (212-791-5032),
James M. McNeil, (212-791-5914)
Federal Reserve Bank of New York.
5. Regulation: J—Collection of Checks
and Other Items and Wire Transfer of
Funds (12 CFR Part 210)
ACTION TAKEN: In May 1981, the
Board issued for public comment
proposals to amend Subpart A of
Regulation J by (1) redefining the terms
“sender” and "bank” to include a
depository institution as defined in 12
U.S.C. 461(b), namely, banks and thrift
institutions, (2) imposing on a paying
bank that returns an item an indemnity
for loss or expense resulting from return
of the item beyond the deadlines
provided in the regulation, (3)
incorporating provisions for collecting
coupons and other securities similar to
provisions regarding the payment and
return of cash items, and (4) imposing a
warranty and related indemnity
regarding wire advice of nonpayment on
a paying bank which returns a cash item
(46 FR 24576, May 1,1981). After
considering the comments received, the
Board adopted the first proposal in
substantially the form proposed (46 FR
42059, August 19,1981). Final action on
the other three items is expected during
the next six months. In its consideration
of these proposals, the Board has taken
account of the requirements of the
Regulatory Flexibility Act, 5 U.S.C. 601612, and has concluded that none are
expected to have a significant economic
impact on a substantial number of small
entities.
AUTHORITY: Sections 13,16, and ll(i)
of the Federal Reserve Act, 12 U.S.C.
342, 248(o), 360, and 248(i).
DOCKET NUMBER: R-0357.
STAFF CONTACT: Joseph R.
Alexander, Attorney, Legal Division,
(202—452-2489).
**6. Regulation: T—Credit by Brokers
and Dealers (12 CFR Part 220)
ANTICIPATED ACTION: In the last
Semiannual Agenda, reference was
made to possible consideration of an
amendment to Regulation T dealing with
back office procedures of brokersdealers.
Such an amendment has been
proposed as part of the current revision
of Regulation T (46 FR 32592, June 24,
1981). The Board will review the
comments on the proposal and is
expected to take further action during
the next six months. (See entry B.4.)
AUTHORITY: Securities Exchange Act
of 1934,15 U.S.C. 78g and w.
STAFF CONTACT: Laura Homer,
Securities Credit Officer, Bruce Brett,

