R. Kinney Williams - Yennik, Inc.®
R. Kinney Williams
Yennik, Inc.

The Community Banker
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Bank Regulatory News
February 2000

February 29, 2000 - Outsourcing of Information and Transaction Processing
Banking organizations are increasingly relying on services provided by other entities to support a range of banking operations. Outsourcing of information and transaction processing activities, either to affiliated institutions or third-party service providers, may help banking organizations manage data processing and related personnel costs, improve services, and obtain expertise not available internally. At the same time, the reduced operational control over outsourced activities may expose an institution to additional risks.

February 29, 2000- Information Technology Examination Frequency
Banking organizations increasingly rely on information technology to conduct their operations and manage risks. As outlined in SR letter 98-9, "Assessment of Information Technology in the Risk-Focused Frameworks for the Supervision of Community Banks and Large Complex Banking Organizations," the use of information technology can have important implications for a banking organization's financial condition, risk profile, and operating performance and should be incorporated into the safety and soundness assessment of each organization. In order to facilitate the integration of information technology supervision within the overall risk-focused supervisory process, the separate frequency guidelines for information technology examinations are being eliminated. Instead, all safety and soundness examinations (or examination cycles) of banking organizations conducted by the Federal Reserve should include an assessment and evaluation of information technology risks and risk management.

February 29, 2000 - OCC Issues Second Quarter 2000 CRA Examination Schedule
WASHINGTON, D.C. -- The Office of the Comptroller of the Currency (OCC) today released its projected schedule of Community Reinvestment Act (CRA) examinations to be conducted in the second quarter of 2000.

February 29, 2000 - The Federal Reserve Board announced today that the Consumer Advisory Council will hold its next meeting on Thursday, March 30, 2000. The meeting will take place in Dining Room E, Terrace level, of the Board's Martin Building. The session will begin at 8:45 a.m. and is open to the public.

February 29, 2000 - The FDIC has issued the public list of institutions that it has scheduled for a Community Reinvestment Act (CRA) examination during the second quarter of 2000. This list is published pursuant to revised CRA regulations published in May 1995 that require each Federal bank and thrift regulator to publish a quarterly CRA examination schedule at least 30 days before the beginning of each quarter.

Efforts to combat international counterfeiting of U.S. currency are working, according to a Treasury Department and Federal Reserve Board report released on Tuesday.

February 28, 2000 - Proposed Rule on the Privacy of Consumers' Financial Information
The Federal Deposit Insurance Corporation (FDIC), the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision have jointly proposed the attached rule on the privacy of consumers' financial information. This regulation is required by the Gramm-Leach-Bliley Act. Comments are due by March 31, 2000.  

February 28, 2000 - Specially Designated Nationals, Narcotics Traffickers and Blocked Persons
On February 16, 2000, the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) updated its listing of Specially Designated Nationals and Blocked Persons to include new entries for Sudan. On February 22, 2000, OFAC updated its listing of Specially Designated Nationals and Blocked Persons to include the names of numerous new Specially Designated Narcotics Traffickers and to make changes to some of the entries previously listed.

February 25, 2000 - OTS Releases January Enforcement Statistics
WASHINGTON, D.C., Feb. 25, 2000 -- The Office of Thrift Supervision (OTS) reported today that it completed five enforcement actions in January 2000.

February 25, 2000 - The Federal Reserve Board today announced the execution of a Written Agreement by and among United Bancshares, Inc., Philadelphia, Pennsylvania; the United Bank of Philadelphia, Philadelphia, Pennsylvania and the Federal Reserve Bank of Philadelphia.

February 24, 2000 - Remarks by Julie L. Williams 1st Senior Deputy Comptroller and Chief Counsel Office of the Comptroller of the Currency Before the 5th Annual Cyberbanking and Electronic Commerce Conference Washington, DC.

February 24, 2000 - Federally insured credit union loan demand increased a significant 10.5 percent according to preliminary 1999 year-end data submitted on 5300 Call Reports by the nations 10,628 federally insured credit unions.

February 24, 2000 - St. Louis Fed Study Reveals Asian Crisis Had Little Effect on U.S. States' Economics
ST. LOUIS, Mo. - The Asian crisis had little effect on most U.S. states' exports and manufacturing employment because the crisis was offset by a rise in exports to the rest of the world and strong demand by U.S. consumers.

February 24, 2000 - OTS Releases January National CRA Ratings
WASHINGTON, D.C., Feb. 24, 2000 -- The Office of Thrift Supervision (OTS) today reissued savings associations' Community Reinvestment Act (CRA) performance evaluation ratings that became available in January 2000. The new report corrects an error in the ratings previously issued on February 18, 2000.

