Board of Governors of the Federal Reserve System

The staff of the Federal Preparatory System (Fed) has created the following frequently asked questions (FAQ) to support the entrepreneurs that comply with the Board of Directors. Except in the case of the following, these questions are interpreted by the staff and are not approved by the Board of Directors. Staff may supplement or revise these frequent items in the future or in case of appropriate. Unless otherwise stated, the terms and definitions used in the FAQ have the same meaning as those described in the rule W. Submit questions or requests for these questions or requests for correction, deletion, or exemption through the Council's inquiry form.

General clause

Section A-Introduction and Definition

12 CFR 223. 2 (What is an "related company" in Part 23A, Part 23B, and the main story?)

12 CFR 223. 3 (What is the meaning of other terms used in Part 23A, Part 23B, and the main part?)

General rules for part B of section 23a?

12 CFR 223. 11

12 CFR 223. 14 (What are the requirements for credit trading with a subsidiary?)

12 CFR 223. 15 (Can the member bank buy lo w-quality assets from a subsidiary?)

12 CFR 223. 16 (How transactions with the Bank of Member Bank are treated as transactions with subsidiaries)

Standard section C-Price of evaluation and timing based on Article 23

12 CFR 223. 21-. 22

Section D-Other requirements based on Article 23A

12 CFR 223. 31 (If you are acquired by a subsidiary by a member bank and become a subsidiary of member banks after the acquisition, how will it be?)

Exclusion of the provisions of su b-part E-CFR23A

12 CFR 223. 41 (What target transactions are exempted from quantitative restrictions and collateral requirements?)

12 CFR 223. 42 (What are the target transactions exempt from quantitative restrictions, collateral requirements, lo w-quality assets?)

Section F-General rules of Article 23 B

12 CFR 223 Article 51 to 56 (General Rules of Article 23b)

In General

Q1: Reflecting the revision of Article 23A and 23B of the Federal Reserve Act (Federal Reserve Act: Fra) by the Dodd-Frank Consumer Reformer Reformer Reformer Reformer Reformer and Protection Act: Dod Frank) Was the regulations revised?

A1: The regulation W has not yet been revised, reflecting the revision of the FRA Article 23A and the 23B of the 23B by the Dodd Frank Law. However, the revision of the FRA Article 23A and the 23B by the Dodd Frank Law came into effect on July 21, 2011. In the Dodd Frank Act, the procedure for exemption from the insurance of deposits (IDI) with insurance is revised from the requirements of Article 23A, and in general, the Federal Bank of Bank of the IDI of the IDI recognizes such requests. The Board of Directors is also required to show some findings before the exemption is approved. Therefore, the currency supervision Agency (OCC) can exempt the stat e-owned bank or federal savings bank by order, (i) (i) OCC and OCC are suitable for public interests, and in the 23rd Articles. It is determined that it will be in line with the purpose, (II), notifying the Federal Deposit Insurance Corporation (FDIC), and applying an objection in documents within 60 days based on the judgment that the exemption will be unacceptable to the deposit insurance fund. If not, the transaction of the stat e-owned bank or the federal savings union may be exempted from the requirements of Article 23. The FDIC can exempt the transaction between the State Bank and the State Savings, and the Board of Directors can exempt the state bank transactions in all cases, in all cases.

Source: The United States Law Collection 12, Article 371C; Source: Article 371C of the US Law Collection 12. L. 111-203, Article 608 (D), Article 609 (D).

Q2: Where can I see the interpretation and statements of the Board of Directors about the regulations? < SPAN> A1: The regulation W has not yet been revised, reflecting the revision of the FRA Article 23A and the 23B of the 23B by the Dodd Frank Law. However, the revision of the FRA Article 23A and the 23B by the Dodd Frank Law came into effect on July 21, 2011. In the Dodd Frank Act, the procedure for exemption from the insurance of deposits (IDI) with insurance is revised from the requirements of Article 23A, and in general, the Federal Bank of Bank of the IDI of the IDI recognizes such requests. The Board of Directors is also required to show some findings before the exemption is approved. Therefore, the currency supervision Agency (OCC) can exempt the stat e-owned bank or federal savings bank by order, (i) (i) OCC and OCC are suitable for public interests, and in the 23rd Articles. It is determined that it will be in line with the purpose, (II), notifying the Federal Deposit Insurance Corporation (FDIC), and applying an objection in documents within 60 days based on the judgment that the exemption will be unacceptable to the deposit insurance fund. If not, the transaction of the stat e-owned bank or the federal savings union may be exempted from the requirements of Article 23. The FDIC can exempt the transaction between the State Bank and the State Savings, and the Board of Directors can exempt the state bank transactions in all cases, in all cases.

Source: The United States Law Collection 12, Article 371C; Source: Article 371C of the US Law Collection 12. L. 111-203, Article 608 (D), Article 609 (D).

