March 4, 2002 News Archive

Board Issues Statement on Hedging Equity Derivative Transactions
The Board issued a press release stating its position on whether a state member bank may acquire equity securities to hedge the bank's exposure from equity derivative transactions lawfully entered with a third party. Banks are generally prohibited from acquiring equity securities. However, a recent interpretation by the Office of the Comptroller of the Currency (OCC) and concomitant review by the General Accounting Office allows national banks to acquire equity securities subject to certain conditions and OCC review and approval. Accordingly, the Board published a statement (PDF) extending the same exemption to state member banks if such purchases are made in accordance with the conditions and restrictions applicable to national banks and to the extent permitted by state law.

FFIEC Approves Revisions to the Call Report for 2002
The Federal Financial Institutions Examination Council (FFIEC) approved revisions to the Reports of Condition and Income (Call Report) to become effective as of the March 31, 2002 report date. The changes are detailed in FIL -13-2002 (PDF).

Senate Banking Committee to Examine Remittances Abuses
Senate Banking Committee Chairman Paul S. Sarbanes announced a hearing to address issues regarding the sending of remittances. The remittance market is characterized by multiple transactions of small dollar amounts sent between individuals and communities with relatively few resources. Witnesses in recent Committee hearings on Financial Literacy and Education have expressed concerns that the remittance market often charges excessive fees, manipulates exchange rates and fails to disclose full transaction costs. As a result, users are overcharged and the amount of money received is significantly reduced. Remittances are also an important source of development capital and could represent a significant share of a country's GDP as exemplified by Mexico where the remittance dollars are greater than the entire tourism economy.

Congressman Bachus Introduces Deposit Insurance Reform Legislation
Chairman Spencer Bachus of the House Financial Services Subcommittee on Financial Institutions introduced a bill (H.R. 3717) that would reform the nation's deposit insurance system. According to the press release, the bill includes provisions to:

• Merge the Bank Insurance Fund and the Savings Association Insurance Fund
• Increase deposit insurance coverage to $130,000 and adjust the index future coverage limits to inflation
• Increase coverage limits for municipal deposits
• Double coverage limits for individual retirement accounts
• Even out bank premiums to avoid sharp increases during times of recession

The full text of H.R. 3717 is available on the Library of Congress web site: http://thomas.loc.gov/