District Circular Letters

April 4, 2001

BANKING SUPERVISION AND REGULATION:
PROCEDURES FOR SUBMITTING CRA REPORTS,
FAIR CREDIT REPORTING REGULATION,
REVISIONS TO REGULATION E,
ELECTRONIC DELIVERY OF DISCLOSURES

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

Submissions Filed Under the CRA Sunshine Requirements (CA Admin 01-3)

The Federal Reserve Board has published procedures for the filing of documents required by the CRA Sunshine Requirements of the Federal Deposit Insurance Act (CRA Sunshine Requirements), which were enacted by the Gramm-Leach-Bliley Act of 1999.

On December 21, 2000, the Board of Governors of the Federal Reserve System (Federal Reserve), the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision approved final regulations implementing the CRA Sunshine Requirements. The joint final rule was published in the Federal Register on January 10, 2001, and will take effect on April 1, 2001. The Federal Reserve’s implementing rule is Regulation G (12 CFR 207).

The new CRA Sunshine provisions require nongovernmental entities or persons (NGEPs) and insured depository institutions or affiliates that are parties to certain written agreements that are in fulfillment of the Community Reinvestment Act (CRA) to do the following:

1. Make the agreement available to the public and the relevant bank or thrift supervisory agency
2. File an annual report about the agreement with the relevant supervisory agency

In order for an agreement to be covered by the rule, a NGEP that is a party to the agreement must have had a "CRA communication," as defined in the rule, prior to the agreement, and the agreement must meet certain dollar thresholds set forth in the rule.

The enclosed compliance chart,* which was published in the Federal Register with the final rule, highlights the rule’s disclosure and annual reporting requirements. As noted in the chart, the rule’s disclosure requirements apply only to covered agreements entered into after November 12, 1999, and the rule’s annual reporting requirements apply only to covered agreements entered into on or after May 12, 2000. The chart and the final rule also describe the procedures for filing agreements that include confidential information.

A covered agreement, list of covered agreements, or annual report concerning a covered agreement must be filed with the Federal Reserve if:

• The parties to the agreement include a state member bank, a subsidiary of a state member bank, a bank holding company, or a subsidiary of a bank holding company (other than an insured depository institution or subsidiary thereof); or
• A state member bank, or a subsidiary or CRA affiliate of a state member bank, provides funds or resources under the agreement.

If a covered agreement, list of covered agreements, or annual report must be filed with the Federal Reserve, the documents should be sent to:

Ms. Jennifer J. Johnson
Secretary of the Board
Attention: CRA Sunshine Agreements and Annual Reports
Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue, N.W.
Washington, D.C. 20551

Fair Credit Reporting Regulations on Communication of Consumer Information (R-1082)

Federal banking agencies have announced that any final Fair Credit Reporting Act (FCRA) rule will not require depository institutions to revise Gramm Leach Bliley Act privacy notices and delivered to consumers before next January. The agencies want to make clear that institutions should not delay delivering their privacy notices in anticipation of a final FCRA rule.

The agencies will provide guidance in any final FCRA rule concerning the effect that new requirements imposed in the rule will have on notices sent after January 1, 2002.

The agencies believe that financial institution customers will benefit from receiving GLBA privacy notices that accurately describe their institution’s information practices before the mandatory GLBA privacy compliance date of July 1, 2001. In the absence of a final FCRA rule, financial institutions providing GLBA privacy notices should comply with the FCRA statute when preparing the FCRA portion of their privacy notices.

Revisions to Regulation E (R-1074)

The Federal Reserve Board has published revisions to the Regulation E (Electronic Fund Transfers) Official Staff Commentary, which applies and interprets the requirements of the regulation.

The effective date is March 15, 2001; however, to allow time for any necessary operational changes, the mandatory compliance date is January 1, 2002.

The revisions provide guidance on electronic check conversion transactions when a consumer authorizes the use of a check to capture information for initiating an electronic debit from the consumer’s account. Guidance is also provided on electronic authorizations permitting recurring debits from a consumer’s account, as well as on other issues. The commentary is intended to help financial institutions comply with Regulation E when they offer electronic fund transfer services to consumers.

Interim Rule with Request for Comments on Electronic Delivery of Disclosures (R-1040-R-1044)

The Federal Reserve Board has published interim final rules to establish uniform standards for the electronic delivery of federally mandated disclosures under five consumer protection regulations: B (Equal Credit Opportunity), E (Electronic Fund Transfers), M (Consumer Leasing), Z (Truth in Lending), and DD (Truth in Savings).

Under the rules, financial institutions, creditors, lessors, and others may deliver disclosures electronically if they obtain consumers’ consent in accordance with the requirements of the Electronic Signatures in Global and National Commerce Act (the "E-Sign Act"), enacted in June 2000. The Board’s interim rules provide guidance on the timing and delivery of electronic disclosures, consistent with proposed rules issued by the Board in August 1999 (See our letter dated September 8, 1999), to ensure consumers have adequate opportunity to access and retain the information.

The rules are being published as interim rules to allow people who would like to comment a chance to present new information or views not previously considered in the context of the Board’s 1999 proposals. In addition, comment is solicited on the need for the Board to interpret the E-Sign Act’s provisions requiring consumer consent to receive electronic disclosures and other provisions. Comment is also solicited on any further statutory or regulatory changes that might be needed to facilitate online delivery of financial services to consumers.

Comment is requested by June 1, 2001.

Copies

Copies of the Board's notice (Dockets R- 1040, R-1041, R-1042, R-1043, R-1044, R-1074, R-1082) are available from our Corporate Services Department. To request copies to be sent by mail, please call (415) 974-2060.

All circulars and documents are available on the Internet through the Federal Reserve Bank of San Francisco's Internet site, at http://www.frbsf.org/banking/letters/.

Additional Information

For additional information on the above matters, please contact our Banking Supervision and Regulation Department at (415) 974-2967.

FEDERAL RESERVE BANK OF SAN FRANCISCO

* Note: Attachments are not available online