[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EFFECTIVE DATE: This Statement is rescinded effective December 11,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