Subpart A—Introduction and Definitions

12 CFR 223.2 (What is an "affiliate" for purposes of sections 23A and 23B and this part?)

Q2: Where can I see the interpretation and statements of the Board of Directors about the regulations? A1: The regulation W has not yet been revised, reflecting the revision of the FRA Article 23A and the 23B of the 23B by the Dodd Frank Law. However, the revision of the FRA Article 23A and the 23B by the Dodd Frank Law came into effect on July 21, 2011. In the Dodd Frank Act, the procedure for exemption from the insurance of deposits (IDI) with insurance is revised from the requirements of Article 23A, and in general, the Federal Bank of Bank of the IDI of the IDI recognizes such requests. The Board of Directors is also required to show some findings before the exemption is approved. Therefore, the currency supervision Agency (OCC) can exempt the stat e-owned bank or federal savings bank by order, (i) (i) OCC and OCC are suitable for public interests, and in the 23rd Articles. It is determined that it will be in line with the purpose, (II), notifying the Federal Deposit Insurance Corporation (FDIC), and applying an objection in documents within 60 days based on the judgment that the exemption will be unacceptable to the deposit insurance fund. If not, the transaction of the stat e-owned bank or the federal savings union may be exempted from the requirements of Article 23. The FDIC can exempt the transaction between the State Bank and the State Savings, and the Board of Directors can exempt the state bank transactions in all cases, in all cases.

Source: The United States Law Collection 12, Article 371C; Source: Article 371C of the US Law Collection 12. L. 111-203, Article 608 (D), Article 609 (D).

Q2: Where can I see the interpretation and statements of the Board of Directors about the regulations?

A2: The preamble to Regulation W (67 Fed. . The Board also maintains a list of all Regulation W exemptions approved by the Board since 1996 on its website. See here. The Federal Reserve Board's Federal Reserve Regulatory Service (FRRS) maintains several additional staff interpretations. Also, Board staff notes on the general application of Sections 23A and 23B and Regulation W are available on the Board's website. See here.

Q1: Is a company that controls a subsidiary of a member bank (but does not control the bank or meet the definition of "subsidiary" in Section 223(2) of Regulation W) a subsidiary of the bank?

A1: No.

Q2: If a foreign government controls a separate entity that is a member bank, is that entity a subsidiary of the bank?

A2: Yes, because of joint control by the foreign government.

Q3: Is a commercial bank investment company or insurance company holding company a subsidiary of a commercial bank that is a subsidiary of a commercial bank under Section 223(2) of Regulation W? 2(a)(9)(i) If a member bank holding company controls 12% of the capital stock and voting stock and voting stock of a holding company under Section 4(k)(4)(h) or (i) of the Banking Act, does a commercial bank investment company or insurance company holding company control 12% of the capital stock and voting stock and voting stock of an investment company under Section 4(k)(4)(h) or (i) of the Banking Act and a holding company under Section 4(c)(6) of the BHC Act?

A3: Yes. A bank holding company cannot own stock of a company that is subject to Section 4(c)(6) of the BHC Act, and therefore cannot own any type of voting securities and voting stock of that company. You cannot own stock in a company if you own or control 5% or more of that company.

12 CFR 223.3 (What are the meanings of the other terms used in sections 23A and 23B and this part?)

Source: 67 Fed. Reg. 76560, 76565 n. 39 (Dec. 12, 2002).

Q4: When is a company engaged in the business of occupying the premises of a member bank excluded from the definition of a "subsidiary"?

A4: Regulation W excludes from the definition of “subsidiary” a company that is solely engaged in maintaining the facilities of the affiliated member bank at 12 CFR 223. 2(b)(2). To qualify for this exception, a company must be a member bank and a Regulation W affiliate of an affiliate bank (12 CFR 225. The company may not own any other assets, including premises, of a bank that is not a sister bank of the affiliate bank, nor may it engage in any other activities.

Source: Letter from J. Virgil Mattingly, Deputy Board Counsel, to Attorney Mark Aldrich, June 20, 1986.

Q1: Does a first company control another company if it consolidates the other company?

A1: Yes. A first company is considered to control a second company if it consolidates the second company in financial statements prepared in accordance with generally accepted accounting standards (GAAP).

GAAP generally requires consolidation when the consolidated company has a controlling financial interest in the consolidated company. GAAP generally requires consolidation when a company owns a majority of the voting securities of the other company, which would substantially exceed the FRA's 25% safety threshold for control. GAAP also requires that (i) The variable interest entity standard requires consolidation of an entity if (i) the entity has significant financial exposure to the variable interest entity and has the power to direct the activities of the entity that significantly affect the entity's financial performance, or (ii) the entity controls the variable interest entity by contract. These circumstances indicate that the consolidated entity exercises control over the consolidated entity.

This view is consistent with the Board's view on accounting consolidation and control in Regulation Y.

Source: See 12 CFR 225, 32(g).

Q2: Can a member bank increase its capital and surplus used in calculating the quantitative limits in the regulation to reflect capital raised as of its most recent consolidated statement of financial position and statement of income (call report) date?

A2: No. A member bank's capital and surplus are based on the bank's most recent consolidated call report. 12 CFR 223. 3(d).

Q3: Should an affiliate bank reduce its capital buffer or surplus used in calculating the quantitative limits under the rule to reflect losses or other capital impairments incurred since its last call report?

A3: No. An affiliate bank's capital buffer and surplus are based on the bank's most recent consolidated call report. 12 CFR 223. 3(d).

Q4: If an affiliate bank merges with another covered institution, how may the affiliate bank measure its capital and surplus for purposes of calculating the quantitative limits under the rule?

A4: An affiliate bank that merges with another covered institution may use the combined capital and surplus of the two merged covered institutions in calculating the quantitative limits under the rule until the merging bank files its next call report.

Q5: Is a sole proprietorship a corporation under the W rule?

A5: No.

Q6: Is a trust established for business purposes (e. g., an employee stock ownership plan or retirement plan) a company for purposes of Regulation W?

A6: Yes.

Q7: If a trustee controls stock in a fiduciary capacity but has discretionary voting power over the stock, can the company qualify for the exception to the definition of "control" with respect to the stock it holds or controls in a fiduciary capacity?

