Transactions With Affliates

Question 1

What is a covered transaction

Answer 1

Extension of credit to an affliate

Purchase of affliate security

Purchase of affliate asset

Securiiry of an affliate offered as collateral

Question 2

What are low quality assets

Answer 2

Substandard assets

Non accrual

30 days past due

Assets acquired via foreclosure

Question 3

Maximum covered for a transactions for a single affliate may not exceed

Answer 3

10% of the capital stock and surplus of the bank

Question 4

Maximum amount of covered transaction for all affiliates can not exceed

Answer 4

20% of bank capital and surplus

Question 5

What is the covered transactions measurements for a savings and loan

Answer 5

Unimpaired capital and unimpaired surplus

Question 6

The collateral requirements in credit transactions with affliates are

Answer 6

100% if collateral consists of US backed notes

110% if obligation of state

120% if collateral is other debt obligations

130% if obligation is stock , leases, or real property

Question 7

What type of items are not allowed to be used as collateral

Answer 7

Low quality assets

Securities issued by any affiliates

Letters of credit

Guaranteed

Intangible assets

Question 8

What does section 23 a require

Answer 8

Banks maintain a security interest I collateral

Question 9

What must banks do when collateral is amortized or retired

Answer 9

It is replaced by additial Eli globe collateral equal to the percentage required at the inception of the transactions

Question 10

Can a bank purchase low quality assets from an aft

Answer 10

No unless it is performed under an independent credit evaluation

Question 11

Can a bank renew low credit assets to an affliate

Answer 11

Yes if the loan was not a low quality asset at the time the bank purchased the participation

It was approved by the board to protect the banks interest

The bank provides its primary regulatory agency with written notice of renewal not later than20 days after consummation

Question 12

What must a credit transaction with an affliate be valued at

Answer 12

The principal amount of the transaction

The amount owed by the affliate to the bank

Question 13

When does a bank engage in a credit transaction with an affliate

Answer 13

At the time during the day it

Becomes legally obligated to lend to, issue a guarantee, or confirm a letter of credit for an affliate

Question 14

Does the 10% rule apply to transactions between a bank and a financial subsidiary

Answer 14

No nor does th 20% on all affliates

Question 15

What is section 24 a

Answer 15

Imposes safeguards to protect banks from misuse of their resources in transactions with affliates

Question 16

What is section 23b

Answer 16

Govern transaction among banks and non affliates by requiring transactions between banks and their affliates to be on comparable terms and conditions as transactions with non affliates

Question 17

What is the attribution rule

Answer 17

Proscribes that any transaction with a third party is considered to be a transaction with an affliate to the extent the proceeds of the transaction benefit of the third party

Question 18

What are some examples of what is subject to reg w

Answer 18

Loan or extension to an affliate

Purchasing assets from an affliate

Accepting collateral or purchasing securities of an affliate

Guarantee letter of credit

Tax allocation agreements

Contributing to a depository institution an affliate that has outstanding debt

Entering into serious tea and securities financing transactions that result in credit exposure

Question 19

Can an individual be an affliate of a bank

Answer 19

No

Question 20

What is the sister bank exception

Answer 20

Sister banks are only subject to the low quality asset and safety and soundness requirements