August 2008

From the editors of CCH’s Banking and Finance publications, this update describes significant developments covered in our products in recent reports, as well as product enhancements.

Past issues of the Banking and Finance Update, can be viewed on the Banking and Finance Web page at: http://business.cch.com/updates/bankingFinance.

If you have questions or comments concerning the information provided below, please contact the Banking and Finance Update editor at Serena.Lynn@ wolterskluwer.com.

Federal Banking Law Reporter

Housing Reform, Mortgage Relief Bill Enacted
Reversing earlier veto threats, President Bush signed the Housing and Economic Recovery Act of 2008 on July 30, 2008. In broad terms, the bill is intended to: enhance the safety and soundness of Fannie Mae, Freddie Mac and the Federal Home Loan Bank System; impose licensing and registration requirements on mortgage loan originators; and reduce the number of mortgage foreclosures. The bill creates a new, independent regulator for the government sponsored housing enterprises (GSEs), called the Federal Housing Finance Agency (FHFA). This agency has the authority to establish capital standards for the GSEs and also to establish prudential management standards addressing internal controls, audits and risk management. The FHFA can restrict asset growth and capital distributions by undercapitalized institutions and, if necessary, can place an insolvent institution into receivership. This story appears in Report Letter No. 2277, July 31, 2008.

Fed Issues Final Home Mortgage Amendments
In order to better protect consumers and facilitate responsible lending, the Federal Reserve Board has issued a final rule for home mortgage loans that is intended to prohibit unfair, abusive or deceptive home mortgage lending practices and restrict certain other mortgage practices. The final rule also establishes advertising standards and requires certain mortgage disclosures to be given to consumers earlier in the transaction. The Fed notice and related documents are at ¶95-332 (ip access user).

FDIC Adopts Insured Deposit Calculation Rules
The Federal Deposit Insurance Corp. has finalized a rule requiring certain large depository institutions to modify their systems in order to facilitate the process for determining the insurance status of depositors in the event of failure. The rule applies only to an estimated 159 "covered institutions," defined as any insured depository institution with at least $2 billion in domestic deposits and either more than 250,000 deposit accounts or total assets over $20 billion, regardless of the number of deposit accounts. The final rule provides for accelerated implementation on a case-by-case basis for covered institutions exhibiting signs of financial difficulty, such as those with a composite CAMELS rating of 3, 4 or 5. Covered institutions using deposit software or servicing from a vendor should determine whether vendor-supplied functionality will be provided. This deposit insurance modernization initiative is necessary for the agency to meet its mandates to structure the least costly of all possible resolution transactions and to pay insured deposits "as soon as possible" after an institution fails. The rule is effective Aug. 18, 2008, and allows for an 18-month implementation period. The FDIC concurrently is adopting an interim rule establishing practices for determining deposit and other liability account balances at a failed insured depository institution. FIL-65-2008 and the FDIC final rule are reported at ¶95-336 (ip access user). FIL-64-2008 and the FDIC interim rule are reported at ¶95-337 (ip access user).

Fed Enhances Liquidity Facility Effectiveness
The Federal Reserve Board has extended the Primary Dealer Credit Facility (PDCF) and Term Security Lending Facility (TSLF) through Jan. 30, 2009, with the intent of making its efforts to stabilize the financial system more effective. Additionally, the Fed has introduced Term Auction Facility loans with 84-day maturities to supplement the existing 28-day loans. The PDCF provides primary dealers with discount window loans that are collateralized by investment-grade securities at the primary credit rate charged by the Federal Reserve Bank of New York. The TSLF consists of weekly auctions to primary dealers of 28-day Treasury securities loans that are collateralized by a range of government and private securities. Report Letter No. 2277, July 31, 2008.

The Red Flags Deadline Is Looming: Best Practices to Meeting Guidelines and Implementing a Successful Solution
ID Insight President Adam Elliott has authored a story offering banks guiding principles on preparing for Red Flags guidelines compliance. According to Elliott, with roughly three months left until the Fair and Accurate Credit Transactions Act (FACT Act) Red Flag guidelines compliance deadline, it's becoming apparent that we collectively have a large mountain to climb. In a recent survey by BankInfoSecurity.com, only half of financial institutions said they will beat the compliance deadline for the Red Flag guidelines. This underscores much of what Elliott has been seeing in the market. With the banking crisis still hanging out there, and the myriad of other challenges still looming, banks and credit unions are struggling to fully get their arms around the Red Flag guidelines. Through Elliott’s work with a range of banks implementing new strategies and solutions to meet the Red Flag guidelines, he has gathered a number of guiding principles to aid in creating a streamlined process with a successful result. Elliott’s best practice guidelines are in Report Letter No. 2277, July 31, 2008.