A7: Yes. The fiduciary exception in Section 4(f)(2) of the BHC Act does not apply to a trustee with sole voting power over the stock, but the fiduciary exception in Regulation W does not exclude a trustee with sole voting power.

Q8: Is the purchase of stock by a subsidiary issued by a member bank a covered transaction?

A8: No.

Q9: If a member bank indemnifies a holding company for losses caused by the bank's negligence or willful misconduct under a service agreement, is this a covered transaction?

A9: No.

Q10: If a holding company indemnifies a subsidiary under a service agreement for losses to the bank caused by the holding company's negligence or willful misconduct, is this a covered transaction?

A10: No.

Q11: If an affiliate purchases assets from an affiliate bank and the affiliate later pays for the assets, is this an extension of credit by the bank to the affiliate?

A11: Yes.

Q12: What is a "guarantee or letter of credit issued by an affiliate bank on behalf of an affiliate"?

A12: A guarantee or letter of credit issued by an affiliate bank for an affiliate is a guarantee or letter of credit issued by a bank in which the affiliate is a party (not a beneficiary) to the account. In other words, it is a transaction in which the affiliate bank promises to make payments to an unrelated company if the bank's affiliate defaults on its debt.

Source: John T. Rose and Samuel H. Talley, The Banking Affiliates Act of 1982: Amendments to Section 23A, 68 Fed. Res. Bull. 693, 697 n. 8 (Nov. 1982); S. Rep. No. 97-536, at 32 (1982).

Q13: When an affiliate bank provides collateral to secure a loan to an affiliate, does that amount to the bank's guarantee on behalf of the affiliate?

A13: Yes, up to the lesser of (i) the market value of the collateral or (ii) the amount of the loan.

Sources Source: Letter from J. Virgil Mattingly (Counsel) to Richard Lasner (Attorney), August 6, 1993.

Q14: Does a keepwell agreement, in which an affiliate agrees to maintain the capital and solvency of an affiliate, constitute a guaranty by the affiliate on behalf of the affiliate?

A14: Yes.

Source: Reg. 76560, 76569 (Dec. 12, 2002).

Q15: Does an affiliate bank's obtaining from a non-affiliated a guarantee or letter of credit issued on behalf of an affiliate, or confirming a letter of credit issued by a non-affiliated on behalf of an affiliate, constitute a guarantee or letter of credit for the affiliate?

A15: Yes.

Q16: What types of subordinated debt are considered to be capital of a company?

A16: Subordinated debt that counts toward a company's regulatory capital is treated as capital of a company. In addition, subordinated debt that is mandatorily convertible or convertible at the holder's option into the company's equity is treated as the company's equity. Other subordinated debt may be treated as the company's equity after considering all facts and circumstances.

Q17: If a member bank purchases a loan or other asset from an affiliate but continues to make draws on that asset to the affiliate, will this be treated as an extension of credit from the bank to the affiliate?

A17: Yes.

Q18: If a member bank purchases credit from a non-affiliated company to a subsidiary, has the member bank extended credit to the affiliate?

A18: Yes.

Q19: Real estate leases from member banks to affiliates are classified as full payment leases and online leasing, and Article 12 of the United States Law Collections (Article 7) and Federal Rules Collection 12 (CFR Will the stat e-owned bank be considered to consider providing credit from the bank to the affiliated company based on part 23)?

A19: Yes.

Source: 67 fed. REG. 76560, 76570 (Dec. 12, 2002).

Q20: If a member bank provides credit to no n-member banks, purchases a new share of a subsidiary of the bank with the funding, and inserts the shares as collateral for credit provision, it will provide credit from the bank to the subsidiary. Will you be done?

A20: Yes, the transaction is deemed to be a credit to a subsidiary from a member bank (not only acceptance of securities issued by a subsidiary). Therefore, member banks must comply with quantitative restrictions and requirements w. Please note that securities issued by subsidiaries cannot be used to meet the collateral requirements.

Q21: Can all subsidiaries of the savings union become a financial subsidiary for the purpose of regulation W?

A21: No.

Source: 67 fed. REG. 76560, 76565 (Dec. 12, 2002).

Q22: Is it possible to avoid the status of lo w-quality assets under the definition of lo w-quality assets by restructuring?

A22: I can't. Its assets will continue to be lo w-quality assets until they are reviewed and withdrawn by the examiner.

Q23: If the member Bank sells assets to a subsidiary, can the affiliated bank be backed by the subsidiary if it gets lo w-quality assets after the sale?

A23: When the member's bank sells, it is possible unless its assets are lo w-quality assets.

Q24: Is it possible to dispose of assets that r e-negotiate and restructured as lo w-quality assets due to the deterioration of the debtor's financial situation?

A24: No. Once the debtor's financial situation has deteriorated, the assets that have once reorganized or restructured are always lo w-quality assets, regardless of how long they have owned their assets.

Q25: If a subsidiary transfers assets to member banks and receives bank shares exclusively for transfer, will it be considered to be purchased from a subsidiary?

A25: No, this is considered a capital contribution from the bank's subsidiary and is generally not a covered transaction under Regulation W.

Q26: If a subsidiary transfers a liability to an affiliate bank and simultaneously transfers an equal amount of cash, is this a covered transaction?

A26: No, it is not a covered transaction if the transfers are contemporaneous, the cash and the liability are denominated in the same currency, and the liability is denominated in an amount.

Subpart B—General Provisions of Section 23A

12 CFR 223.11 (What is the maximum amount of covered transactions that a member bank may enter into with any single affiliate?)

