Office of the Comptroller of the Currency May 2006 – Federal Register Recent Federal Regulation Documents
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Interagency Statement on Sound Practices Concerning Elevated Risk Complex Structured Finance Activities
On May 19, 2004, the Agencies issued and requested comment on a proposed Interagency Statement on Sound Practices Concerning Complex Structured Finance Activities (``Initial Statement'') of national banks, state banks, bank holding companies, Federal and state savings associations, savings and loan holding companies, U.S. branches and agencies of foreign banks, and SEC registered broker-dealers and investment advisers (collectively, ``financial institutions'' or ``institutions''). The Initial Statement described some of the internal controls and risk management procedures that may help financial institutions identify, manage, and address the heightened reputational and legal risks that may arise from certain complex structured finance transactions (``CSFTs''). After reviewing the comments received on the Initial Statement, the Agencies are requesting comment on a revised proposed interagency statement (``Revised Statement''). The Revised Statement has been modified in numerous respects to address issues and concerns raised by commenters, clarify the purpose, scope and effect of the statement, and make the statement more principles-based. These changes include reorganizing and streamlining the document to reduce redundancies and to focus the statement on those CSFTs that may pose heightened levels of legal or reputational risk to the relevant institution (referred to as ``elevated risk CSFTs''). In addition, the Agencies have modified the examples of transactions that may present elevated risk to make these examples more risk-focused, and have recognized more explicitly that an institution's review and approval process for elevated risk CSFTs should be commensurate with, and focus on, the potential risks presented by the transaction to the institution. As discussed below, the Revised Statement will not affect or apply to the vast majority of small financial institutions, nor does it create any private rights of action.
Effect of the Federal Deposit Insurance Reform Act on the Consolidated Reports of Condition and Income
The Federal Financial Institutions Examination Council (FFIEC), of which the agencies are members, has approved the agencies' publication of this notice announcing the effect of the Federal Deposit Insurance Reform Act on the reporting of certain deposit-related data in the Consolidated Reports of Condition and Income (Call Report; FFIEC 031 and 041). Because the deposit insurance coverage for certain retirement plan deposits has increased from $100,000 to $250,000 while the insurance limit for deposit accounts in other ownership capacities has remained at $100,000, data will begin to be reported separately for the number and amount of retirement deposit accounts with balances within and in excess of the new $250,000 insurance limit. The instructions for reporting estimated uninsured deposits by banks with $1 billion or more in total assets and for reporting brokered deposits will be revised to reflect the new insurance limit for retirement deposit accounts. In addition, with the merger of the insurance funds administered by the FDIC, items in which banks with ``Oakar deposits'' have reported information on purchases and sales of deposits are no longer needed and will be eliminated. These reporting changes will take effect in the Call Report for June 30, 2006. In a separate action, the agencies have decided not to implement two new credit-derivative- related items that were to be added to the Call Report on September 30, 2006.
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