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      -  Financial Services Regulatory Relief Act of 2006 
      -  Unlawful Internet Gambling Enforcement Act of 2006 
      -  Military Personnel Financial Services Protection Act 
      -  Financial Netting Improvements Act of 2006 

#           Federal Legislative Developments 

The following federal laws enacted during 2006 affect      the Federal Reserve System and the institutions it regulates: the      Financial Services Regulatory Relief Act of 2006; the Unlawful Internet      Gambling Enforcement Act of 2006; the Military Personnel Financial      Services Protection Act; and the Financial Netting Improvements Act of      2006.

##       Financial Services Regulatory Relief Act of 2006 

On October 13, 2006, President Bush signed into law the Financial      Services Regulatory Relief Act of 2006 (Regulatory Relief Act),      culminating more than four years of work by Congress, the Board, and      other interested parties. The act incorporates a number of significant      monetary policy, supervisory, and regulatory provisions that were      proposed or supported by the Board. These provisions should reduce      unnecessary burden on banking organizations and improve operation of      the financial system. The most important provisions of the Regulatory      Relief Act affecting the Federal Reserve System and banking      organizations supervised by the Federal Reserve are discussed below.      Except as noted below, the act became effective on October 13, 2006.

### Monetary Policy Provisions 

#### Authority to Pay Interest on Balances Held at Reserve Banks      and Greater Flexibility in Setting Reserve Requirements 

For monetary policy purposes, federal law obliges the Board to      establish reserve requirements on certain deposits held at      depository institutions and mandates that the Board set the      ratio of required reserves on transaction accounts above a      certain percentage (8 percent for amounts above the      so-called low reserve tranche, and 3 percent for amounts within      the low reserve tranche). Because the Federal Reserve does not pay      interest on balances held at Reserve Banks to meet reserve      requirements, depositories have an incentive to reduce their reserve      balances to a minimum. To do so, they engage in a variety of      reserve-avoidance activities, including using "sweep" arrangements      that move funds from accounts that are subject to reserve requirements      to accounts and money market investments that are not. These sweep      programs and similar activities absorb resources and therefore diminish      banking system efficiency. Depository institutions also may voluntarily      hold contractual clearing balances and excess reserve balances at a      Reserve Bank. These balances also do not explicitly earn interest,      although contractual clearing balances implicitly earn interest in the      form of credits that may be used to pay for Federal Reserve services,      such as check clearing.

The Regulatory Relief Act gives the Federal Reserve the      authority, effective as of October 1, 2011, to pay explicit interest on      all types of balances (including required reserves, excess reserves,      and contractual clearing balances) held by or for depository      institutions at a Reserve Bank. Paying interest on required reserve      balances, once authorized, will remove a substantial portion of the      incentive for depositories to engage in reserve-avoidance measures, and      the resulting improvements in efficiency should eventually be passed      through to bank borrowers and depositors.

Moreover, if the Board were to determine to pay explicit interest      on contractual clearing balances, once authorized to do so, the action      could provide a stable enough supply of voluntary balances to allow the      Federal Reserve to effectively implement monetary policy using existing      procedures without the need for required reserves.

Importantly, the Regulatory Relief Act gives the Board the      discretion, effective as of October 1, 2011, to lower the ratio of      reserves that a depository institution must maintain against its      transaction accounts *below* the ranges currently established      by law, including potentially establishing a zero reserve      ratio. Thus, once these authorities become effective, the Board could      reduce or even eliminate reserve requirements if it determined that      such action was consistent with the effective implementation of      monetary policy. Such action, if taken, would reduce a      significant regulatory burden for all depository institutions.

Having the authority to pay interest on excess reserves also will      enhance the Federal Reserve's monetary policy toolkit. If the      Board were to determine to pay interest on such balances at some point      in the future, the rate paid would act as a minimum for      overnight interest rates and, thus, could help mitigate potential      volatility in overnight interest rates.