Securities Regulation Analyst, Division
of Banking Supervision and Regulation,
(202-452-2781).
f**7. Regulation: T—Credit by Brokers
and Dealers (12 CFR Part 220)
ACTION TAKEN: In June 1981, the
Board issued for public comment a
proposed amendment to Regulation T to
provide special rules for margin on
options written on Treasury or
Government National Mortgage
Association (GNMA) securities (46 FR
32033, June 19,1981).
The Securities and Exchange
Commission on February 24,1981,
approved a Chicago Board Options
Exchange proposal to trade options on
GNMA securities. The Board’s existing
margin requirements for options on
equity securities will be applicable
unless relaxing changes are made for
options on fixed income securities. If
special rules are not adopted, the
markets for these risk-transferring
instruments may not be economically
viable. Sectors affected by such a
proposal would include securities
brokers, government securities dealers,
mortgage bankers, option exchanges,
and the general public who may wish to
take positions in the options market.
The Board’s June 16,1981 action
requested public comment on two
alternative margin-setting proposals for
options on government and government
agency debt issues. One such proposal
would permit brokers and dealers to
give “good faith” loan value to an option
which has been purchased and would
permit a “good faith” margin when an
option contract is written. Under the
alternate proposal, the Board would set
a margin requirement of 130 percent of
the option premium, plus $1,000 for the
initial writing of all uncovered option
contracts on exempt debt securities.
Under this proposal no option contract
would be permitted to have loan value.
The Board will review the comments
on the proposals and is expected to take
further action during the next six
months.
AUTHORITY: Securities Exchange Act
of 1934,15 U.S.C. 78 g and w.
DOCKET NUMBER: R-0082.
STAFF CONTACT: Laura Homer,
Securities Credit Officer, Bruce Brett,
Securities Regulation Analyst, Division
of Banking Supervision and Regulation
(202-452-2781).
* *8. Regulation: Y—Bank Holding
Companies and Change in Bank Control
(12 CFR 225.7)
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. 1817(j).
DOCKET NUMBER: R-0199.
STAFF CONTACT: Carl Howard, Senior
Attorney, Legal Division (202-452-3786);
Jack M. Egertson, Assistant Director,
Division of Banking Supervision and
Regulation (202-452-3408).
9. Regulation: Y—Bank Holding
Companies and Change in Bank Control
(12 CFR 225.4(a))
ACTION TAKEN: In June 1981, the
Board issued for public comment a
proposed amendment to Regulation Y to
include the issuance of travelers checks
in the list of activities permissible for
bank holding companies (46 FR 32594,
June 24,1981).
Before a bank holding company is
allowed to engage in a nonbanking
activity, the Board must first determine
that (1) the activity is “so closely related
to banking * * * as to be a proper
incident thereto.” and (2) permitting the
particular company to engage in the
activity is in the public interest. The
Board may make the "closely related”
determination by issuing an order in an
individual case upon request or by
adopting a regulation; the public interest
determination is always made on a
case-by-case basis. On several
occasions the Board has found by order
that the issuance of travelers checks by
particular holding companies is closely
related to banking. In view of the
increased number of applications to
engage in this activity, the Board is
proposing to make the general “closely
related” determination by regulation.
The change would impose no
additional burden on any bank holding
company; indeed, it should facilitate the
application process for any company
wishing to engage in the activity
because the company would merely
have to refer to the regulation without
offering specific evidence on the
"closely related” test.
The Board will review the comments
received on the draft proposal and is
expected to take final action on the
proposal during the next six months.
AUTHORITY: Bank Holding Company
Act, 12 U.S.C. 1843(c)(8).
DOCKET NUMBER: R-0361.
STAFF CONTACT: Richard Whiting,
Senior Attorney, Legal Division (202-

_

4

-

452-3779); Susan Weinberg, Attorney,
Legal Division (202-452-3707).
**10. Guidelines for Enforcement of the
Equal Credit Opportunity and Fair
Housing Acts
ACTION TAKEN: In July 1978, the five
Federal financial regulatory agencies—
Comptroller of the Currency, Federal
Deposit Insurance Corporation, Federal
Home Loan Bank Board, National Credit
Union Administration, and the Federal
Reserve Board—issued for public
comment proposed uniform guidelines
for enforcement of the Equal Credit
Opportunity and Fair Housing Acts (43
FR 29256, July 6, 1978). The guidelines
would specify the kind of corrective
action a creditor would be requested to
take for violations of the more
substantive provisions of the Equal
Credit Opportunity Act (Regulation B)
and the Fair Housing Act. Based on the
comments received and further
deliberation, the agencies, under the
direction of the Federal Financial
Institutions Examination Council, have
developed a policy statement and
agency guidelines for implementing the
policy statement. These have been
recommended to the agencies for
possible adoption by October 1981.
AUTHORITY: Equal Credit Opportunity
Act, 15 U.S.C. 1691, et seq., Federal
Deposit Insurance Act, 12 U.S.C. 1818(b).
DOCKET NUMBER: R-0168.
STAFF CONTACT: Jerauld C.
Kluckman, Associate Director, Division
of Consumer and Community Affairs
(202-452-3401).
C. REGULATORY MATTERS THE
BOARD MAY CONSIDER DURING
THE NEXT SIX MONTHS
fl. Regulation: E— Electronic Fund
Transfers (12 CFR Part 205)
ANTICIPATED ACTION: The Board has
been asked by financial institutions to
consider publishing for comment
amendments to the regulation
concerning (1) a limited exemption for
small institutions that participate in the
federal government’s direct deposit
program, but do not offer other
electronic services subject to the
regulation; (2) a partial exemption from
the periodic statement requirements for
savings accounts that are accessible by
intra-institutional telephone transfers;
and (3) modification of certain
requirements for institutions that offer
electronic services internationally.
The suggested amendments, if
proposed and adopted by the Board,
would relax existing regulatory burdens
for a number of small institutions (under
the first two items listed above) and for

