Academic journal article Federal Reserve Bulletin

Request for Comment on Proposed New Regulation W regarding Banks and Affiliates

Academic journal article Federal Reserve Bulletin

Request for Comment on Proposed New Regulation W regarding Banks and Affiliates

Article excerpt

The Federal Reserve Board on May 2, 2001, decided to seek public comment on a proposed new Regulation W that would comprehensively implement sections 23A and 23B of the Federal Reserve Act. The sections restrict loans by a bank to an affiliate, asset purchases by a bank from an affiliate, and other transactions between a bank and its affiliates.

Regulation W would unify in one document various Board and staff interpretations issued over the years as well as several new interpretations of the statute. It would also provide several additional exemptions from the statute. The purpose of sections 23A and 23B and Regulation W is to limit a bank's risk of loss in transactions with affiliates and limit a bank's ability to transfer to its affiliates the benefits arising from its access to the federal safety net. Comment is requested within ninety days of publication in the Federal Register.

Until Regulation W is finalized, all previously issued, valid Board and staff interpretations regarding sections 23A and 23B remain in effect.

Separately, the Board, as required by the Gramm-Leach-Bliley Act, approved an interim final rule on May 4, 2001, under sections 23A and 23B, requiring institutions to adopt policies and procedures designed to monitor, manage, and control credit exposures arising from derivatives transactions with affiliates and intraday credit extensions to affiliates. …

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