Federal Register / Vol. 74, No. 185 / Friday, September 25, 2009 / Notices 48959 

5Regulation F requires institutions’ policies and 

procedures to limit exposure to the correspondent, 

either by the establishment of internal limits or by 

other means, when the correspondent’s financial 

condition and the form or maturity of the bank’s 

exposure create a significant risk that payment will 

not be made in full or in a timely manner. 

Regulation F also requires institutions to reduce 

credit exposure to below 25 percent of total capital 

within 120 days after the date when the current 

Report of Condition or other relevant report 

normally would be available if the correspondent is 

no longer at least Adequately Capitalized. More 

information on Regulation F is available at: 

http://www.federalreserve.gov/bankinforeg/ 

reglisting.htm. 

ongoing, timely reviews of 

correspondent relationships. Such 

reviews should be conducted on a 

quarterly basis at a minimum and more 

frequently when appropriate. The 

procedures also should establish 

documentation requirements for the 

reviews conducted. In addition, the 

procedures should specify when 

relationships that meet or exceed 

internal criteria are to be brought to the 

attention of the Board of Directors or the 

appropriate management committee. 

Managing Correspondent 

Concentrations 

Pursuant to Regulation F, institutions 

should establish prudent correspondent 

concentration limits, as well as ranges 

or tolerances for each factor being 

monitored. Institutions should develop 

plans for managing risk when these 

limits, ranges or tolerances are met or 

exceeded, either on an individual or 

collective basis. Consistent with the 

requirements of Regulation F, 

contingency plans should provide a 

variety of actions that can be considered 

relative to changes in the 

correspondent’s financial condition.5

Contingency plans should not rely on 

temporary deposit insurance programs 

for mitigating concentration risk. 

Prudent risk management of 

correspondent concentrations should 

include procedures for reducing 

exposures that meet or exceed 

established limits, ranges, or tolerances 

in an orderly manner over reasonable 

timeframes. Such actions could include, 

but are not limited to: 

• Reducing the volume of 

uncollateralized/uninsured funds. 

• Transferring excess funds to other 

financial institutions rather than the 

correspondent after conducting 

appropriate reviews of their financial 

condition. 

• Requiring the correspondent to 

serve as agent rather than as principal 

for Federal funds sold. 

• Establishing limits on asset and 

liability purchases from and 

investments in correspondents. 

• Specifying reasonable timeframes to 

meet targeted reduction goals for 

different types of advances. 

Examiners will review correspondent 

relationships during examinations to 

ascertain whether an institution’s 

policies and procedures identify and 

monitor correspondent concentrations 

on an organization-wide basis. 

Examiners also will review the 

adequacy and reasonableness of 

institutions’ contingency plans to 

manage correspondent concentrations. 

Performing Appropriate Due Diligence 

The Agencies expect financial 

organizations that maintain credit 

exposures in or provide funding to other 

financial organizations to have effective 

risk management programs for these 

activities. For this purpose, credit or 

funding exposures may include, but are 

not limited to, due from bank accounts, 

Federal funds sold as principal, direct 

or indirect loans (including 

participations and syndications), and 

trust preferred securities, subordinated 

debt, and stock purchases of the 

correspondent, its holding company, or 

any affiliated entity. 

An institution that maintains or 

contemplates entering into any credit or 

funding transactions with another 

financial institution should have written 

investment, lending, and funding 

polices and procedures, including 

appropriate limits, that govern these 

activities. In addition, these procedures 

should ensure the institution conducts 

an independent analysis of credit 

transactions prior to committing to 

engage in the transactions. The terms for 

all such credit and funding transactions 

should strictly be on an arm’s length 

basis, conform to sound investment, 

lending, and funding practices, and 

avoid potential conflicts of interest. 

This concludes the text of the 

Proposed Guidance. 

Dated at Washington, DC, the 18th day of 

September 2009. 

By order of the Federal Deposit Insurance 

Corporation. 

Robert E. Feldman, 

Executive Secretary. 

By order of the Board of Governors of the 

Federal Reserve System, September 18, 2009. 

Jennifer J. Johnson, 

Secretary of the Board. 

Dated: September 8, 2009. 

Office of the Comptroller of the Currency. 

John C. Dugan, 

Comptroller of the Currency. 

Dated: September 17, 2009. 

By the Office of Thrift Supervision. 

John E. Bowman, 

Acting Director. 

[FR Doc. E9–23208 Filed 9–24–09; 8:45 am] 

BILLING CODE 6714–01–P, 6210–01–P, 4810–33–P, 

6720–01–P 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

Notice of Agency Meeting 

Pursuant to the provisions of the 

‘‘Government in the Sunshine Act’’ (5 

U.S.C. 552b), notice is hereby given that 

the Federal Deposit Insurance 

Corporation’s Board of Directors will 

meet in open session at 10 a.m. on 

Tuesday, September 29, 2009, to 

consider the following matters: 

Summary Agenda: No substantive 

discussion of the following items is 

anticipated. These matters will be 

resolved with a single vote unless a 

member of the Board of Directors 

requests that an item be moved to the 

discussion agenda. 

Disposition of minutes of previous 

Board of Directors’ Meetings. 

Discussion Agenda: Memorandum 

and resolution re: Deposit Insurance 

Fund Restoration Plan, Assessments, 

and Funding. 

The meeting will be held in the Board 

Room on the sixth floor of the FDIC 

Building located at 550 17th Street, 

NW., Washington, DC. 

This Board meeting will be Webcast 

live via the Internet and subsequently 

made available on-demand 

approximately one week after the event. 

Visit http://www.vodium.com/goto/fdic/ 

boardmeetings.asp to view the event. If 

you need any technical assistance, 

please visit our Video Help page at: 

http://www.fdic.gov/video.html. 

The FDIC will provide attendees with 

auxiliary aids (e.g., sign language 

interpretation) required for this meeting. 

Those attendees needing such assistance 

should call (703) 562–6067 (Voice or 

TTY), to make necessary arrangements. 

Requests for further information 

concerning the meeting may be directed 

to Mr. Robert E. Feldman, Executive 

Secretary of the Corporation, at (202) 

898–7043. 

Dated: September 22, 2009. 

Federal Deposit Insurance Corporation. 

Robert E. Feldman, 

Executive Secretary. 

[FR Doc. E9–23212 Filed 9–24–09; 8:45 am] 

BILLING CODE 6714–01–P 


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