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FIL-107-96 Attachment

[Federal Register: December 11, 1996 (Volume 61, Number 239)]

[Notices]

[Page 65225]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]



 

[[Page 65225]]


 

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FEDERAL DEPOSIT INSURANCE CORPORATION


 

 

Rescission of Statement of Policy; Retail Repurchase Agreements


 

AGENCY: Federal Deposit Insurance Corporation (FDIC).


 

ACTION: Rescission of statement of policy.


 

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SUMMARY: As part of the FDIC's systematic review of its regulations and

written policies under section 303(a) of the Riegle Community

Development and Regulatory Improvement Act of 1994 (CDRI), the FDIC is

rescinding its policy statement concerning retail repurchase agreements

(Statement). The Statement alerts insured nonmember banks to legal and

safety and soundness issues involved in the issuance of retail

repurchase agreements (retail repos). The FDIC is rescinding the

Statement because it is now outmoded. The rescission does not reflect

any substantive change in the FDIC's supervisory attitude toward the

need for fundamental disclosure of investor risks, as reflected in the

Interagency Statement on Retail Sales of Nondeposit Investment

Products.


 

EFFECTIVE DATE: This Statement is rescinded effective December 11,

1996.


 

FOR FURTHER INFORMATION CONTACT: Kenton Fox, Senior Capital Markets

Specialist, Division of Supervision, (202) 898-7119; Gerald J. Gervino,

Senior Attorney, (202) 898-3723, Legal Division, FDIC, 550 17th Street,

N.W., Washington, D.C. 20429.


 

SUPPLEMENTARY INFORMATION: The FDIC is conducting a systematic review

of its regulations and written policies. Section 303(a) of the CDRI (12

U.S.C. 4803(a)) requires each federal banking agency to streamline and

modify its regulations and written policies in order to improve

efficiency, reduce unnecessary costs, and eliminate unwarranted

constraints on credit availability. Section 303(a) also requires each

federal banking agency to remove inconsistencies and outmoded and

duplicative requirements from its regulations and written policies.

As part of this review, the FDIC has determined that the Statement

is outmoded, and that the FDIC's written policies can be streamlined by

its elimination.

The Statement was published on October 6, 1981, 46 FR 49197. The

Statement requires banks to follow safe and sound banking practices in

the issuance of retail repurchase agreements, alerts banks to certain

requirements of 12 CFR part 329 and the Investment Company Act of 1940,

establishes disclosure requirements, and restricts bank advertising and

solicitations.

The Government Securities Act of 1986 established, among other

things, requirements for repurchase agreement transactions using U.S.

government and agency securities. In addition, the Division of

Supervision has issued guidance for the sale of investment products by

banks in the Interagency Statement on Retail Sales of Nondeposit

Investment Products. This law partially supersedes the Policy

Statement. Similarly, the Interagency Statement provides broader

guidance for securities transactions, including retail repurchase

transactions. The presence of these two newer guideposts may lead to

confusion as to the application of the Policy Statement.

The Policy Statement references parts of the FDIC's interest rate

regulations, 12 CFR part 329, that are no longer in force. Much of the

discussion on the Investment Company Act of 1940, 17 U.S.C. 80a-1

through 80a-64, is unnecessary as the subject has not been raised in

recent years. These factors have caused confusion among banks, their

advisors, and consumers.


 

For the above reasons, the Policy Statement is hereby rescinded.


 

By order of the Board of Directors.


 

Dated at Washington, DC, this 26th day of November, 1996.


 

Federal Deposit Insurance Corporation

Jerry L. Langley,

Executive Secretary.

[FR Doc. 96-31393 Filed 12-10-96; 8:45 am]

BILLING CODE 6714-01-P

Last Updated: March 24, 2024