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Circular Letters

Circular Letter 5581

December 12, 2002

To: All Member Banks and Others Concerned in the Third Federal Reserve District

Attention: Chief Executive Officer and Chief Financial Officer

Subject: FINAL REGULATION W AND PROPOSED AMENDMENT

Summary:

On November 27, the Federal Reserve Board announced that it is publishing a final Regulation W that comprehensively implements sections 23A and 23B of the Federal Reserve Act and provides several new exemptions consistent with the purposes of the statute. The final rule combines statutory restrictions on transactions between a member bank and its affiliates with numerous Board interpretations and exemptions in an effort to simplify compliance with sections 23A and 23B.

The Board is also publishing a final rule that rescinds, as of April 1, 2003, the Board's existing formal interpretations of sections 23A and 23B.

In addition, the Board is seeking public comment on a proposed rule that would amend an exemption in Regulation W that permits a member bank to exclude the purchase of an extension of credit from an affiliate from the quantitative limits imposed by section 23A of the Federal Reserve Act if certain criteria are met. The proposed amendment would limit a member bank's ability to buy an extension of credit from an affiliate under the exemption to 100 percent of the capital stock and surplus of the member bank.

Date: Final Regulation W will have an effective date of April 1, 2003.

Comment Requested: Comments on the proposed rule must be submitted by January 13, 2003. Comments should refer to Docket Number R-1135 and should be sent to Ms. Jennifer J. Johnson, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, N.W., Washington, D.C. 20551, or mailed electronically to: regs.comments@federalreserve.gov

Additional Information: Copies of the two final rules and the proposed rule are attached PDF Icon (349 KB, 143 pages). For additional information, contact Pamela G. Nardolilli, Senior Counsel (202/452-3289), or Mark E. Van Der Weide, Counsel (202/452-2263), Legal Division, Board of Governors of the Federal Reserve System.

Attachments:

Attachment2 PDF Icon (27 KB, 9 pages)
Attachment3 PDF Icon (14 KB, 4 pages)