District Circular Letters

June 29, 2000

BANKING SUPERVISION AND REGULATION:
REVISED RETAIL CREDIT POLICY
REQUEST FOR COMMENT-
CUSTOMER INFORMATION SECURITY
REVISED SUSPICIOUS ACTIVITY REPORT

To State Member Banks, Bank
Holding Companies, U.S. Branches and
Agencies of Foreign Banks,
and Others Concerned
in the Twelfth Federal Reserve District

Federal Financial Institutions Examination Council (FFIEC) Issues Revised Credit Policy (SR 00-8)

The revised policy, which supercedes the policy issued in February 1999, guides institutions when they classify or write off delinquent retail loans and lines of credit. In general, the revised policy provides banks and thrifts additional flexibility in working with borrowers who are experiencing temporary problems in repaying their consumer loans, including open-end accounts such as credit card balances, and closed-end loans that have fixed maturities such as installment loans. It also emphasizes that the frequency of extensions, renewals, and deferrals must be prudently limited and based on both the borrower's ability and willingness to repay.

Agencies Propose Standards for Customer Information Security (R-1073)

Comments are requested on a proposed rule establishing standards for safeguarding confidential customer information. The proposed rule would implement section 501 (b) of the Gramm-Leach-Bliley Act (GLBA).

Comments will be accepted until August 25, 2000.

The proposed rule would provide that financial institutions establish an information security program that would require them to: (1) identify and assess the risks that may threaten customer information; (2) develop a written plan containing policies and procedures to manage and control these risks; (3) implement and test the plan; and (4) adjust the plan on a continuing basis to account for changes in technology, the sensitivity of customer information, and internal or external threats to information security.

The agencies seek comments on various aspects of the proposal, including its impact on community banks that operate with more limited resources and which may have a different risk profile than larger banks. Comments are also sought on whether the final standards should be guidelines or regulations.

Agencies Issue Revised Suspicious Activity Report (SAR) Form

The revisions to the SAR form reflect comments from filers and users on how to make the SAR form easier to complete and to provide more useful and timely information. Financial institutions and organizations that are currently required to report suspicious activity may continue to use the existing SAR form until December 31, 2000 while their procedures and systems are updated to make use of the new SAR form. After December 31, 2000, only the new SAR form will be accepted.

Copies

Copies of the Board's notice (Docket R-1073, SR 00-8) are available from our Corporate Services Department. To request copies to be sent by mail, please call (415) 974-2060. Docket 1073 is also available via fax. To request Docket 1073 to be sent by fax, please call (415) 974-3333, and specify document number 4175.

The Suspicious Activity Report form and guidelines for filling out the form are available by fax. Please call (415) 974-3333, and request document number 4113.

Additional Information

For additional information about the revised Uniform Credit Policy, please contact our Banking Supervision and Regulation Department, at (415) 974-2901. For information on the proposed Customer Information Security standards, please call (415) 974-3007, and for questions on the Suspicious Activity Report, please call (213) 683-2762.

FEDERAL RESERVE BANK OF SAN FRANCISCO