On Monday, April 5, 2004 Senior Deputy General Counsel Doug Jones,
Assistant General Counsel John Thomas, Senior Counsel Marilyn Anderson,
Counsel Pam LeCren (FDIC Legal), and Chief of Planning and Program
Development Serena Owens (FDIC DSC) met with staff from the Conference
of State Bank Supervisors (CSBS) (Buz Gorman, Montrice Yakimov and Alan
Cox) regarding the FDICs proposed Part 324 which, if adopted, would
apply the substantive provisions of Federal Reserve Board (FRB)
Regulation W (implementing sections 23A and 23B of the Federal Reserve
Act) to insured state nonmember banks. The meeting was held in response
to FDICs offer to sit down with CSBS staff to explain the background
for the proposal and to answer any questions CSBS staff might have on
the proposal. FDIC staff started the meeting by providing general
information on the background of the proposal followed by a brief
overview of the proposal. FDIC staff also mentioned concerns raised by
two of the FDICs Directors at the March 10 Board of Directors meeting
that the proposal might put state banks in an awkward position given
concerns informally raised by the General Counsel of the FRB about the
proposal and FDICs authority to adopt it. CSBS inquired about the
FDICs position on the issues raised by the FRBs General Counsel and
Doug Jones briefly walked through the source of the FDICs authority for
the proposal and informed CSBS staff that, as reflected in the proposal
and as stated at the FDICs Board meeting, it is staffs intent to
coordinate closely with the FRB in the administration of sections 23A
and 23B as to insured state nonmember banks. CSBS staff indicated that
they felt that it is, in their view, very important that the FDIC and
FRB find a way to avoid subjecting banks to conflicting directions from
two regulators. FDIC responded to several questions concerning the
proposed exemption for certain subsidiaries that were in existence prior
to March 10, 2004 as well as a question on how the proposal would impact
bank capital. CSBS staff indicated that they had not had the opportunity
to review the proposal in depth but that it was their intent to do so
and that CSBS would consider filing a formal comment. FDIC staff called
to their attention that the FDIC had requested comment on 15 specific
questions and indicated that if a comment is filed it would be most
useful in terms of providing guidance to the agency if the comment was
as specific as possible. In closing CSBS staff said that it is
supportive of state banks taking advantage of powers granted by the
states and would like to see an operating environment that allows that
to continue.