Basel II-Based Standardized Approach Capital Proposal Issued
The federal banking regulators have proposed a rule that would implement certain of the less-complex approaches for calculating risk-based capital requirements that are included in the international Basel II capital accord. The proposal would provide banks with the option to adopt an alternative risk-based capital framework based largely on the Standardized Approach set forth in the Basel II Framework. The proposal, known as the standardized framework, would be available for banks, bank holding companies and savings associations that are not required to implement the advanced approaches of Basel II. The standardized framework also seeks to more closely align regulatory capital requirements with institutions' risk and should further encourage improvements in their risk-management practices. The notice is at ¶95-322 (ip access user).

Banks Warned of Risks in Reducing, Suspending HELOCs
The Federal Deposit Insurance Corp. has issued a reminder that banks must meet consumer protection requirements if they decide to reduce credit limits or suspend consumers' home equity lines of credit (HELOCs). Falling home prices and declining consumer creditworthiness may make it prudent for a bank to take such an action, the FDIC noted, but the Fair Housing Act and Regulation B impose consumer protection requirements. The agency also urged banks to work with consumers to mitigate any resulting hardships. FIL-58-2008 is at ¶63-884 (ip access user).

Fed, SEC Agree on Information Sharing, Cooperation
The Federal Reserve Board and Securities and Exchange Commission have signed a Memorandum of Understanding (MOU) intended to enhance information sharing and cooperation between the two agencies. Under the MOU, the Fed and SEC will share information and cooperate across a number of areas of common interest, including anti-money laundering, bank brokerage activities under the Gramm-Leach-Bliley Act, clearance and settlement in the banking and securities industries and the regulation of transfer agents. The MOU specifically covers Fed-regulated bank holding companies and SEC-supervised Consolidated Supervised Entities that own securities firms. The memorandum is at ¶36-596 (ip access user).

Fannie, Freddie Uncertainty Prompts Action from Regulators
In a move designed to shore up confidence in Fannie Mae and Freddie Mac, the Federal Reserve Board announced on July 13 that it will seek authority from Congress to allow the government sponsored enterprises (GSEs) to have the ability to borrow from the Federal Reserve Bank of New York should it be necessary. The Fed explained that any lending would be at the primary credit rate and collateralized by government and federal agency securities. The move is intended to supplement the Treasury Department's existing lending authority. This story is in Report Letter No. 2275, July 17, 2008.

FDIC Approves Final Covered Bond Policy Statement
The Federal Deposit Insurance Corp. has approved a final policy statement providing bondholders expedited access to collateral if the FDIC declines to continue covered bonds after a failure of the issuing bank. According to the agency, the statement is intended to facilitate the development of a U.S. covered bond market while the financial services regulatory agencies evaluate the risks and benefits of the instruments. The FDIC's policy statement is reproduced at ¶68-242 (ip access user).

 

Product Enhancements

Agency Letters and Opinions Consolidated on IRN
All of the older agency letters and opinions reported in Transfer Binders as part of the reporting of Regulatory Developments have now been consolidated in the “Federal Banking Law Reporter Agency Letters and Opinions” publication on the CCH Internet Research Network. When the new publication first launched in June, only current letters were available. It now includes published legal interpretations and opinions issued by the Federal Reserve Board and its staff since 1996; Comptroller of the Currency (OCC) legal staff interpretations, including trust interpretive letters and securities letters, since 1977; Federal Deposit Insurance Corporation Advisory Opinions, including interpretations of the rules for determining deposit insurance coverage, since 1979; Office of Thrift Supervision General Counsel Opinions interpreting statutes and regulations as they apply to the facts presented by the requester since 1983; and FinCEN Rulings and Guidance on issues such as customer identification program requirements and currency report obligations, since 2002.

Consumer Credit Guide

Debt Collector Fails to Meet Burden of Proof for “Bona Fide Error” Defense
The U.S. Court of Appeals for the Ninth Circuit determined that a debt collection agency violated the federal Fair Debt Collection Practices Act (FDCPA) when the agency improperly attempted to collect an attorney's fee from a debtor as part of the overall debt associated with the debtor's residential lease with his former landlord. The court also ruled that, in connection with its “bona fide error” defense, the debt collection agency failed to meet the burden of proof necessary under the FDCPA to negate liability for the statutory violation. The court decided that the information about the attorney's fee was questionable on its face, and the agency failed to show that its reliance on the landlord-creditor's information was reasonable. Further, the Ninth Circuit decided that a mere assertion by a representative of the collection agency in his affidavit that the agency had procedures in place to avoid errors was insufficient to satisfy the required burden of proof. Reichert v. National Credit Systems, Inc. (9thCir) ¶52,177 (ip access user).