Q27: If an affiliate bank and a subsidiary enter into an asset swap, does the affiliate bank purchase an asset from the subsidiary?

A27: Yes, unless the asset the affiliate bank receives is cash.

Q28: What is the definition of "securities" under Regulation W?

A28: For guidance in determining what financial instruments are securities for purposes of Regulation W, the Board generally considered the federal securities laws.

Q1: If a member bank's holding company owns 100% of Subsidiary A, which in turn owns 100% of Subsidiary B, is the bank subject to the 10% limit for each of Subsidiary A and Subsidiary B separately?

12 CFR 223.14 (What are the collateral requirements for a credit transaction with an affiliate?)

A1: Yes, but if Subsidiary A uses Subsidiary B as a conduit, the performance rules of Regulation W may apply.

Q2: Does Regulation W require a member bank to deregulate an existing covered transaction if the bank exceeds the 10% or 20% quantitative threshold solely due to a reduction in the bank's capital or an increase in the value of the existing covered transaction?

A2: No. The quantitative limits in Regulation W only prohibit a member bank from participating in a new covered transaction if the bank would exceed the 10% or 20% limit after the completion of the new transaction. However, because credit transactions must always meet the collateral requirements of Regulation W, an affiliate may be required to post additional collateral to the member bank if the value of an existing credit transaction increases.

Source: 67 Fed. Reg. 76560, 76572 (Dec. 12, 2002).

Q1: Can a member bank use non-member bank collateral to meet the collateral requirements of Regulation W?

A1: No, not even if the guarantee is from a U. S. government agency. Transactions in which the only credit risk counter is a U. S. government agency guarantee may not even qualify for the exemption from Regulation W section 223. 42(c).

Q2: Does the W rule require a separate Escro deposit account to the Bank of Payers to accept each target transaction with an affiliated company?

A2: No. The use of a commonly separated Escro deposit mouth seat that covers multiple subsidiaries and multiple target transactions may be appropriate depending on the situation. In all cases, the bank shall retain the complete property and priority requirements of Article 123, Paragraph 14 of Article 223, Paragraph 14 of the 12 CFR.

Source: 67 fed. Fed. 76560, 76573 (Dec. 12, 2002).

Q3: The Bank of Federation can meet the Credit Protection in the form of credit default swaps or other credit derivatives referenced in credit transactions with subsidiaries to meet the guarantee requirements of the W regulations. Can you do it?

12 CFR 223.15 (May a member bank purchase a low-quality asset from an affiliate?)

A3: No.

Source 67 fed. 76560, 76573 n. 91 (Dec. 12, 2002).

Q4: Which of the exemptions from the guarantee requirement of regulation W in Article 223. 14 (F) (2) in Article 223. 14 (F) (2) in Article 12CFR, when the member bank provides revolving credit facility. Do you comply like?

A4: The bank that uses this exception is 12CFR 223, 14 (b), regarding the total amount of security committed to support the facility when a new drawer of credit facilities. You have to make sure that the requirement limit is satisfied. In other words, at the time of a new drawer, at the time of a new drawer, we should not deposit sufficient amounts of collateral to cover all total balance (including new drawers) based on the guarantee requirements of regulation W. Must be.

Q1: How do you deal with W regulation if the member Bank gets all shares of a subsidiary with debt and lo w-quality assets free of charge, and as a result, if the child society becomes a sales subsidiary after the acquisition. 。 < SPAN> Q2: Does the rules require a separate Escrow deposit account to the member Bank that accepts the deposit account collateral to secure each target transaction with an affiliated company?

12 CFR 223.16 (What transactions by a member bank with any person are treated as transactions with an affiliate?)

A2: No. The use of a commonly separated Escro deposit mouth seat that covers multiple subsidiaries and multiple target transactions may be appropriate depending on the situation. In all cases, the bank shall retain the complete property and priority requirements of Article 123, Paragraph 14 of Article 223, Paragraph 14 of the 12 CFR.

Source: 67 fed. Fed. 76560, 76573 (Dec. 12, 2002).

Q3: The Bank of Federation can meet the Credit Protection in the form of credit default swaps or other credit derivatives referenced in credit transactions with subsidiaries to meet the guarantee requirements of the W regulations. Can you do it?

A3: No.

Source 67 fed. 76560, 76573 n. 91 (Dec. 12, 2002).

Q4: Which of the exemptions from the guarantee requirements of regulation W in Article 223. 14 (F) (2) in Article 223. 14 (F) (2) in the unused part of Article 22 CFR in Article 223. 14 (F) (2). Do you comply like?

A4: The bank that uses this exception is 12CFR 223, 14 (b), regarding the total amount of security committed to support the facility when a new drawer of credit facilities. You have to make sure that the requirement limit is satisfied. In other words, at the time of a new drawer, at the time of a new drawer, we should not deposit sufficient amounts of collateral to cover all total balance (including new drawers) based on the guarantee requirements of regulation W. Must be.

Q1: How do you deal with W regulation if the member Bank gets all shares of a subsidiary with debt and lo w-quality assets free of charge, and as a result, if the child society becomes a sales subsidiary after the acquisition. 。 Q2: Does the W rule require a separate Escro deposit account to the Bank of Payers to accept each target transaction with an affiliated company?

A2: No. The use of a commonly separated Escro deposit mouth seat that covers multiple subsidiaries and multiple target transactions may be appropriate depending on the situation. In all cases, the bank shall retain the complete property and priority requirements of Article 123, Paragraph 14 of Article 223, Paragraph 14 of the 12 CFR.

