Federal Reserve Board Adds FAQs to Regulation’s Legal Interpretations

On December 30, 2021, the Federal Reserve Board (FRB) published  updated frequently asked questions (FAQs) to several regulations including existing legal interpretations to “increase transparency and enhance accessibility.”

• Regulation H

  • Five new FAQs relating to:

• branch closing procedures and required notices;

• requirements for a state member bank to declare and pay dividend of property;

• determination of “branches” for banking facilities under the Federal Deposit Insurance Act;

• permissibility of certain operations following a merger or business combination; and

• permissibility of public welfare investments and a state member bank’s  public welfare investments in a company engaging in certain activities;

• Regulation O

  • 10 new FAQs include:

    • the application of Regulation O to certain extensions of credit;

    • treatment of guarantee or extension of credit;

    • general prohibitions on the application of and activities relating to Regulation O; and

    • clarification on the type and number of qualifying properties.

• Regulation W

  • 34 new FAQs relating to:

    • nonaffiliate and affiliate lending and extensions of credit under the attribution rule;

    • valuation and timing principles under Section 23A;

    • nonaffiliate related revolving credit facilities and loan commitments;

    • credit transactions and asset purchases from affiliates;

    • bank acquisitions of an affiliate; and

    • exemptions from the Provisions of Section 23A 11.

• Regulation Y

  • Nine new FAQs relating to:

    • determinations for voting rights under the Bank Holding Company Act;

    • exceptions and qualifications to tying restriction and safe harbor;

    • factors considered in acting on bank acquisition proposals;

    • transactions requiring prior notice;

    • filing requirements for persons engaging in transactions under Change in Bank Control Act and Regulation Y;

    • appraisal standards for federally-related transactions; and

    • permissibility of a request of approval to engage in an activity that is complementary to a financial activity.

• Covered Savings Associations

  • 29 new FAQs relating to:

    • the scope of Section 5A;

    • adding CSA to the list of members in the Federal Reserve System;

    • filing requirements;

    • requirements applicable to a CSA or a company controlling a CSA;

    • requirements for transactions involving a CSA or a company controlling a CSA; and

    • the process of termination of an election to operate as a CSA.

Financial institutions should review and understand the new FAQs.