institutions that are members of debitcredit card networks (under the third
item). It is believed that these proposed
changes would not result in any loss of
significant protections for consumers.
The Board is expected to consider,
within the next six months, whether to
publish these proposals.
AUTHORITY: Electronic Fund Transfer
Act, 15 U.S.C. 1693b.
STAFF CONTACT: Dolores S. Smith,
Assistant Director, Division of
Consumer and Community Affairs (202452-2412).
f2. Regulation: G— Securities Credit by
Persons Other than Banks, Brokers, and
Dealers (12 CFR Part 207); T—Credit by
Brokers and Dealers (12 CFR Part 220);
and U—Credit by Banks for the Purpose
of Purchasing or Carrying Margin Stocks
(12 CFR Part 221)
ANTICIPATED ACTION: The Board
will consider issuing for public comment
proposed amendments to the
requirements set forth in Regulations G,
T and U for initial and continued
inclusion on the List of OTC Margin
Stocks.
In July 1969, the Board adopted
criteria for including stocks on the List
of OTC Margin Stocks. In discussions
leading to the selection of the criteria,
the Board indicated that (a) stocks to be
included on the List should have market
characteristics similar to exchangelisted securities; (b) manipulation by
issuers to permit or prevent inclusion or
non-inclusion should be made as
difficult as possible, and (c) fluctuations
in the List should be minimized.
Recommended changes in the OTC
List criteria are the result of a staff
review of the OTC Margin stock listing
and continued listing requirements in
light of recent developments in the
securities markets in general, the OTC
market in particular, and staff
experience with administering the
requirements. It is believed that revising
the criteria is especially appropriate at
this time because of a recent decision to
revise the List three times a year
commencing in 1982 rather than twice a
year as is the current practice. This has
been a frequent recommendation of the
securities industry.
Stocks included on the List of OTC
Margin stocks may be bought and held
on margin at brokerage firms, and some
market participants believe this
broadens the market for these stocks. To
the extent this is true, changes in the
listing criteria may affect the future
growth of the List and might have some
effect on the ability of small
corporations to raise additional equity
capital from the public.




AUTHORITY: Securities Exchange Act
of 1934,15 U.S.C. 78g and w.
STAFF CONTACT: Robert S. Plotkin,
Assistant Director; Laura Homer,
Securities Credit Officer; Jamie Lenoci,
Financial Analyst, Division of Banking
Supervision and Regulation, (202-4522781).

AUTHORITY: Federal Reserve Act, 12
U.S.C. 616. International Banking Act of
1978,12 U.S.C. 611.

f **3. Regulation: K—International
Banking Operations (12 CFR Part 211)

5. Regulation: T—Credit by Brokers and
Dealers (12 CFR 220.4(c))

ANTICIPATED ACTION: The Board
will consider publishing for comment a
revised proposal that would permit Edge
Corporations to provide a broader range
of banking services than is now
permissible to a limited class of
customers. While Edge Corporations are
in most instances owned by major
banks, the proposal would also afford
scope for smaller banks to compete
more effectively 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 (44 FR
10509, February 21, 1979), to improve the
competitive position of Edge
Corporations.
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 Corporations.
AUTHORITY: International Banking Act
of 1978,12 U.S.C. 3101. Federal Reserve
Act 12 U.S.C. 601 and 615.

ANTICIPATED ACTION: The Board
will consider issuing for public comment
either an amendment to the special cash
account provision of Regulation T or an
interpretation to facilitate the covered
writing of options by institutions and
other entities which are prevented by
law from using margin accounts.
Because of processing delays in delivery
versus payment arrangements in which
escrow receipts from banks are used,
brokers have asked for more flexibility
than presently permitted.
Lifting the Securities and Exchange
Commission’s moratorium on option
expansion has increased the difficulties
encountered by brokers, and the Board’s
staff has verified with banks that a
problem exists. With respect to the
Regulatory Flexibility Act (5 U.S.C. 601612), it is not expected that such a
proposal would be likely to have a
significant economic impact on a
substantial number of small entities.