Source: 67 fed. Fed. 76560, 76573 (Dec. 12, 2002).

Q3: The Bank of Federation can meet the Credit Protection in the form of credit default swaps or other credit derivatives referenced in credit transactions with subsidiaries to meet the guarantee requirements of the W regulations. Can you do it?

A3: No.

Source 67 fed. 76560, 76573 n. 91 (Dec. 12, 2002).

Q4: Which of the exemptions from the guarantee requirement of regulation W in Article 223. 14 (F) (2) in Article 223. 14 (F) (2) in Article 12CFR, when the member bank provides revolving credit facility. Do you comply like?

A4: The bank that uses this exception is 12CFR 223, 14 (b), regarding the total amount of security committed to support the facility when a new drawer of credit facilities. You have to make sure that the requirement limit is satisfied. In other words, at the time of a new drawer, at the time of a new drawer, we should not deposit sufficient amounts of collateral to cover all total balance (including new drawers) based on the guarantee requirements of regulation W. Must be.

Q1: How do you deal with W regulation if the member Bank gets all shares of a subsidiary with debt and lo w-quality assets free of charge, and as a result, if the child society becomes a sales subsidiary after the acquisition. 。

A1: This transaction must be evaluated based on this clause, based on 12CFR223. 31, to purchase assets from subsidiaries, based on this provision. However, (i) The total amount of capital contributed to the member bank by the transaction (from the asset value of the transferor to the premise of additional contributions to the transfer of the transfer person) is more than the value of lo w-quality assets. In addition, (II), if the total amount of capital (after deduction of transfer assets), which was contributed to the Bank of Member by the transaction, is higher than the transfer value of lo w-quality assets, the Board of Directors is lo w-quality assets from the affiliated companies. I do not consider it as a purchase.

Source: Roberson, Deputy Secretary of the Board, to Winthrop N. Brown, ESQ. V. Howard, ESQ.

Q2: If the subsidiary is investing in the bank free of charge, will the member bank buy lo w-quality assets from a subsidiary?

A2: Except if there is no credit frame committed to the contribution assets, or if the bank is linked to other debt considering the bank after the contribution is accepted.

Q1: What kind of transactions are the performance rules? Does the Board apply yield rules to prevent W-arrangement from tax avoidance? < SPAN> A1: This transaction must be evaluated based on this clause, based on 12CFR223. 31, to purchase assets from subsidiaries based on 12CFR223. 31. However, (i) The total amount of capital contributed to the member bank by the transaction (from the asset value of the transferor to the premise of additional contributions to the transfer of the transfer person) is more than the value of lo w-quality assets. In addition, (II), if the total amount of capital (after deduction of transfer assets), which was contributed to the Bank of Member by the transaction, is higher than the transfer value of lo w-quality assets, the Board of Directors is lo w-quality assets from the affiliated companies. I do not consider it as a purchase.

A8: No.

Q2: If the subsidiary is investing in the bank free of charge, will the member bank buy lo w-quality assets from a subsidiary?

A2: Except if there is no credit frame committed to the contribution assets, or if the bank is linked to other debt considering the bank after the contribution is accepted.

Q1: What kind of transactions are the performance rules? Does the Board apply yield rules to prevent W-arrangement from tax avoidance? A1: This transaction must be evaluated based on this clause, based on 12CFR223. 31, to purchase assets from subsidiaries, based on this provision. However, (i) The total amount of capital contributed to the member bank by the transaction (from the asset value of the transferor to the premise of additional contributions to the transfer of the transfer person) is more than the value of lo w-quality assets. In addition, (II), if the total amount of capital (after deduction of transfer assets), which was contributed to the Bank of Member by the transaction, is higher than the transfer value of lo w-quality assets, the Board of Directors is lo w-quality assets from the affiliated companies. I do not consider it as a purchase.

Source: Roberson, Deputy Secretary of the Board, to Winthrop N. Brown, ESQ. V. Howard, ESQ.

Q2: If the subsidiary is investing in the bank free of charge, will the member bank buy lo w-quality assets from a subsidiary?

A2: Except if there is no credit frame committed to the contribution assets, or if the bank is linked to other debt considering the bank after the contribution is accepted.

Q1: What kind of transactions are the performance rules? Does the Board apply yield rules to prevent W-arrangement from tax avoidance?

A1: The performance rules of W rules include the transaction between the Bank of Federation and the individual, as long as the transaction revenue is used for the interests of the member bank or the relocation to the Bank of the Member, the company and affiliated companies. It is specified that it will be considered as a withdrawal between. The purpose of the performance rules includes the use of brokers to prevent the restrictions of regulations W from avoiding the restrictions on regulations, and the Bank of the Bank restricts exposure to related companies. Furthermore, unlike regulations O, regulations W do not include the exclusion of return rules for transactions used to purchase products and services from affiliated companies. However, W rules have several exceptions in the yield rules. 12 CFR 223. 16 (b)-(c). In general, the board of directors did not know that the banks were used at the time of transactions, or that they would be used for the benefit of affiliated companies, or were relocated to an affiliated company. In other words, we believe that the Board will not recommend the Bank of Perspost to take forced measures.

Source: 67 fed. Fed. 76560, 76576 (dec. 12, 2002).

Q2: Is the yield rules applied only to transactions with the Bank and Bank who are not affiliated with the bank?

