April 11, 2005 News Archive

SR 05-6: Risk-Based Capital Treatment for Unrated Direct Credit Subs Extended to ABCP Programs
The federal banking regulatory agencies issued interagency guidance that clarifies how banking organizations are to use internal ratings that they assign to asset pools purchased by their asset-backed commercial paper (ABCP) programs in order to risk weight appropriately any direct credit substitutes, e.g., guarantees, extended to such programs.

The guidance provides an analytical framework for assessing the broad risk characteristics of direct credit substitutes that a banking organization provides to an ABCP program it sponsors and provides specific information on evaluating direct credit substitutes issued in the form of program-wide credit enhancements.

Financial institutions and the public will receive notification via Regulatory Update.

SBA Studies Effects of Mergers and Acquisitions on Small Business Lending by Large Banks
A report by the Small Business Administration (SBA) found that financial deregulation and the structure of bank holding companies (BHCs) has a direct affect on small-business lending. The report found that in general, larger bank holding companies tend to do less small -business lending as a percentage of total business loans. The report also found that the organizational form of the BHC influences its small-business lending. When BHCs acquire other banks--but do not merge them--small business lending is little affected. In contrast, if bank portfolios are merged and integrated into larger banks, their small business lending declines. The report examined the non-credit card lending of the 50 largest bank holding companies.