STAFF CONTACT: James S. Keller,
Senior Attorney, Legal, (202-452-3582);
Henry S. Terrell, Chief, International
Banking Section, Division of
International Finance, (202-452-3768).
4. Regulation: K—International Banking
Operations (12 CFR Part 211)
ANTICIPATED ACTION: The Board
will consider publishing for comment an
amendment to Regulation K that would
permit Edge Corporations in the United
States to offer certain investment,
financial and economic advisory
services. These services would include
providing general economic information
and certain portfolio investment advice,
as well as managing investment
portfolios for non-U.S. customers of the
Edge Corporation.
This proposal, in response to a request
by a U.S. banking organization in
accordance with Regulation K, would
enable Edge Corporations to offer a
service that currently is not on the list of
activities permissible for an Edge
Corporation in the U.S. The proposal
would impose no additional burden on
any Edge Corporation.

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5

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STAFF CONTACT: Melanie L. Fein,
Attorney, Legal Division, (202-452-3594);
Henry N. Schiffman, Division of Banking
Supervision and Regulation, (202-4522525).

AUTHORITY: Securities Exchange Act
of 1934,15 U.S.C. 78g and w.
STAFF CONTACT: Robert Lord,
Attorney, Securities Regulation Section,
Division of Banking Supervision and
Regulation, (202-452-2781).
6. Regulation: T—Credit by Brokers and
Dealers (12 CFR Part 220)
ANTICIPATED ACTION: The Board
will consider issuing for public comment
a proposed amendment to Regulation T
to permit letters of credit to be used as
collateral in connection with the lending
of securities. The current rule (12 CFR
220.6(h)) permits only cash to be used as
collateral when creditors borrow
securities to make delivery in the cases
of short sales, failures to receive
securities required to be delivered, or in
other circumstances involving
3ecurities transactions. In
addition, staff has expressed the view
that Treasury bills may also be used as
collateral.
Members of the securities industry
and institutional lenders of securities
ave requested Board staff to review
Regulation T with a view toward
permitting the use of letters of credit in
securities lending transactions. They
argue that a low-cost alternative to cash

deposits in such transactions is
necessary under current economic
conditions. They also argue that the use
of letters of credit would be more
efficient since it eliminates transfers of
money and book entry problems. In
addition, the newly revised Federal
Bankruptcy Code has created
uncertainty over the rights of securities
lenders to the cash collateral deposited
by a broker/borrower in the event of the
latter’s insolvency. Finally, the
Department of Labor has recently given
permission to employee benefit plans to
lend securities and take back letters of
credit as collateral. It is not expected
that such a proposal would have an
adverse impact on any small
institutions.
AUTHORITY: Securities Exchange Act
of 1934,15 U.S.C. 78g and w.
STAFF CONTACT: Laura Homer,
Securities Credit Officer, Division of
Banking Supervision and Regulation,
(202-452-2781).
7. Regulation: Y— Bank Holding
Companies and Change in Bank Control
(12 CFR 225.4(a)(9))
ANTICIPATED ACTION: The Board
will consider issuing for public comment
a proposal to amend Regulation Y to
authorize bank holding companies to act
as agents for the sale of renewal
insurance.
In rulemaking proceedings to conform
the Board’s insurance agency regulation
(Section 225.4(a)(9) of Regulation Y) to a
court decision, the Board in July 1981,
deleted the authority for bank holding
companies to sell renewal insurance. In
connection with that rulemaking
proceeding, the Board had received
comments from several organizations
requesting that the authority for bank
holding companies to sell renewal
insurance be re-added to Regulation Y.
In addition the Board received a request
opposing the inclusion of renewal
insurance within the final regulation.
The proposal was deferred pending final
Board action on the rulemaking
proceedings referred to above; now that
those proceedings are completed the
Board will consider issuing for public
comment a proposal to amend
Regulation Y to authorize bank holding
companies to act as agents for the sale
of renewal insurance.
If the Board determines to issue this
proposal, it would seek comment from
the public on whether the activity is “so
closely related to banking * * * as to
be a proper incident thereto,” including
comment on whether performance of the
activity by an affiliate of a bank holding
company can reasonably be expected to
produce benefits to the public that




