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#49437 - 12/18/02 04:57 PM Reg W
DeeQ Offline
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DeeQ
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Hi,
I wanted to share some Reg W material with my BOD, however, everything I find
is "really" regulatory... Anyone have anything in laymen's terms?? Help please
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#49438 - 12/18/02 05:21 PM Re: Reg W
OnTheEdge Offline
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I'm embarrassed to say, I don't even know what Reg W is?
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#49439 - 12/18/02 05:26 PM Re: Reg W
DeeQ Offline
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Hi From what little I know, it's supposed to implement 23A & 23B of the
Fed Res Act...Holding companies, limited transactions with affiliates...
Something just came on on Dec 12th, but it's like 300 pages long...
The BOD just doesn't think compliance is exciting as I do.
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#49440 - 12/18/02 05:27 PM Re: Reg W
DeeQ Offline
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Oh, and tressaj,
DON'T BE EMBARRASSED, THAT'S MY JOB FUNCTION!
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#49441 - 12/18/02 05:31 PM Re: Reg W
OnTheEdge Offline
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I've been involved in Compliance for about 12 years now and every day I realize how little I actually know!
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#49442 - 12/18/02 05:43 PM Re: tressaj
DeeQ Offline
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If you think 12 years is nothing, how about 3 months? AHHHHH!
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#49443 - 12/18/02 06:36 PM Re: Reg W
Ted Dreyer Offline
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Ted Dreyer
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Sections 23A and 23B of the Federal Reserve Act impose restrictions on a bank’s loans to, purchases of assets from, and certain other transactions with, affiliates. The original intent of the legislation was to prevent the misuse of a bank’s resources stemming from large-scale, “non-arm’s-length” loans to affiliates. The law also limits the ability of a bank to transfer to its affiliates the subsidy arising from the bank’s access to the Federal safety net.

Section 23A is simple in concept, but complicated in its application --particularly to large, complex banking organizations participating in modern financial markets. Section 23A seeks to achieve its goals in several ways.
First, it prohibits a bank from initiating a “covered transaction” with an affiliate if, after the transaction,
(i) the aggregate amount of the bank’s covered transactions with that affiliate would exceed 10 percent of the bank’s capital stock and surplus, or
(ii) the aggregate amount of the bank’s covered transactions with all affiliates would exceed 20 percent of the bank’s capital stock and surplus.
Covered transactions include loans and other extensions of credit to an affiliate, investments in the securities of an affiliate, purchases of assets from an affiliate, and certain other transactions that expose the bank to the financial risks of its affiliates.
Second, it requires all covered transactions between a bank and its affiliates to be on terms and conditions that are consistent with safe and sound banking practices.
Third, it prohibits a bank from purchasing low-quality assets from its affiliates.
Fourth, it requires that a bank’s extensions of credit to affiliates be secured by a statutorily defined amount of collateral.
Finally, it contains an attribution rule that provides that any transaction by a bank with any person is deemed to be a transaction with an affiliate to the extent that the proceeds of the transaction are used for the benefit of, or transferred to, the affiliate.

Section 23B protects a bank by requiring that transactions between the bank and its affiliates occur on market terms. Section 23B applies this restriction to any covered transaction (as defined in section 23A) with an affiliate as well as certain other transactions, including
(i) any sale of assets by the bank to an affiliate;
(ii) any payment of money or furnishing of services by the bank to an affiliate;
(iii) any transaction in which an affiliate acts as an agent or broker for the bank or for any other person if the bank is a participant in the transaction; and
(iv) any transaction by the bank with a third party if an affiliate has a financial interest in the third party or if an affiliate is a participant in the transaction.


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#49444 - 12/18/02 07:11 PM Re: Reg W-thanks
DeeQ Offline
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Thank you for that nice concise explanation. With your permission,
I will copy and paste it onto a word doc. Thanks again.
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Get your facts first, then you can distort them as you please. - Mark Twain

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#49445 - 12/20/02 04:04 PM Re: Reg W
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If anyone is interested, TS published a relatively simple explanation of the
Reg W implementation! Go to:
[url=http://www.ots.treas.gov/docs/73173.pdf]
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#49446 - 12/20/02 04:52 PM Re: Reg W-thanks
Nanwa Offline
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Oh, I thought you meant Compound W!
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#49447 - 12/20/02 05:40 PM Re: Reg W
RVFlyboy Offline
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Soaring over Georgia
Maria, you didn't finish off your link - that's why it didn't actually create a link. After what you've typed you need to put the words or phrase that you want underlined in the link, then finish off with [/url] in order for the link to be created.
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#49448 - 12/20/02 06:14 PM Re: Reg W
Al Miller Offline
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Actually it needs [ ] (with url inside) at the front and [ ] (with /url inside] at the end. Here is the link.

http://www.ots.treas.gov/docs/73173.pdf
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#49449 - 12/20/02 08:05 PM Re: Reg W
DeeQ Offline
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Jim:
OOPS, Sorry, I'm new! OTS
try this one...
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Get your facts first, then you can distort them as you please. - Mark Twain

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#49450 - 12/20/02 08:06 PM Re: Reg W
DeeQ Offline
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Al & Jim,
Thank you for your patience... at least you aren't mean!
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Get your facts first, then you can distort them as you please. - Mark Twain

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