Lenders’ Mail Solicitations Did Not Violate FCRA
Recently, two U.S. Courts of Appeal have separately decided that various lenders did not violate the federal Fair Credit Reporting Act (FCRA) by sending mail solicitations to consumers because the mailings constituted "firm offers of credit." In both cases, the consumers contended the lenders violated the FCRA because, without any "firm offer of credit," the lenders had no permissible purpose to access their credit information. In rejecting the consumers’ claims and in analyzing whether the mail solicitations complied with the FCRA, both the U.S. Court of Appeals for the Seventh Circuit and the U.S. Court of Appeals for the Eighth Circuit placed more weight on whether the mail offers were firm under the FCRA than on whether the mail offers provided sufficient value to consumers. Cavin v. Home Loan Center, Inc. (7thCir) ¶52,175 (ip access user) and Poehl v. Countrywide Home Loans, Inc. (8thCir), ¶52,173 (ip access user).

State Law Update

Alaska: An amendment to the state's unfair trade practices law makes the offering of certain promotional checks an unfair or deceptive act or practice. Law at Alaska ¶6045 (ip access user).

Connecticut: Legislation intended to promote responsible lending and economic security enacts comprehensive mortgage lending reforms governing lenders and brokers. The legislation prohibits lenders from engaging in misleading, deceptive, or untruthful practices and imposes a duty of good faith on lenders and brokers. Law beginning at Connecticut ¶6114 (ip access user).

Georgia: Identity theft protections will allow Georgia residents to place a security freeze on their credit reports. Law beginning at Georgia ¶6093 (ip access user).

Hawaii: Updates to the state's Code of Financial Institutions requires financial services loan companies to conspicuously display their licenses. Law at Hawaii ¶6067A (ip access user).

Idaho: Amendments to the Idaho Collection Agency Act attempt to establish uniform licensing requirements for collection agencies operating in Idaho, whether based in or outside of the state. Law beginning at Idaho ¶6101 (ip access user).

Kentucky: Amendments to the state's consumer loan law allows licensees to charge borrowers higher fees for bad checks, credit investigations, and default. Law at Kentucky ¶6853.3 (ip access user) and ¶6859 (ip access user). Changes to the motor vehicle sales law require debt cancellation agreements to be itemized by type on a motor vehicle retail installment contract as an “other benefit” for which the seller, sales finance company, or other holder may charge the buyer or obligor. Law at Kentucky ¶6107A (ip access user). The bad check handling fee authorized under the state's criminal theft-by-deception statute has been increased to $50 from $25. Law at Kentucky ¶6371 (ip access user).

Michigan: Legislation strengthening consumer protections on gift cards and gift certificates prohibit inactivity and service fees as well as require gift cards and gift certificates to remain valid for at least five years after their issuance. Law at Michigan ¶6291 (ip access user).

Nebraska: Amendments to the state's deceptive practices law prohibit the use of unsolicited promotional or incentive checks that obligate the endorser to pay for goods and services if the check is cashed or deposited. Law at Nebraska ¶6062 (ip access user).

Rhode Island: Legislation aimed at closing a loophole in the state's gift certificate law prohibits businesses from charging any surcharge on gift certificates and gift cards. Law at Rhode Island ¶6200 (ip access user).

Tennessee: Restrictions on credit card marketing to college students make it unlawful for any credit card issuer to recruit potential student cardholders or customers for credit card business on campus or at college or university facilities, or through student organizations. Law at Tennessee ¶6379 (ip access user).

Texas: The Finance Commission of Texas and the Texas Credit Union Commission (commissions) have jointly adopted amendments to interpretations relating to home equity lending under the Texas Constitution to conform with constitutional changes that became effective late last year. Regulations at Texas ¶9185R (ip access user) and ¶9188 (ip access user).

Smart Charts Highlights

Some of the latest changes reflected in Consumer Credit Smart Charts include:

• Consumer Credit Topics Smart Charts. Coverage of Michigan's newly enacted gift certificate and gift card law has been added to the Gift Card Topic Smart Chart. In addition, the pertinent adjustment-of-dollar amounts, effective July 1, 2008, announced by several state agencies respectively, are reflected in the “Credit Card Charges and Fees” Smart Chart and the “Retail Installment Sales Transactions” Smart Chart.
  