outweigh possible adverse effects. The
proposal would impose no additional
burden on any bank holding company.
AUTHORITY: Bank Holding Company
Act. 12 U.S.C. 1843(c)(8).
STAFF CONTACT: Richard Whiting,
Senior Attorney, Legal Division, (202452-3779).
**8. Regulation: AA—Unfair or
Deceptive Acts and Practices (12 CFR
Part 227)
ANTICIPATED ACTION: The Board is
required by the Federal Trade
Commission Act to adopt a rule
applicable to the acts or practices of
banks that is substantially similar to a
trade regulation rule adopted by the
FTC prohibiting certain acts or practices
of other creditors as unfair or deceptive,
unless the Board finds that such acts or
practices of banks are not unfair or
deceptive or that implementation of a
similar rule with respect to banks would
seriously conflict with essential
monetary and payments systems
policies of the Board. In response to a
proposed FTC rule (known as the
"creditor holder-in-due-course rule”)
governing the preservation of
consumers’ claims and defenses, the
Board published a comparable proposal
for comment (41 FR 7110, February 17,
1976). The proposal would require the
insertion in certain credit contracts of a
notice preserving a consumer’s claims
and defenses against a seller of goods or
services so that they can be raised
against any holder of the contract. The
FTC published a revised version of its
creditor rule for comment in November
1979, and is expected to take final action
sometime in 1981. When a final FTC rule
is adopted, the Board will consider
publishing a new proposal for comment
or taking other appropriate regulatory
action.
AUTHORITY: Section 18(f) of Federal
Trade Commission Act, 15 U.S.C. 41 et
seq.
DOCKET NUMBER: R-0006.
STAFF CONTACT: Dolores S. Smith,
Assistant Director, Division of
Consumer and Community Affairs, (202452-2412).
**9. Regulation: Rules Regarding
Availability of Information (12 CFR Part
261)
ANTICIPATED ACTION: The Board
will consider issuing for public comment
certain amendments to its Rules
Regarding Availability of Information in
order to bring them into conformity with
existing information disclosure law as it
has developed since the regulation was
last amended, and also in order to take
advantage of the staffs experience

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working with the Freedom of
Information Act. With respect to the
Regulatory Flexibility Act (5 U.S.C. 601612), it is not expected that proposals in
the area would create any additional
burden for small businesses.
AUTHORITY: Freedom of Information
Act, 5 U.S.C. 552.
STAFF CONTACT: Stephen L. Siciliano,
Senior Counsel, Legal Division, (202452-3920).
**10. Regulatory Improvement Project
ANTICIPATED ACTION: The Board’s
Regulatory Improvement Project
involves, among other things, a
substantive, zero-base 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 (5) the
clarity of the regulation.
During the next six months, the staff is
expected to complete its review of
Regulation Y (Bank Holding Companies
and Change in Bank Control), and public
comment on proposed changes may be
sought during this period. In addition,
the Project will be continuing its review
of the “margin credit” regulations;
Regulation G (Securities Credit by
Persons Other than Banks, Brokers, or
Dealers), Regulation T (Credit by
Brokers and Dealers), Regulation U
(Credit by Banks for the Purposes of
Purchasing or Carrying Margin Stocks),
and Regulation X (Rules Governing
Borrowers Who Obtain Securities
Credit). The staff will be reviewing the
comments that were due by September
15,1981, on some margin credit
proposals, and additional requests for
public comment may be made over the
coming six months. The Project will also
participate in other regulatory action
listed in this agenda to ensure that the
objectives of the Project are met.
AUTHORITY: Financial Simplification
Act of 1980, 12 U.S.C. 3501.
STAFF CONTACT: Barbara R. Lowrey,
Assistant Secretary, Office of the
Secretary, (202-452-3742).
Board of Governors of the Federal Reserve
System, September 24,1981.
Barbara R. Lowrey,
Assistant S ecreta ry o f the Board.
[FR Doc. 81-28447 Filed 9-30-81; 8:45 am|

BILLING CODE 6210-01-M