A2: No. Performance rules also apply to transactions between member banks and any stakeholders (whether they are related to the member bank). Thus, membership banks cannot do with other affiliated companies with related companies that exceed the quantitative restrictions of banks applied to the affiliated companies. For example, a member bank gives credit to subsidiaries A for continuous financing to subsidiaries B, and the Board of Directors generally applies the fulfillment rules and provides the transaction from the bank to the subsidiary B. It will be handled.

Q3: Based on the yield rules, if the member bank makes a loan of $ 100 to a no n-relevant company, and only $ 5 of the loan is transferred or used for the interests of a bank affiliate, the target transaction amount is eligible. How much will it be? < SPAN> A1: The performance rules of the rules are transactions between the member bank and the individual, as long as the transaction revenue is used for the benefit of the member bank or the relocation to the member bank. It is stipulated that it will be regarded as a recruitment between affiliated companies. The purpose of the performance rules includes the use of brokers to prevent the restrictions of regulations W from avoiding the restrictions on regulations, and the Bank of the Bank restricts exposure to related companies. Furthermore, unlike regulations O, regulations W do not include the exclusion of return rules for transactions used to purchase products and services from affiliated companies. However, W rules have several exceptions in the yield rules. 12 CFR 223. 16 (b)-(c). In general, the board of directors did not know that the banks were used at the time of transactions, or that they would be used for the benefit of affiliated companies, or were relocated to an affiliated company. In other words, we believe that the Board will not recommend the Bank of Perspost to take forced measures.

Source: 67 fed. Fed. 76560, 76576 (dec. 12, 2002).

Q2: Is the yield rules applied only to transactions with the Bank and Bank who are not affiliated with the bank?

A2: No. Performance rules also apply to transactions between member banks and any stakeholders (whether they are related to the member bank). Thus, membership banks cannot do with other affiliated companies with related companies that exceed the quantitative restrictions of banks applied to the affiliated companies. For example, a member bank gives credit to subsidiaries A for continuous financing to subsidiaries B, and the Board of Directors generally applies the fulfillment rules and provides the transaction from the bank to the subsidiary B. It will be handled.

Subpart C—Valuation and Timing Principles under Section 23A

12 CFR 223.21-.22 (What valuation and timing principles apply to credit transactions and asset purchases?)

Q3: Based on the yield rules, if the member bank makes a loan of $ 100 to a no n-relevant company, and only $ 5 of the loan is transferred or used for the interests of a bank affiliate, the target transaction amount is eligible. How much will it be? A1: The performance rules of W rules include the transaction between the Bank of Federation and the individual, as long as the transaction revenue is used for the interests of the member bank or the relocation to the Bank of the Member, the company and affiliated companies. It is specified that it will be considered as a withdrawal between. The purpose of the performance rules includes the use of brokers to prevent the restrictions of regulations W from avoiding the restrictions on regulations, and the Bank of the Bank restricts exposure to related companies. Furthermore, unlike regulations O, regulations W do not include the exclusion of return rules for transactions used to purchase products and services from affiliated companies. However, W rules have several exceptions in the yield rules. 12 CFR 223. 16 (b)-(c). In general, the board of directors did not know that the banks were used at the time of transactions, or that they would be used for the benefit of affiliated companies, or were relocated to an affiliated company. In other words, we believe that the Board will not recommend the Bank of Perspost to take forced measures.

Source: 67 fed. Fed. 76560, 76576 (dec. 12, 2002).

Q2: Is the yield rules applied only to transactions with the Bank and Bank who are not affiliated with the bank?

A2: No. Performance rules also apply to transactions between member banks and any stakeholders (whether they are related to the member bank). Thus, membership banks cannot do with other affiliated companies with related companies that exceed the quantitative restrictions of banks applied to the affiliated companies. For example, a member bank provides credit to subsidiaries A for continuous financing to subsidiaries B, the Board of Directors generally applies the fulfillment rules and provides the transaction from the bank to the subsidiary B. It will be handled.

Q3: Based on the yield rules, if the member bank makes a loan of $ 100 to a no n-relevant company, and only $ 5 of the loan is transferred or used for the interests of a bank affiliate, the target transaction amount is eligible. How much will it be?

A3: The yield rule applies to a transaction to the extent that the proceeds of the transaction are used for or transferred to the subsidiary. Thus, the covered transaction amount in this scenario is $5.

Q4: A member bank makes a loan to a non-affiliated company, which uses the loan proceeds to purchase assets from a subsidiary of the bank. Under the performance rule, would the transaction be treated as an extension of credit from the bank to the affiliate or as a purchase by the bank of assets from the affiliate?

A4: Under the performance rule, the transaction would be treated as an extension of credit from the member bank to the subsidiary. 12 CFR 223. 16(a).

Sources Source: Letter from Michael Bradfield, Board Counsel to Richard S. Brennan, March 21, 1988.

Q5: Sister Bank A loaned funds to Sister Bank B, which transferred the funds to affiliates of both banks, subjecting them to a non-utilizing transaction. In this scenario, would the Execution Rule apply to attribute non-utility transactions to Sister Bank A?

A5: Generally, no. Sister Bank B has a non-business transaction with its subsidiary. Sister Bank A's loan to Sister Bank B is covered by the sister exemption, and the Execution Rule would not attribute covered transactions between Sister Bank B and its subsidiaries to Sister Bank A, unless the transaction is structured to allow Sister Bank A to avoid the requirements of Section 23A and Regulation W.

Q6: If an affiliate bank purchases assets from Subsidiary A in an exempt transaction and then transacts with Subsidiary B, would the Execution Rule apply and the affiliate bank would have a covered transaction with Subsidiary B?

