District Circular Letters
September 3, 1997
REGULATION Y:
REMOVAL OF PRUDENTIAL LIMITS (FIREWALLS)
FEDERAL RESERVE ACT--SECTIONS 23A and 23B:
EXTENSION OF COMMENT PERIOD ON PROPOSED AMENDEMNTS
To Member Banks, Bank Holding Companies,
and Others Concerned
in the Twelfth Federal Reserve District
Removal of Prudential Limits Applying to Bank Holding Companies (Docket
R-0958)
The Federal Reserve Board has announced modifications to the prudential
limits or firewalls that currently apply to bank holding companies engaged
in securities underwriting and dealing activities through section 20 subsidiaries.
The modifications are effective October 31, l997.
The Board is eliminating those restrictions that have proven to be unduly
burdensome or unnecessary in light of other laws or regulations, and consolidating
the remaining restrictions in a series of eight operating standards.
The new operating standards will cover the following areas:
- Capital requirement for each bank holding company and section 20 subsidiary;
- Internal controls;
- Interlocks restriction;
- Customer disclosure;
- Credit for clearing purposes;
- Funding of securities purchases from a section 20 affiliate;
- Reporting requirement; and
- Application of sections 23A and 23B to foreign banks.
The Board has concluded that the narrower set of restrictions will be
fully consistent with safety and soundness and should improve operating
efficiency at section 20 subsidiaries and increase options for their customers.
Extended Comment Period on Proposed Application of Sections 23A and
23B of Federal Reserve Act (Docket R-0977)
The Board has extended the comment period from September 3, l997, to
October 3, l997, on its proposal to apply sections 23A
and 23B of the Federal Reserve Act to transactions between a member bank
and any subsidiary that engages in activities that are impermissible for
the bank itself and that Congress has not previously exempted from coverage
by section 23A. The extension is granted to give the public additional
time to comment on the proposal.
Copies
Copies of the Board's notices (Dockets R-0958
and R-0977)
are available from our Corporate Services Department. To request copies
to be sent via mail, please call (415) 974-2748. To request copies to
be sent via fax, please call (415) 974-3333, and specify document numbers
4247 and 4162, respectively.
Additional Information
For additional information regarding these matters, please contact our
Banking Supervision and Regulation Department, at (415) 974-3007.
FEDERAL RESERVE BANK OF SAN FRANCISCO
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