FEDERAL RESERVE BOARD REGULATIONS Flashcards
FRB REGULATION B - EQUAL CREDIT OPPORTUNITY ACT
Equal Credit Opportunity Act requires all applicants to get equal consideration and are treated fairly and consistently. What items can a lender not discriminate based on? (9) (MR RACE NRS)
- Race
- Color
- National Origin
- Religion
- Sex
- Marital Status
- Age
- Receives public assistance
- Exercised rights under the consumer credit protection laws.
- Requires consumer loan documentation be kept for 26 months
FRB REGULATION D - RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS
How are the reserve requirement ratios calculated?
• Required reserves are computed by applying the reserve requirement ratios to net transaction accounts, non-personal time deposits, and Eurocurrency liabilities of the institution during the computation period.
FRB REGULATION D - RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS
What are the reserve requirement ratios?
- $0 to reserve requirement exemption amount (Up to $10.7 million) = 0 % of amount
- Over reserve requirement exemption amount ($10.7 million to 58.8 million) = 3 % of amount.
- Over low reserve tranche (Greater than $58.8 million) = $1,443,000 plus 10% amount over $58.8 million
- Non-personal time deposits = 0 %
- Eurocurrency liabilities = 0 %
FRB REGULATION F - LIMITS ON INTERBANK LIABILITIES
What does Regulation F require? (CADII)
- Develop written policy
- Annual review and approval of policy by Board
- Internal limits when there is significant risk
- Interday and Intraday credit exposure is limited to 25% of capital unless at least adequately capitalized. (Commonly controlled - 25% correspondents are excluded from this requirement)
- Correspondents capital position is monitored quarterly
FRB REGULATION F - LIMITS ON INTERBANK LIABILITIES
What is the time frame for reducing a bank’s exposure to 25% after determining they are no longer adequately capitalized?
120 days
FRB REGULATION O - LOANS TO EXECUTIVE OFFICERS, DIRECTORS, AND PRINCIPAL SHAREHOLDERS
What Part in the FDIC Rules and Regulations is further implemented by Regulation O?
Part 337.3 – Limits on extensions of credit to Executive Officers, Directors, and principal shareholders of insured nonmember banks.
FRB REGULATION O - LOANS TO EXECUTIVE OFFICERS, DIRECTORS, AND PRINCIPAL SHAREHOLDERS
What is an Affiliate?
Any company of which a member bank is a subsidiary or any other subsidiary of that company
FRB REGULATION O - LOANS TO EXECUTIVE OFFICERS, DIRECTORS, AND PRINCIPAL SHAREHOLDERS
Can a bank be an affiliate?
- No. According to Regulation O Part 215.2, the definition of affiliate does not include a financial institution
- Similar to FDI Act - 23B - Banks are NOT affiliates.
FRB REGULATION O - LOANS TO EXECUTIVE OFFICERS, DIRECTORS, AND PRINCIPAL SHAREHOLDERS
An extension of credit is making or renewal of any loan, a granting of a line of credit, or an extending of credit in any manner whatsoever, including _______? (GAS ROO U)
- Repurchase Agreements
- Overdrafts
- SBLC (Standby letter of credit);
- Guarantee
- Additional Existing Indebtedness
- Unearned Salary Advance for a period in excess of 30 days
- Other Similar Extensions resulting in a person becoming obligated to the bank.
FRB REGULATION O - LOANS TO EXECUTIVE OFFICERS, DIRECTORS, AND PRINCIPAL SHAREHOLDERS
What does an extension of credit not include? (RAID AEI)
- Receipt by a bank of a check deposited in or delivered to the bank unless it results in the carrying of a cash item for or the granting of an overdraft;
- Indebtedness of $15,000 or less by reason of a general arrangement by which a bank acquires credit accounts; or makes payments on behalf of credit card, check credit plan, or any open-ended credit plan, unless:
- Advance against accrued salary or other accrued compensation, or for the payment of authorized travel or other expenses incurred or to be incurred on behalf of the bank;
- Discount of promissory notes, bills of exchange, conditional sales contracts, or similar paper, without recourse;
- Acquisition of a note, draft, bill of exchange, or other indebtedness through a merger by a bank that acquires assets and assumes liabilities of another bank, or through foreclosure, provided the debt is not held for more than three years from the date of the acquisition;
- Endorsement or guarantee for the protection of a bank of loan or asset previously acquired by the bank in good faith;
- Indebtedness of $5,000 or less arising by reason of an interest-bearing overdraft credit plan as specified in § 215.4.
FRB REGULATION O - LOANS TO EXECUTIVE OFFICERS, DIRECTORS, AND PRINCIPAL SHAREHOLDERS
Unless excluded annually by a Board Resolution, who are assumed to be executive officers? (STEP CC)
- Secretary
- Treasurer
- Every Vice President
- President
- Cashier
- Chairman of the Board
FRB REGULATION O - LOANS TO EXECUTIVE OFFICERS, DIRECTORS, AND PRINCIPAL SHAREHOLDERS
Who are insiders? (DEPA)
- Directors
- Executive Officers
- Principal Shareholders
- Any related interests of the above
FRB REGULATION O - LOANS TO EXECUTIVE OFFICERS, DIRECTORS, AND PRINCIPAL SHAREHOLDERS
Who is a related interest is?
A company that is controlled by that person or a political or campaign committee that is controlled by that person
FRB REGULATION O - LOANS TO EXECUTIVE OFFICERS, DIRECTORS, AND PRINCIPAL SHAREHOLDERS
What three ways can a person have conclusive control?
- Controls 25% or more of any class of voting stock,
- Controls the election of a majority of directors, or
- Has power to exercise controlling influence over management or policies
FRB REGULATION O - LOANS TO EXECUTIVE OFFICERS, DIRECTORS, AND PRINCIPAL SHAREHOLDERSWhat is presumptive control? (Reg O 10%)
- Person who is an executive officer or director and directly or indirectly controls more than 10% of voting stock; OR
- Person directly or indirectly controls more than 10% of voting stock and no other person controls a greater percentage
FRB REGULATION O - LOANS TO EXECUTIVE OFFICERS, DIRECTORS, AND PRINCIPAL SHAREHOLDERS
What does unimpaired capital and surplus mean?
Tier 1 and Tier 2 Capital and the portion of the ALLL not includable in Tier 2 Capital.
FRB REGULATION O - LOANS TO EXECUTIVE OFFICERS, DIRECTORS, AND PRINCIPAL SHAREHOLDERS A principal shareholder, directly or indirectly owns, controls, or has the power to vote more than \_\_\_\_\_\_ % , of any class of voting stock securities of the company or bank; including shares of \_\_\_\_\_\_\_\_\_\_, and no other person owns, controls or has the power to vote a greater percentage of that class of voting securities has \_\_\_\_\_\_\_\_ .
- 10%
- Shares held by immediate family,
- Rebuttable presumption of control
- Note: Includes a person that controls a principal shareholder (e.g. a person that controls a BHC)
FRB REGULATION O - LOANS TO EXECUTIVE OFFICERS, DIRECTORS, AND PRINCIPAL SHAREHOLDERS
What is immediate family?
- Spouse
- Minor children
- Adult children living at home