• The Legislative Developments Smart Charts includes over 90 consumer credit related laws enacted to date during 2008 as well as over 150 archived entries for 2007. The Legislative Developments Smart Chart is updated regularly as legislation is enacted, allowing users to keep up-to-date without waiting for a scheduled Report. Links to legislative summaries and to full text of laws amended, repealed or added are provided. Recent updates include:

• California: Consumer Credit Reports—Security Freezes.
• Michigan: Gift Certificates and Gift Cards.
• Pennsylvania: Loan and Interest Protections Law.

Secured Transactions Guide

Secured Creditors May Pursue Alternate Remedies
A creditor was not barred from submitting a secured claim for an outstanding obligation owed by debtors in bankruptcy despite the fact that it had obtained a prior judgment against the debtors in state court. The debtors, who had borrowed $5,000 from the finance company, filed for Chapter 13 bankruptcy protection and their confirmation plan valued the creditor's secured claim at zero dollars. The debtors argued the creditor lost its secured creditor status by obtaining a pre-petition money judgment against the creditors in state court. However, the Oregon UCC provides that a creditor may pursue alternate remedies until the debt is satisfied. In re Plante (Bankr DIdaho) appears at ¶56,157 (ip access).

Mill Did Not Have a Valid Laundryman’s Lien
In Georgia, lien laws are strictly construed, and where a mill did not perform one of the statutorily enumerated services required to create a laundryman's lien, it could not sell a manufacturer's goods for nonpayment. Georgia law grants a laundryman's lien upon articles laundered, cleaned, tailored, altered, repaired or dyed for the agreed price or reasonable value of services. The mill was to tuft yarn and backing so that the manufacturer could turn it into finished carpet. Strictly construing the statute, the court determined that tufting of yarn constitutes an initial manufacturing stage, which could not be considered "making alterations to carpet." Beaulieu Group, LLC v. S & S Mills, Inc. (GaCtApp) appears at ¶56,155 (ip access).

State Law Update

Kansas: The regulations established by the Kansas Secretary of State to govern the UCC have been amended. A new definition for the term "address" has been added and the filing office data entry rules have been expanded. The fee for a certified copy of a financing statement has been increased to $7.50 and the fee for information sent by fax has been set at a flat $1 for each page. In addition, the provisions relating to errors in filing, searches, search logic and unofficial searches have been revised. The law begins at Kansas ¶1401 (ip access).

Louisiana: The Louisiana legislature has delayed the effective date of the Louisiana Vessel Titling Act that was first enacted in 2007, effective July 1, 2008, to 60 days after final adjournment of the 2009 regular session of the legislature. The legislature determined that the Department of Wildlife and Fisheries needed more time to implement a new advanced titling system for vessels. The effective dates of the conforming amendments made to the Louisiana UCC have not been delayed. The Vessel Titling Act appears beginning at Louisiana ¶1251 (ip access).

New Hampshire: Starting Oct. 1, 2008, a dealer applying for a certificate of title to a vehicle purchased from the dealer will now have 40 days, formerly 20 days, from the date of sale to mail or deliver the application and supporting documentation to the New Hampshire Department of Safety if the title to the vehicle is in the possession of a lienholder at the time of sale. The law appears at New Hampshire ¶1264 (ip access).

Smart Charts Highlights

Latest Changes on the Internet Research Network:

The Secured Transactions UCC Filing Fees Smart Chart has been updated to reflect reductions in the Kansas filing fees, electronic filing fees and electronic search costs that were effective July 7, 2008.

Financial Privacy Law Guide

Circuits Split on Whether Statute Requires Knowing Theft of Person's Identity
To be convicted of the federal crime of aggravated identity theft, an identity thief must have actual knowledge that the false identity the thief assumed belonged to an actual person, the U.S. Court of Appeals for the First Circuit has held. The law provides that a person commits aggravated identity theft when he or she "knowingly transfers, possesses, or uses, without lawful authority, a means of identification of another person." The circuits are divided on the issue of whether "knowingly" extends to "of another person." The U.S. Courts of Appeals for the Fourth, Eighth and Eleventh Circuits have concluded that it does not, while the D.C. Circuit, and now, the First Circuit, has concluded that it does. A story on U.S. v. Godin (1stCir) appears in Privacy Extra, July 31, 2008, and the case will be reflected in an upcoming Report.