A3: No. An affiliate bank's capital buffer and surplus are based on the bank's most recent consolidated call report. 12 CFR 223. 3(d).

Q7: Does the yield rule apply only if the member bank knows or has reason to know that the proceeds of a non-covered transaction may be used for the benefit of or transferred to the subsidiary?

A7: The yield rules are applied by the conditions if the revenue that the member bank trades with the parties involved is used for a subsidiary of the member bank or transferred to a subsidiary of a member of the Bank. 12 CFR 223. 16. However, the Board of Directors did not know that the Trading Bank could be used for related companies during transactions, or had no reason to know. We believe that the Board will not recommend the member bank to take forced measures.

Q8: If the member bank knows that the no n-parties will transfer revenue to the affiliated bank a few days later, or have a reason to know the no n-parties, when they have given credit to no n-parties. Should we treat credit to no n-parties as a target transaction?

A8: The Bank of Federation is the time when the bank is relocated to the subsidiary, or when the bank is expected to flow to the subsidiary, or the reason for knowing the reason for knowing it. (It may be possible to provide credit and handle the credit provision as a target transaction.

Subpart D—Other Requirements under Section 23A

12 CFR 223.31 (How does section 23A apply to a member bank's acquisition of an affiliate that becomes an operating subsidiary of the member bank after the acquisition?)

Q9: Bank holding company owns less than 25 % of Company A's capital. A subsidiary of a bank holding company lends it to Company A, but Company A is not considered a bank subsidiary in regulations.

A9: No. Bank holding companies have shares of Company A, but Company A is not a subsidiary of W-regulations, so performance rules are generally not applied to such patterns.

Q10: Credit from member banks to subsidiaries employees are considered to have been used only for the employee's personal interests and is not transferred to a subsidiary, and is deemed to have been conducted by the subsidiary based on the return rules. mosquito?

A10: No.

Q11: Is the fulfillment rules applied just because the credit of the bank's credit is done by the trustee of the subsidiary of the bank? < SPAN> A7: The yield rules are applied by the conditions if the profits that the Bank of Payers trade with a party is used for subsidiaries or transfer to a subsidiary of member banks. Huh. 12 CFR 223. 16. However, the Board of Directors did not know that the Trading Bank could be used for related companies during transactions, or had no reason to know. We believe that the Board will not recommend the member bank to take forced measures.

Q8: If the member bank knows that the no n-parties will transfer revenue to the affiliated bank a few days later, or have a reason to know the no n-parties, when they have given credit to no n-parties. Should we treat credit to no n-parties as a target transaction?

A8: The Bank of Federation is the time when the bank is relocated to the subsidiary, or when the bank is expected to flow to the subsidiary, or the reason for knowing the reason for knowing it. (It may be possible to provide credit and handle the credit provision as a target transaction.

Q9: Bank holding company owns less than 25 % of Company A's capital. A subsidiary of a bank holding company lends it to Company A, but Company A is not considered a bank subsidiary in regulations.

A9: No. Bank holding companies have shares of Company A, but Company A is not a subsidiary of W-regulations, so performance rules are generally not applied to such patterns.

Q10: Credit from member banks to subsidiaries employees are considered to have been used only for the employee's personal interests and is not transferred to a subsidiary, and is deemed to have been conducted by the subsidiary based on the return rules. mosquito?

A10: No.

Q11: Is the fulfillment rules applied just because the credit of the bank's credit is done by the trustee of the subsidiary of the bank? A7: The yield rules are applied by the conditions if the revenue that the member bank trades with the parties involved is used for a subsidiary of the member bank or transferred to a subsidiary of a member of the Bank. 12 CFR 223. 16. However, the Board of Directors did not know that the Trading Bank could be used for related companies during transactions, or had no reason to know. We believe that the Board will not recommend the member bank to take forced measures.

Subpart E—Exemptions from the Provisions of Section 23A

12 CFR 223.41 (What covered transactions are exempt from the quantitative limits and collateral requirements?)

Q8: If the member bank knows that the no n-parties will transfer revenue to the affiliated bank a few days later, or have a reason to know the no n-parties, the Bank will be given to no n-parties. Should we treat credit to no n-parties as a target transaction?

A8: The Bank of Federation is the time when the bank is relocated to the subsidiary, or when the bank is expected to flow to the subsidiary, or the reason for knowing the reason for knowing it. (It may be possible to provide credit and handle the credit provision as a target transaction.

Q9: Bank holding company owns less than 25 % of Company A's capital. A subsidiary of a bank holding company lends it to Company A, but Company A is not considered a bank subsidiary in regulations.

A9: No. Bank holding companies have shares of Company A, but Company A is not a subsidiary of W-regulations, so performance rules are generally not applied to such patterns.

Q10: Credit from member banks to subsidiaries employees are considered to have been used only for the employee's personal interests and is not transferred to a subsidiary, and is deemed to have been conducted by the subsidiary based on the return rules. mosquito?

A10: No.

Q11: Is the fulfillment rules applied just because the credit of the bank's credit is done by the trustee of the subsidiary of the bank?

A11: No. However, there is a possibility that the resignation rules will be applied depending on other events and situations. In any case, credit provisions are eligible for other requirements, including Article 22 (H) of the Federal Preparatory Law (H) (Article 12 of the United States Law Collections, Article 375 B) and the Board of Directors O (12 CFR Part 215).

Q12: If a member bank makes a loan to a no n-related company, and a no n-related company purchases a securities issued by a member bank child company for its loan funding, will the yield rule apply?

