Announcements - Federal Reserve

Federal Reserve Bulletin, June, 2002

POSTPONEMENT OF RECENT AMENDMENTS TO REGULATION C (HOME MORTGAGE DISCLOSURE ACT)

The Federal Reserve Board approved on May 2, 2002, a final rule that postpones the effective date of the recent amendments to Regulation C (Home Mortgage Disclosure Act) from January 1, 2003, to January 1, 2004.

On February 15, 2002, the Board published in the Federal Register amendments to Regulation C effective for data collected beginning January 1, 2003, and solicited comment on several related issues with a comment period that closed on April 12. Financial institutions and their trade associations requested a postponement of the effective date until January 1, 2004, on the grounds that a 2003 deadline does not afford institutions adequate time to take the steps necessary to ensure full compliance with the new rules. Consumer and community organizations generally opposed postponement of the effective date.

The Board has weighed the financial institutions' claims and underlying assumptions against public policy benefits of collecting the new data as soon as possible. The Board believes that some Home Mortagage Disclosure Act (HMDA) reporters, especially the largest ones, will not be able to fully implement the new rules by January 1, 2003, without jeopardizing the quality and usefulness of the data and incurring substantial additional implementation costs that could be avoided by a postponement.

The Board is, however, adopting an interim amendment to Regulation C, effective January 1, 2003, mandating the use of 2000 census data in HMDA reporting. Given the many changes that have occurred since the 1990 census, use of 2000 census tracts and demographics will produce more accurate and useful data in the HMDA disclosure statements and aggregate reports.

INTERAGENCY GUIDANCE ON RISKS OF PARALLEL-OWNED BANKING ORGANIZATIONS

The federal bank and thrift regulatory agencies issued on April 23, 2002, guidance that reviews the risks of parallel-owned banking organizations. The guidance sets forth an approach for supervising those risks.

A parallel-owned banking organization consists of a U.S. depository institution and a foreign bank that are both controlled directly or indirectly by one person or group of persons who are closely associated in their business dealings or act in concert. It does not include an organization controlled by a company subject to the Bank Holding Company Act or the Savings and Loan Holding Company Act or where one institution is a subsidiary of the other. Control may exist if a person or group of persons controls 10 percent or more of any class of voting shares of the depository institutions.

The guidance describes various risks that may be increased because of the structure of parallel-owned banking organizations, including engaging in transactions that prefer the foreign bank member of the group over the U.S. depository institution. The agencies will address these risks by coordinating their supervision of the U.S. operations of parallel-owned banking organizations. Enhanced communication and cooperation with foreign bank supervisors is also important to this process.

When an applicant proposes to acquire or establish a U.S. depository institution that will be part of a parallel-owned banking organization, the application will be reviewed on a case-by-case basis. In appropriate circumstances, special conditions may be imposed in a regulatory decision, including restrictions on the ability of the U.S. depository institution to engage in transactions with its foreign affiliates. In cases where a parallel-owned banking organization is formed in a way that does not require review by the banking agencies, the guidance recommends that a U.S. depository institution inform the appropriate federal banking agency prior to becoming part of a parallel-owned banking organization.

PUBLICATION OF THE ANNUAL REPORT AND BUDGET REVIEW

The 88th Annual Report, 2001, of the Board of Governors of the Federal Reserve System, covering operations for the calendar year 2001, is now available from Publications Services, Mail Stop 127, Board of Governors of the Federal Reserve System, Washington, DC 20551, or phone 202452-3244 or 3245. Also available from Publications Services is a separately printed companion document, Annual Report, Budget Review, 2002, which describes the budget expenses of the Federal Reserve Banks for 2002, the 2002 phase of the Board's current two-year (2002-03) budget, and income and expenses for 2000 and 2001. Both reports are also available on the Federal Reserve Board's web site: www.federalreserve.gov.

DISCONTINUANCE OF TEN STATISTICAL TABLES IN THE FEDERAL RESERVE BULLETIN

After this issue (June 2002), the Federal Reserve Bulletin will no longer publish ten statistical tables that have run in its "Financial and Business Statistics" section. Each table, plus information on where to obtain the data presented in that table, is listed below.

1.38: Federal Fiscal and Financing Operations. Monthly totals are from Monthly Treasury Statements, which are available on the web site of the U.S. Department of the Treasury at www.fms.treas.gov/ mts/index.html or telephone (202) 874-9880. Fiscal year totals are from The Budget of the U.S. Government, which can be found on the web site of the U.S. Office of Management and Budget, at www.whitehouse.gov/omb/budget/index.html or telephone (202) 395-3080.