HHS Enters Into First Resolution Agreement for HIPAA Privacy Violations
The U.S. Department of Health & Human Services (HHS) has entered into a Resolution Agreement with Seattle-based Providence Health & Services to settle potential violations of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy and Security Rules. Under the agreement, Providence will pay $100,000 and implement a Corrective Action Plan to ensure that it will appropriately safeguard identifiable electronic patient information against theft or loss. The Resolution Agreement relates to Providence's loss of electronic backup media and laptop computers containing individually identifiable health information in 2005 and 2006. This is the first time HHS has required a Resolution Agreement regarding the HIPAA Privacy and Security Rules. A story on the Resolution Agreement appears in Privacy Extra, July 31, 2008.

State Law Update

Alaska: The Alaska Personal Information Protection Act contains new requirements relating to security freezes, data breaches and identity theft. Effective July 1, 2009, Alaska residents can place a security freeze on their credit report. In addition, the new law provides that businesses and government agencies that own or license the personal information of any Alaska resident must notify the resident if the entity or agency discovers a breach of security of its information system. To further limit the risk of identity theft, businesses and government agencies disposing of records that contain personal information must take all reasonable measures necessary to protect against unauthorized access to or use of the records. The law begins at ¶31-451 (ip access user), and the explanation is at ¶31-101 (ip access user) and ¶31-151 (ip access user).

Missouri: A new law allows a consumer in Missouri to prohibit a consumer credit reporting agency from releasing the consumer's credit report or credit score without express authorization by placing a security freeze on the consumer's credit report. Although the agency may charge $5 for the first request, no fee may be charged to a victim of identity theft if the request is accompanied by an identity theft incident report. The law begins at ¶55-451 (ip access user), and the explanation is at ¶55-101 (ip access user).

New York: The state security freeze law was amended to provide that, beginning in 2010, consumer credit reporting agencies must place a security freeze within one business day after receiving a request. Also, beginning Sept. 1, 2009, a request to temporarily lift a freeze that is made electronically or by telephone must be acted on within 15 minutes. The disclosure of employees’ Social Security numbers by private employers is restricted beginning in 2009, and disclosure by the state government is restricted beginning in 2010. A story on the law appears in Privacy Extra, July 31, 2008, and the law will be reflected in an upcoming Report.

Virginia: An individual or entity that owns or licenses computerized data that includes personal information must disclose any breach of the security of the system following discovery or notification of the breach. However, an entity that is subject to Title V of the Gramm-Leach-Bliley Act and maintains procedures for notification of a breach in accordance with the provisions of that Act and its regulations is deemed to be in compliance with the state security breach law. The law is at ¶76-504 (ip access user), and the explanation is at ¶76-151 (ip access user).

Bankruptcy Law Reporter

Contrary to Repayment Plan, Discharge Order Did Not Discharge Debt
A bankruptcy court was not permitted to enforce the discharge injunction against a student loan creditor where the discharge order did not cover the debt, and the debtor allowed the order to become final without seeking an appeal. The court also declined to revisit its previous decision to allow debtors to obtain "discharge by declaration." The court found that its decision in In re Pardee, (9thCir) CCH BankrLRep 2001-2003 ¶78,022 (ip access user) relied on straightforward notions of notice and waiver and was consistent with accepted principles concerning the finality of judgments. Espinosa v. United Student Aid Funds (9thCir) can be found at ¶81,262 (ip access user)

Deficiency Claim Permitted Following Surrender of 910 Vehicle
The U.S. Court of Appeals for the Fourth Circuit has concluded that the so-called "hanging paragraph" does not operate to deprive an undersecured 910 creditor of a deficiency claim following a debtor's surrender of the vehicle under Bankruptcy Code Sec. 1325(a)(5)(C) because the parties are bound to their contractual rights and obligations under operative state law, and the Bankruptcy Code does not command otherwise. Tidewater Finance Company v. Keeney (4thCir) can be found at ¶81,270 (ip access user)

Lien Invalidation Required Adversary Proceeding
A debtor in a Chapter 13 bankruptcy case did not invalidate a lien on her property by providing for it as an unsecured claim in her confirmed plan without initiating an adversary proceeding as required by the Federal Rules of Bankruptcy Procedure. If the Bankruptcy Rules require an adversary proceeding, which entails a fundamentally different, and heightened, level of procedural protections to resolve a particular issue, a creditor has the due process right not to have that issue resolved without one. Mansary-Ruffin (3rdCir) can be found at ¶81,265 (ip access user)

Credit Briefing Permitted on Same Day of Filing
In an issue of first impression, the Bankruptcy Appellate Panel of the Tenth Circuit has held that the credit counseling requirement of Bankruptcy Code Sec. 109(h)(1) is satisfied when an individual debtor obtains the required counseling on the same day of, but prior to, the filing of the petition for bankruptcy relief. A debtor qualifies as a debtor under Sec. 109(h) so long as he or she completed the required credit counseling at any time between 180 days before, and the moment of, filing the petition. Francisco (Bankr10thCir) can be found at ¶81,272 (ip access user).

