Complex Structured Finance Activities Interagency Statement on Sound Practices for Activities With Elevated Risk

Highlights:
The attached Final Statement:

• Focuses on complex structured finance transactions designed to achieve specific legal, tax or accounting objectives of a particular customer in a novel or complex manner that often elevate an institution's exposure to various forms of legal or reputational risk.
• Illustrates the types of complex structured finance transactions that warrant increased review by the institution's senior management and board of directors.
• Describes the types of internal controls and risk- management procedures that the agencies believe should enable a financial institution to identify, monitor and control the heightened legal and reputational risk associated with various types of complex structured finance transactions.
• Generally does not apply to products with well- established track records that are familiar to participants in the financial markets. These include standard public mortgage-backed securities transactions, public securitizations of retail credit cards, asset-backed commercial paper conduit transactions, and hedging transactions involving "plain vanilla" derivatives and collateralized loan obligations.
• Applies primarily to large financial institutions, generally not to smaller institutions.

Distribution:
FDIC-Supervised Banks (Commercial and Savings)

Suggested Routing:
Chief Executive Officer
Chief Financial Officer
Chief Accounting Officer
Chief Risk Officer

Note:
FDIC financial institution letters (FILs) may be accessed from the FDIC's Web site at www.fdic.gov/news/financial-institution-letters/2007/index.html .

To receive FILs electronically, please visit http://www.fdic.gov/about/subscriptions/fil.html .

Paper copies of FDIC financial institution letters may be obtained through the FDIC's Public Information Center, 3501 North Fairfax Drive, Room E-1002, Arlington, VA (1-877-275-3342 or 703-562-2200).