Conference
of State Bank Supervisors
September 17, 2004
The Honorable Donald E. Powell
Chairman
Federal Deposit Insurance Corporation
550 17th Street, N.W.
Washington, D.C. 20429-9990
VIA EMAIL: comments@FDIC.gov
Attention: RIN number 3064-AC85
International Banking; Proposed Rule, 69 Fed. Reg. 43060 (2004)
Dear Mr. Chairman:
The Conference of State Bank Supervisors (CSBS) is pleased to submit
comments on the International Banking Proposed Rule, which was published
by the Federal Deposit Insurance Corporation (FDIC) at 69 Fed. Reg.
43060 (July 19, 2004). Specifically, CSBS submits the following comments
on proposed revisions to FDIC regulations pertaining to operations
of federal branches and agencies of foreign banks.
As you know,
CSBS is the professional association of state officials responsible
for
chartering, regulating and supervising more than
6,000 of the nation’s state-chartered commercial and savings
banks, and nearly 420 state-licensed foreign banking organizations
nationwide. These state-licensed institutions account for 85% of
the more than $1.3 trillion in assets held by foreign banking organizations
in the United States, demonstrating that the state license is the
overwhelmingly choice of the foreign bank community. Our states provide
effective and efficient supervision to ensure the continued safe
and sound operation of state-licensed institutions, while being receptive
and responsive to their legitimate needs and concerns. In doing so,
we work closely with the FDIC and value our partnership in achieving
our mutual supervisory goals.
At the outset,
we note that the provisions affecting branches of foreign banks
cover a
limited number of institutions1 that were “grandfathered” under
the 1991 statutory amendments. That is, these institutions are allowed
to continue to obtain FDIC insurance for their retail deposits. With
this in mind, we offer the following comments.
We believe that asset pledge and asset maintenance requirements
are extremely important and valuable supervisory tools. Indeed, where
the purpose of these requirements is to protect creditors of uninsured
branches, the role of state asset pledge and asset maintenance requirements
is paramount. However, in the unique situation where retail deposits
are insured by the FDIC, a major objective is the protection of depositors.
Nothing in the proposed rule limits a state's prerogative to impose
asset pledge and asset maintenance requirements. Where allowed by
state law, certain states (e.g., New York and Illinois) have taken
the initiative to avoid the imposition of double asset pledge requirements
by exempting FDIC insured branches from state asset pledge requirements.
Given the unique situation and lack of effect on state prerogatives,
we have no objection to these provisions of the proposed rule.
The proposed
rule requests comments on whether the FDIC should provide deposit
insurance for
wholesale U.S. branches of foreign banks. Our
supervisors are not responsible for the operation and administration
of the insurance fund, and so we defer to the FDIC for the analysis
of the implications for the insurance fund. However, as a matter
of principle we believe that federal statutes should be construed
carefully to ensure that Congressional intent is implemented.. Accordingly,
we concur in the FDIC’s legal conclusion that such “optional
insurance” is not authorized specifically by statute.
Thank you for your consideration of our comments. Please contact
Alan Cox or me at 202-296-2840 if you have any questions or we can
be of service.
Best personal regards,
Neil Milner CAE
President & CEO
Conference of State Bank Supervisors
1155 Connecticut Avenue, N.W., Fifth Floor
Washington, D.C. 20036-4306
_________________________________________
1 Currently there are 12 such institutions
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