Commercial Bank
Examination Manual
October 2008 Update
The October 2008 update to the Commercial Bank Examination Manual has been published (supplement no. 30). The manual comprises the Federal Reserve System's regulatory, supervisory, and examination guidance for state member banks. The new supplement includes guidance on the following subjects:
- Identity Theft Red Flags and Address Discrepancies. Sections 4060.1 through 4060.4, "Information Technology," are revised to incorporate the November 9, 2007, adoption of interagency rules, "Identity Theft Red Flags and Address Discrepancies Under the Fair and Accurate Credit Transactions Act of 2003" (sections 115 and 315 of the FACT Act), and guidelines issued by the federal financial institution regulatory agencies and the Federal Trade Commission. For more information, see the Federal Reserve Board's rule that implemented section 315 (Part 222 of Regulation V, "Fair Credit Reporting," and its appendix J). The rule and its guidelines address three elements: (1) duties of users of credit reports regarding address discrepancies; (2) duties regarding the detection, prevention, and mitigation of identity theft (implementation of an Identity Theft Prevention Program); and (3) duties of credit and debit card issuers regarding changes of address. The joint rules and guidelines were effective on January 1, 2008. The date for mandatory compliance with the rule was November 1, 2008. The section is revised to incorporate the rule's provisions that focus on a financial institution's safety and soundness (in particular, item 2 above). See also SR letter 08-7/CA letter 08-10, dated October 10, 2008, and its interagency attachments.
- "Review of Regulatory Reports." Section 4150.1 is significantly revised to include more current discussions of the institution's general and specific responsibilities, and the examiner's review responsibilities, with regard to regulatory financial reports and refilings submitted to the Federal Reserve and other federal agencies (for example, the Securities and Exchange Commission and the U.S. Department of the Treasury). Many of the reports' general instructions and descriptions are revised, including those pertaining to the submission of the bank Call Report. The section clarifies the various monetary deposit transaction reporting categories applicable to depository institutions, as found in the Federal Reserve's instructions, "Reserve Requirements of Depository Institutions" (Regulation D). A listing of the U.S. Department of the Treasury's reports that are applicable to institutions regulated and supervised by the Federal Reserve is also updated.
- Sections 3020.1, "Assessment of Capital Adequacy," and 4030.1, "Asset Securitization," are revised to reference (1) the Board staff's October 12, 2007, legal interpretation regarding the risk-based capital treatment of asset-backed commercial paper (ABCP) liquidity facilities; and (2) the Board staff's August 21, 2007, legal interpretation regarding the appropriate risk-based capital risk weight to be applied to certain collateralized loans of cash. Section 4030.1 states that a banking organization may risk-weight the credit equivalent amount of an eligible ABCP liquidity facility by looking through to the underlying assets of the ABCP conduit.
A more detailed summary of changes is included with the update package. The public may obtain the manual and the updates (including pricing information) from Publications Fulfillment, MS-N127, Board of Governors of the Federal Reserve System, 20th and C Streets, N.W., Washington, DC 20551; telephone (202) 452-3244; or send a facsimile to (202) 728-5886.