Joint Press Release
Board of Governors of the Federal Reserve System

U.S. Department of the Treasury

March 14, 2000

Federal Reserve and Treasury Department Announce Interim Rule on Alternative to Rated Debt Requirement For Financial Subsidiaries

The Federal Reserve Board and the Secretary of the Treasury today announced their approval of an interim rule, effective March 14, 2000, establishing alternative criteria for debt ratings that certain large banks may satisfy in order to establish a financial subsidiary under the Financial Modernization Act.

Under the act, a national or state member bank ranked among the largest 50 insured banks may control a financial subsidiary only if the bank meets certain criteria, including having an issue of highly rated debt outstanding. The next 50 largest insured banks may control a financial subsidiary if they satisfy this debt rating requirement or an alternative requirement determined by Treasury and the Federal Reserve. Under the interim rule, a bank meets the alternative requirement if it has a current long-term issuer credit rating from a nationally recognized statistical rating organization that is within the three highest investment-grade rating categories used by the rating organization.

Comments will be accepted on the interim rule until May 15, 2000.

The joint notice is attached.

Attachment (22 KB PDF)

Federal Reserve: Dave Skidmore (202) 452-2955
Treasury: Bill Buck (202) 622-2960

2000 Banking and consumer regulatory policy

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Last update: March 14, 2000