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NORTHERN TRUST COMPANY
July 19, 2004
Ms. Jennifer J. Johnson
Secretary
Board of Governors of the
Federal Reserve System
20th Street and Constitution Ave., N.W.
Washington, D.C. 20551
Docket No. OP-1189
Robert E. Feldman
Executive Secretary
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
Attn: Comments/Exec.Secretary Section
Communications Division
Public Information Room
Mailstop 1-5
Office of the Comptroller of the Currency
250 E Street, SW
Washington, DC 20219
Attention: Docket No. 04-12
Jonathan G. Katz
Securities and Exchange Commission
450 5th Street, NW
Washington, D.C. 20549-0609
File Number S7-22-04
Regulation Comments
Chief Counsel’s Office
Office of Thrift Supervision
1700 G Street, NW
Washington, DC 20552
Attention No. 2004-27
Dear Sir or Madam:
We appreciate the opportunity to comment to the Office of the
Comptroller of the Currency, the Board of Governors of the Federal
Reserve System, the Office of Thrift Supervision, the Federal Deposit
Insurance Corporation, and the Securities and Exchange Commission
(collectively, the "Agencies") on the Interagency Statement on Sound
Practices Concerning Complex Structured Finance Activities, 69 Fed. Reg.
28980 (the, "Guidance'') Northern Trust Corporation ("Northern Trust")
is a multi-bank holding company with its headquarters in Chicago,
Illinois, USA, a growing network of offices in 12 U.S. states,
international offices in six countries and over 8,000 employees
worldwide. Northern Trust had assets totaling approximately $41 billion
and trust assets under administration totaling $2.3 trillion as of
December 31, 2003.
We commend the efforts of the Agencies to provide guidance with
respect to policies, procedures and practices that pan help financial
institutions mitigate the risks associated with complex structured
finance transactions ("CSFTs"). Northern Trust is a member company of
the Financial Services Roundtable (the "Roundtable") and strongly
supports all of the comments and recommendations made by the, Roundtable
in its letter to the, Agencies dated July 19, 2004. Northern Trust
offers the following additional comment in an effort to ensure that the
underlying goals of the Agencies are satisfied without imposing undue
burden on financial institutions.
The Guidance fails to distinguish among the various roles
financial institutions play in a complex structured finance transaction
and the varying degrees of access to information associated with each
such role
Financial institutions play numerous roles in a CSFT. In each role
there are varying degrees of responsibilities and obligations assumed by
the financial institutions and such responsibilities and obligations are
governed by established bodies of law and regulation. Each such role
entitles financial institutions to varying degrees of access to
information concerning the counterparty's undertaking of a particular
transaction. When a customer retains a financial institution to
undertake an advisory or other fiduciary role with respect to a
transaction, the financial institution may assume significant
responsibilities and affirmative duties and, as a result, have greater
access to information concerning the customer's tax, regulatory and
accounting treatment of the particular transaction. When a financial
institution plays a more limited role, for example a financial
institution that is a member of a larger group of financial institutions
to which the transaction has been syndicated, the financial institution
has limited access to information concerning the counterparty's
undertaking of the transaction and is simply evaluating information
provided to it. The Guidance imposes on financial institutions
obligations and responsibilities without regard to the financial
institution's role in the transaction and consequent ability to obtain
access to information concerning the counterparty's tax, regulatory and
accounting treatment of the transaction. The imposition of such
additional obligations and responsibilities will create significant
unintended negative consequences for financial institutions.
We recommend that the Agencies clearly state that they do not intend
the Guidance to impose responsibilities and obligations on financial
institutions beyond the responsibilities and obligations imposed by
existing law, including any responsibility or obligation to obtain tax,
regulatory and accounting information about a particular transaction
that is not typically available to financial institutions in the
particular role it plays with the responsibilities and obligations it
assumes. In addition, Northern Trust urges the Agencies to carefully
consider the comments and recommendations made by the Roundtable and
other constituents before issuing the final Guidance.
Northern Trust appreciates the opportunity to present its comments on
such an important proposal, and we thank you for considering our views.
If you have any questions or comments on this letter, please feel free
to contact me at (312) 557-1865.
Respectfully submitted,
Jennifer M. Dirkin
Northern Trust Company
50 South La Salle St.
Chicago, IL 60675
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