A12: When a no n-related company purchases a securities of an affiliated company at the primary market, the Yield Rules are applied. If a no n-related company purchases securities from an affiliated company in the distribution market, the purchase of securities of an affiliate is generally unless it is configured to avoid the requirements of section 23A and regulations. The rules are not applied.

A10: No.

A13: Yes. The slower rules are applied to the amount of floors' loans provided to unrelated retailers by loan companies at Member Bank.

A4: An affiliate bank that merges with another covered institution may use the combined capital and surplus of the two merged covered institutions in calculating the quantitative limits under the rule until the merging bank files its next call report.

A14: Member banks can reduce the amount of target transactions according to the amount paid by an unrelated company. For example, suppose a member bank lends $ 100 to a no n-affiliated company, and that the company purchased an asset from a company affiliated company using $ 20 out of the loan. The first target transaction amount is $ 20. If a no n-related company pays and the bank's initial credit dollar is reduced by $ 10, the bank can reduce the target transaction amount by $ 2 (return 20 % of the initial credit donated amount to the affiliates. Same as doing).

Q15: Is the yield rules applied only if the Bank of Member issues a guarantee as a securities issued by an affiliated company? < SPAN> A11: No. However, there is a possibility that the resignation rules will be applied depending on other events and situations. In any case, credit provisions are eligible for other requirements, including Article 22 (H) of the Federal Preparatory Law (H) (Article 12 of the United States Law Collections, Article 375 B) and the Board of Directors O (12 CFR Part 215).

12 CFR 223.42 (What covered transactions are exempt from the quantitative limits, collateral requirements, and low-quality asset prohibition?)

Q12: If a member bank makes a loan to a no n-related company, and a no n-related company purchases a securities issued by a member bank child company for its loan funding, will the yield rule apply?

A12: When a no n-related company purchases a securities of an affiliated company at the primary market, the Yield Rules are applied. If a no n-related company purchases securities from an affiliated company in the distribution market, the purchase of securities of an affiliate is generally unless it is configured to avoid the requirements of section 23A and regulations. The rules are not applied.

Q13: If a loa n-related company at a member of the Bank provides purchases to retailers that are not related to banks, and the affiliate bank purchases products from no n-related companies with the funds, the yield rules are applied. Will you be?

A13: Yes. The slower rules are applied to the amount of floors' loans provided to unrelated retailers by loan companies at Member Bank.

Q14: Based on the yield rules, if a part of credit provision from a member bank to an unrelated company is treated as an affiliated company, the no n-related company pays the initial credit amount, and the target transaction amount. How is it reduced?

A14: Member banks can reduce the amount of target transactions according to the amount paid by an unrelated company. For example, suppose a member bank lends $ 100 to a no n-affiliated company, and that the company purchased an asset from a company affiliated company using $ 20 out of the loan. The first target transaction amount is $ 20. If a no n-related company pays and the bank's initial credit dollar is reduced by $ 10, the bank can reduce the target transaction amount by $ 2 (return 20 % of the initial credit donated amount to the affiliates. Same as doing).

Q15: Is the yield rules applied only if the Bank of Member issues a guarantee as a securities issued by an affiliated company? A11: No. However, there is a possibility that the resignation rules will be applied depending on other events and situations. In any case, credit provisions are eligible for other requirements, including Article 22 (H) of the Federal Preparatory Law (H) (Article 12 of the United States Law Collections, Article 375 B) and the Board of Directors O (12 CFR Part 215).

Q12: If a member bank makes a loan to a no n-related company, and a no n-related company purchases a securities issued by a member bank child company for its loan funding, will the yield rule apply?

A12: When a no n-related company purchases a securities of an affiliated company at the primary market, the Yield Rules are applied. If a no n-related company purchases securities from an affiliated company in the distribution market, the purchase of securities of an affiliate is generally unless it is configured to avoid the requirements of section 23A and regulations. The rules are not applied.

Q13: If a loa n-related company at a member of the Bank provides purchases to retailers that are not related to banks, and the affiliate bank purchases products from no n-related companies with the funds, the yield rules are applied. Will you be?

A13: Yes. The slower rules are applied to the amount of floors' loans provided to unrelated retailers by loan companies at Member Bank.

Q14: Based on the yield rules, if a part of credit provision from a member bank to an unrelated company is treated as an affiliated company, the no n-related company pays the initial credit amount, and the target transaction amount. How is it reduced?

Subpart F—General Provisions of Section 23B

12 CFR 223.51–.56 (General provisions of section 23B)

A14: Member banks can reduce the amount of target transactions according to the amount paid by an unrelated company. For example, suppose a member bank lends $ 100 to a no n-affiliated company, and that the company purchased an asset from a company affiliated company using $ 20 out of the loan. The first target transaction amount is $ 20. If a no n-related company pays and the bank's initial credit dollar is reduced by $ 10, the bank can reduce the target transaction amount by $ 2 (return 20 % of the initial credit donated amount to the affiliates. Same as doing).

Q15: Is the yield rules applied only if the Bank of Member issues a guarantee as a securities issued by an affiliated company?

A15: No. However, the market requirements for regulatory W are applied to the transaction. 12 CFR 223. 51.

Source: 67 fed. REG. 76560, 76569 (Dec. 12, 2002) (62 Fed.

Q16: If the member Bank is credit to no n-member banks and purchases assets from an affiliated company affiliated company for that fund (the credit is considered to have been made to an affiliated company), will the credit donation be updated?

A16: Yes.

Q18: If a member bank purchases credit from a non-affiliated company to a subsidiary, has the member bank extended credit to the affiliate?