February 24, 2000 - U.S. Mint and Federal Reserve Announce Program For Direct Shipment of Golden Dollars To Small Financial Institutions --Online Ordering to Begin on March 1, 2000-- The United States Mint and the Federal Reserve today announced a program to provide direct shipments of Golden Dollars to community banks, credit unions, and savings and loans across the country. Strong public demand for the new dollar coin has generated thousands of orders from banks and retailers and led some banks to create Golden Dollar waiting lists for their individual and commercial customers.

February 22, 2000 - The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the Office of Thrift Supervision today published for comment in the Federal Register a proposed regulation implementing the privacy provisions of the Gramm-Leach-Bliley Act. The proposed rule pertains to all institutions regulated by the four federal agencies.  (OCC)

February 17, 2000 - Outstanding Risks Associated With the Year 2000
As a result of the banking industry's comprehensive Year 2000-readiness preparations, no substantive problems occurred during the date change period. However, while the industry can generally claim success, some associated risks remain. They involve certain critical dates, the expiration of temporary remediation techniques, records retention and customer risk.

February 17, 2000 - Comptroller Hawke Cautious Agricultural Bankers About Uncertain Farm Environment in comments Before a Conference on Agricultural Credit Risk Management in St. Louis, Missouri

The four federal banking agencies today released proposed revisions to their risk-based capital requirements for certain obligations related to securitized transactions.  The proposal by the Federal Reserve Board, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency and Office of Thrift Supervision is intended to produce more consistent capital treatment for credit risks associated with exposures arising from securitization transactions. It would amend the risk-based capital requirements for asset-backed securities as well as recourse obligations and direct credit substitutes.

February 16, 2000 - OTS Awards Software Contract to Enhance Existing Interest Rate Measurement Tool
WASHINGTON, D.C., Feb. 16, 2000 – The Office of Thrift Supervision (OTS) announced today it has awarded a contract to Quantitative Risk Management, Inc. (QRM), Chicago, to license an asset/liability software system. The QRM system will be used as a platform to further enhance performance of the agency’s Net Portfolio Value (NPV) model, which has measured interest rate risk of thrift institutions since 1991.

February 14, 2000 - This OCC advisory reminds management of banks, service providers, and software vendors of potential Year 2000-related risks subsequent to the century date change.

February 11, 2000 - OTS Releases January National CRA Ratings
The Office of Thrift Supervision (OTS) today released savings associations' Community Reinvestment Act (CRA) performance evaluation ratings that became available in January 2000.

February 11, 2000 - OTS Grants Thrift Charter to New Internet Bank
The Office of Thrift Supervision (OTS) granted a federal thrift charter to 1st Virtual, Inc., Palm Beach Gardens, Fla., a company that will operate as a full-service Internet bank. VirtualBank will be the sixth Internet bank under OTS supervision.

February 11, 2000 - Comptroller of the Currency Administrator of National Banks Subject: Internet Security: Distributed Denial of Service Attacks 
In recent days, many high profile Internet-based electronic commerce Web sites have been victims of attacks. The attacks have interrupted customer access to Internet Web sites by flooding these targeted sites with more information than their computers can handle. This flooding of information may force the Web site to suspend normal service, and is commonly referred to as a "distributed denial of service" attack (DDoS). DDoS attacks represent a new and significant threat to Internet Web site availability and merit close scrutiny by management.

February 10, 2000 - OTS Releases December Enforcement Statistics
The Office of Thrift Supervision (OTS) reported today that it completed six enforcement actions in December 1999.  This brought to 57 the number of enforcement actions by OTS since January 1, 1999.

February 9, 2000 - The Board of Directors of the Federal Deposit Insurance Corporation (FDIC) today joined other federal regulators in proposing a rule that would establish the minimum requirements to be followed by state nonmember banks and certain other financial institutions for protecting the privacy of financial information provided to the institutions by consumers.

February 9, 2000 - The Office of Thrift Supervision (OTS) is seeking comments on a proposed rule to implement privacy provisions of the Gramm-Leach-Bliley Act, the financial modernization legislation.  The proposed regulation requires a financial institution to inform consumers about the institution’s privacy policies and practices; describes the conditions under which a financial institution may disclose nonpublic personal information about a consumer to a nonaffiliated third party; and gives a consumer a chance to “opt out” at any time by informing the institution not to share information with nonaffiliated third parties, with certain limitations.

