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Laws and Regulations

Key laws and regulations that pertain to �౦��Ϸ����-supervised institutions; note that other laws and regulations also may apply.

• implements Federal Deposit Insurance Act Section 24 provisions that restrict or prohibit activities and investments that are not permissible for national banks and their subsidiaries
• outlines standards under which national banks may purchase, sell, deal in, underwrite, and hold securities which establish permissibility through the implementation of Part 362

Supervisory Resources

Frequently asked questions, advisories, statements of policy, and other information issued by the �౦��Ϸ���� alone, or on an interagency basis, provided to promote safe-and-sound operations.

• provides interagency guidance on managing the risks of investment securities and end-user derivative activities
• Uniform Agreement on the Classification and Appraisal of Securities Held by Financial Institutions provides an update to a 2004 Uniform Agreement that reiterates the importance of robust investment analyses and the agencies’ asset classification definitions
• Revised Standards of Creditworthiness for Investment Securities provides a reminder to ensure issuers have adequate capacity to meet all financial commitments for the projected life of investment securities and what due diligence may include to reduce reliance on credit ratings
• Guidance on Due Diligence Requirements for Savings Associations in Determining Whether a Corporate Debt Security Is Eligible for Investment
• Interagency Policy Statement on Allowances for Credit Losses addresses changes in the accounting for credit losses under U.S. generally accepted accounting principles (U.S. GAAP)
• Interagency Statement on Accounting and Reporting Implications of the New Tax Law highlights certain accounting and reporting implications of the tax law enacted in December 2017
• Interagency Statement on Sound Practices for Activities With Elevated Risk describes internal controls and other risk management policies useful in identifying and managing risks that may arise from complex structured finance transactions and generally applies to large banking organizations
• Examiner Guidance On Structured Note Holdings advises that agency-issued step-up bonds, when appropriately managed, present risks similar to callable bonds and that aggregate levels of structured notes should not, in and of themselves, raise supervisory concern
• Covenants Associated with Supervisory Actions in Securitization Documents provides notification that covenants with supervisory thresholds or adverse supervisory actions as triggers for early amortization or the transfer of servicing may be criticized as unsafe and unsound practices
• Alert Regarding Bank Investment Securities and Custodial Accounts Held at Securities Broker-Dealers outlines regulatory concerns with custodial relationships at failed broker-dealers
• Guidance for Investment Securities describes credit-linked notes with speculative characteristics and addresses the �౦��Ϸ����’s supervisory policy for these investments
• Guidance on Asset Securitization highlights risks and concerns with certain retained interests generated from the securitization and sale of assets
• Authority of State Banks to Invest in Trust Preferred Securities provides confirmation of the permissibility for state banks to invest in trust preferred securities
• Section 3.3 — Securities and Derivatives of the Risk Management Manual of Examination Policies provides information about risk management processes, internal controls, unsuitable investment activities, board and senior management oversight, and report of examination treatment

Other Resources

Supplemental information related to safe-and-sound banking operations.

• �౦��Ϸ����’s Supervisory Insights — Summer 2015 article, "Bank Investment in Securitizations: The New Regulatory Landscape in Brief"
• �౦��Ϸ����’s Supervisory Insights — Winter 2013 article, "The New Basel III Definition of Capital: Understanding the Deductions for Investments in Unconsolidated Financial Institutions"
• �౦��Ϸ����’s Supervisory Insights — Summer 2013 article, "Credit Risk Assessment of Bank Investment Portfolios"
• on types of activities and investments permissible for banking entities, the associated risks, and how banking entities mitigate those risks