[Federal Register Volume 61, Number 239 (Wednesday, December 11, 1996)]
[Notices]
[Page 65225]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-31393]



[[Page 65225]]

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FEDERAL DEPOSIT INSURANCE CORPORATION


Rescission of Statement of Policy; Retail Repurchase Agreements

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Rescission of statement of policy.

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SUMMARY: As part of the FDIC's systematic review of its regulations and 
written policies under section 303(a) of the Riegle Community 
Development and Regulatory Improvement Act of 1994 (CDRI), the FDIC is 
rescinding its policy statement concerning retail repurchase agreements 
(Statement). The Statement alerts insured nonmember banks to legal and 
safety and soundness issues involved in the issuance of retail 
repurchase agreements (retail repos). The FDIC is rescinding the 
Statement because it is now outmoded. The rescission does not reflect 
any substantive change in the FDIC's supervisory attitude toward the 
need for fundamental disclosure of investor risks, as reflected in the 
Interagency Statement on Retail Sales of Nondeposit Investment 
Products.

EFFECTIVE DATE: This Statement is rescinded effective December 11, 
1996.

FOR FURTHER INFORMATION CONTACT: Kenton Fox, Senior Capital Markets 
Specialist, Division of Supervision, (202) 898-7119; Gerald J. Gervino, 
Senior Attorney, (202) 898-3723, Legal Division, FDIC, 550 17th Street, 
N.W., Washington, D.C. 20429.

SUPPLEMENTARY INFORMATION: The FDIC is conducting a systematic review 
of its regulations and written policies. Section 303(a) of the CDRI (12 
U.S.C. 4803(a)) requires each federal banking agency to streamline and 
modify its regulations and written policies in order to improve 
efficiency, reduce unnecessary costs, and eliminate unwarranted 
constraints on credit availability. Section 303(a) also requires each 
federal banking agency to remove inconsistencies and outmoded and 
duplicative requirements from its regulations and written policies.
    As part of this review, the FDIC has determined that the Statement 
is outmoded, and that the FDIC's written policies can be streamlined by 
its elimination.
    The Statement was published on October 6, 1981, 46 FR 49197. The 
Statement requires banks to follow safe and sound banking practices in 
the issuance of retail repurchase agreements, alerts banks to certain 
requirements of 12 CFR part 329 and the Investment Company Act of 1940, 
establishes disclosure requirements, and restricts bank advertising and 
solicitations.
    The Government Securities Act of 1986 established, among other 
things, requirements for repurchase agreement transactions using U.S. 
government and agency securities. In addition, the Division of 
Supervision has issued guidance for the sale of investment products by 
banks in the Interagency Statement on Retail Sales of Nondeposit 
Investment Products. This law partially supersedes the Policy 
Statement. Similarly, the Interagency Statement provides broader 
guidance for securities transactions, including retail repurchase 
transactions. The presence of these two newer guideposts may lead to 
confusion as to the application of the Policy Statement.
    The Policy Statement references parts of the FDIC's interest rate 
regulations, 12 CFR part 329, that are no longer in force. Much of the 
discussion on the Investment Company Act of 1940, 17 U.S.C. 80a-1 
through 80a-64, is unnecessary as the subject has not been raised in 
recent years. These factors have caused confusion among banks, their 
advisors, and consumers.

    For the above reasons, the Policy Statement is hereby rescinded.

    By order of the Board of Directors.

    Dated at Washington, DC, this 26th day of November, 1996.

Federal Deposit Insurance Corporation
Jerry L. Langley,
Executive Secretary.
[FR Doc. 96-31393 Filed 12-10-96; 8:45 am]
BILLING CODE 6714-01-P