SR 12-15 Investing in Securities without Reliance on Nationally Recognized Statistical Rating Organization Ratings

December 5, 2012

The Federal Reserve is issuing this letter to advise state member banks that effective January 1, 2013, they may no longer rely solely on credit ratings issued by nationally recognized statistical rating organizations (external credit ratings) to determine whether a particular security is an “investment security” that is permissible for investment by a state member bank. Under regulations of the Office of the Comptroller of the Currency (OCC), securities qualify for investment by national banks only if they are determined by the bank to be “investment grade” and not predominantly speculative in nature. This letter provides background on recent statutory changes and actions of the OCC to amend its regulation on investment securities, which also applies to state member banks.