Individual Retirement Plans Guide

Guidance on Health Savings Accounts Released
The Treasury Department and the IRS have issued a notice providing employers and employees with a new set of formal questions and answers on Health Savings Accounts (HSAs). An HSA is a tax-exempt trust or custodial account established under Code Sec. 223 exclusively for the purpose of paying qualified medical expenses of the account beneficiary who, for the months for which contributions are made to a HSA, is covered under a high-deductible health plan (HDHP). The guidance includes over 40 frequently asked questions and answers grouped into the following categories: eligible individual, HDHPs, HSA contributions, prohibited transactions, and establishing an HSA. IRS Notice 2008-59 is at ¶6070 (ip access user).

Hot Topic of the Month

This month’s hot topic is the limits placed on transactions between banks and affiliates. In light of the increased the range of affiliations permitted to banking organizations since enactment of the Gramm-Leach-Bliley Act, the Federal Reserve Board considers requests for exemptions from the requirements for loans, purchases of assets and other transactions on a case-by-case basis. Full coverage is found in the Federal Banking Law Reporter.

Section 23A of the Federal Reserve Act and Federal Reserve Board Regulation W limit the aggregate amount of "covered transactions" between a bank and any single affiliate to 10 percent of the bank's capital stock and surplus, and limit the aggregate amount of covered transactions with all affiliates to 20 percent of the bank's capital stock and surplus. "Covered transactions" include the extension of credit by a bank to an affiliate and the issuance by a bank of a guarantee on behalf of an affiliate. In addition, the statute and rule require a bank to secure its extensions of credit to, and guarantees on behalf of, affiliates with prescribed amounts of collateral.

The publication “Federal Banking Law Reporter Agency Letters and Opinions” on the CCH Internet Research Network enables users to search published legal interpretations issued by the Federal Reserve Board and its staff. A search of FRB Interpretations for “affiliate transactions” provides a list of the Board exemption interpretations since Regulation W became effective April 1, 2003. Putting the search term in quotation marks provides more precise search results. Examples of Interpretive Letters that are found include:

• JPMorgan Chase & Co. was given exemptions from several affiliate transaction and capital restrictions in order to facilitate its acquisition of The Bear Stearns Companies, Inc.—April 1, 2008, ¶80-388 (ip access user).

• A temporary exemption from the limits on transactions with affiliates that previously was granted to a bank holding company to allow its subsidiary bank to lend to a U.S. securities affiliate was broadened to apply to loans to a London, United Kingdom, securities affiliate.—Oct. 23, 2007, ¶80-378 (ip access user).
  
• Three bank holding companies were given temporary, conditional exemptions from the limits on transactions with affiliates to allow their subsidiary banks each to lend up to $25 billion to affiliated securities companies as a way of adding liquidity to the market for mortgages, mortgage backed securities and other asset-backed securities.—Aug. 20, 2007, beginning at ¶80-367 (ip access user).

Similarly, interpretive letters and opinions of other regulators could be searched for guidance on other issues involving affiliate transactions. For example, a relevant FDIC Advisory Opinion is found:

• A bank's purchase of a retail installment sales contract on an automobile that was subject to a floor plan financing arrangement between the auto dealer and the bank's corporate parent would constitute a transaction with an affiliate. The loan would be attributed to the corporate parent because the funds would benefit or be transferred to the parent.—FDIC-04-09, June 9, 2004, ¶82-270 (ip access user).

Researchers may also choose to go directly to the text of Regulation W, 12 CFR Part 223 (Transactions between Bank Member Banks and Their Affiliates), beginning at ¶13-631 (ip access user). The corresponding Office of Thrift Supervision regulation, 12 CFR 563.41 (Transactions with Affiliates), is at ¶19-991 (ip access user).

The text of the underlying law, Section 23A of the Federal Reserve Act, codified as 12 CFR 371c, is found at ¶1646 (ip access user). CCH explanations on the topic begin at ¶59-671 (ip access user).