February 8, 2000 - Recent Bank Failures Teach Us Lessons, Says OTS's Seidman
People learn from failures, and federal banking regulators are no different. Testifying with other regulators before the House Banking Committee Tuesday on bank failures, Director Ellen Seidman of the Office of Thrift Supervision (OTS) asserted, “There are important lessons to be learned from the recent failures, as well as from institutions that have required our supervisory attention to prevent failures.”

February 8, 2000 - The Addition of Fundamentals of Interest Rate Risk Management Course to Examiner Training Program

February 8, 2000 - Procedures to Become a Financial Holding Company and Guidance Regarding the Initial Monitoring of Acquisitions and the Commencement of New Activities by Financial Holding Companies

February 8, 2000 - Comptroller Addresses 1999 Bank Failures and OCC Supervision
WASHINGTON-- Comptroller of the Currency John D. Hawke, Jr. told the House Banking Committee today that three national bank failures in 1999 do not represent systemic problems or foreshadow an increase in the number of failures in the year ahead.  Testimony Cover Letter, Audit Effectiveness Response  OCC Responses, Questionnaire on Audit Effectiveness

February 8, 2000 - The Federal Reserve Board today announced the execution of a Written Agreement by and among the Bank of New York, New York, New York, the Federal Reserve Bank of New York, and the New York State Banking Department.

February 7, 2000 - The FDIC today issued its monthly list of state nonmember banks recently evaluated for compliance with the Community Reinvestment Act (CRA). The list covers evaluation ratings that the FDIC assigned to institutions in November 1999.

February 4, 2000 - The Federal Deposit Insurance Corporation (FDIC) is refining the Risk-Related Premium System (RRPS) to provide a more flexible, forward-looking system that keeps pace with new and emerging risks. The refinements are intended to identify institutions with atypically high-risk profiles among those in the best-rated premium category, and to determine whether there are unresolved supervisory concerns regarding the risk-management practices of these institutions. Where such concerns are present, the institutions will be given an opportunity to address the cited deficiencies with risk-management practices before higher premiums are assessed. It is expected that very few institutions will fall into this category.

WASHINGTON, DC -- The Office of the Comptroller of the Currency (OCC) today released a list of Community Reinvestment Act (CRA) performance evaluations that became public during the period of December 15 through January 14. The list contains only national banks and insured federal branches of foreign banks that have received ratings. The possible ratings are outstanding, satisfactory, needs to improve, and substantial noncompliance.

February 3, 2000 - The Federal Reserve Board today voted to request comment on a new regulation implementing the privacy provisions of the Gramm-Leach-Bliley Act.  Attachment

February 3, 2000 - OCC Proposes Rules to Implement Gramm-Leach-Bliley Act Privacy Provisions

February 2, 2000 - The National Credit Union Administration Board has issued orders prohibiting the following former credit union officials and affiliated parties from participating in the affairs of any federally insured financial institution without the consent of the appropriate federal regulatory agency.

February 2, 2000 - Children's Online Privacy Protection Act Description: Final Rule
The Federal Trade Commission published a final rule to implement the Children’s Online Privacy Protection Act of 1998 (COPPA) in the Federal Register on November 3, 1999. The COPPA, which is effective April 21, 2000, prohibits unfair or deceptive acts or practices in connection with the collection, use/or disclosure of personal information from and about children on the Internet. The COPPA and the final rule apply to national banks. In addition, section 1306 of the COPPA gives the OCC enforcement responsibility. Examination procedures, currently being developed, will provide further guidance.

February 2, 2000 - The Federal Open Market Committee voted today to raise its target for the federal funds rate by 25 basis points to 5-3/4 percent. In a related action, the Board of Governors approved a 25 basis point increase in the discount rate to 5-1/4 percent.

February 1, 2000 - OCC Seeks Comment on a Wide Range of Electronic Banking Issues As First Step in Effort to Adapt Regulations to Accommodate New Technologies - Attachment
WASHINGTON, D.C. -- In response to the rapid growth of electronic commerce and the significant business opportunities that technology affords national banks, the Office of the Comptroller of the Currency (OCC) is seeking comment on a wide range of issues concerning national bank involvement in Internet-based activities and other emerging electronic technologies.

February 1, 2000 - The Federal Deposit Insurance Corporation (FDIC) has joined federal, state and local organizations and national advocacy groups to launch the second annual National Consumer Protection Week (NCPW), to be held from February 14-20.  This year's campaign, "Armchair Armor: Shopping Safely From Home," focuses on how to avoid the risks of fraud or deception while making the most of home-shopping opportunities, through telemarketing, direct mail, the Internet and other avenues.

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