#### Authority for Member Banks to Use Pass-Through Reserves 

The Regulatory Relief Act also eliminated the statutory      provisions that prohibited banks that are members of the Federal      Reserve from counting as reserves their deposits in other banks that      are "passed through" by those banks to the Federal Reserve as      required reserve balances. These amendments, once implemented, will      enable national and state member banks to take advantage of the same      type of pass-through reserve arrangements previously available only to      state nonmember banks.

### Supervisory and Regulatory Provisions 

#### Rules Implementing the "Broker" Exceptions for Banks Adopted      as Part of the Gramm-Leach-Bliley Act 

Before the Gramm-Leach-Bliley Act (GLB Act) of 1999, banks had a      blanket exception from the definition of "broker" in the Securities      Exchange Act of 1934. This meant that banks could engage in any type of      securities activity permissible under federal and state banking laws      without registering with the Securities and Exchange Commission (SEC)      as a broker and without complying with the SEC's rules applicable to      registered brokers. In the GLB Act, Congress eliminated this blanket      exception for banks from the definition of "broker" and replaced it      with eleven exceptions for broad types of securities activities      conducted by banks. These new activity-focused exceptions were designed      and intended to allow banks to continue to provide their customers with      securities services as part of their usual trust, fiduciary, custodial,      and other banking functions. The SEC requested comment on rules that      would implement these "broker" exceptions for banks in 2001 and      2004.

The Regulatory Relief Act requires that the SEC and the Board,      within 180 days of enactment, jointly request comment on a new      "single set" of rules to implement the "broker" exceptions for      banks that were adopted as part of the GLB Act. The Regulatory Relief      Act also requires that the SEC and the Board jointly adopt a "single      set" of final rules to implement these exceptions after consulting      with, and seeking the concurrence of, the Office of the Comptroller of      the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC),      and the Office of Thrift Supervision (OTS). In addition, the act      provides that the single set of final rules adopted jointly by the      Board and the SEC shall supersede the rules previously issued by the      SEC to implement these exceptions.

On December 18, 2006--well before the end of the 180-day period      established by the Regulatory Relief Act--the Board and the SEC issued      and requested comment on joint proposed rules to implement the      "broker" exceptions for banks. *See* 71 FR 77,522      (Dec. 26, 2006). These joint proposed rules--designated      Regulation R--are designed to accommodate the securities activities      that banks conduct as part of their normal banking functions,      consistent with the purposes of the GLB Act.

#### Expanded Eligibility for Eighteen-Month Examination Schedule      for Small Banks 

The Regulatory Relief Act expands the number of well-capitalized      and well-managed small insured depository institutions that may qualify      for an eighteen-month (rather than a twelve-month) on-site safety and      soundness examination schedule. Before the act, an insured depository      institution could qualify for an extended eighteen-month safety and      soundness examination schedule only if the institution had less than      $250 million in total assets, was well capitalized and well managed,      and met certain other supervisory criteria. *See* 12 USC      1820(d)(4). The act raised this $250 million asset threshold for an      eighteen-month exam cycle to $500 million, thereby allowing additional      small, well-run institutions to potentially qualify for an extended      examination schedule. On January 11, 2007, President Bush also signed      into law a complementary bill, Pub. L. 109-473, that allows an insured      depository institution that meets the new $500 million total      assets threshold to potentially qualify for an eighteen-month      on-site exam cycle if the institution received a composite rating      of either a 1 or a 2 at its most recent safety and soundness      examination.

#### Nonwaiver of Privileges 

The Regulatory Relief Act includes an important provision that      should facilitate the sharing of information between banking      organizations and federal, state, and foreign banking authorities.      Specifically, the act provides that any privilege (for example,      attorney-client or work-product privilege) a person may have with      respect to information is not waived or destroyed if the person      provides that information to "any federal banking agency, state bank      supervisor, or foreign banking authority for any purpose in the course      of the supervisory or regulatory process of such agency, supervisor, or      authority."

#### Voting State Representative Added to the Federal Financial      Institutions Examination Council 

Another provision of the Regulatory Relief Act adds a state      representative as a voting member of the Federal Financial      Institutions Examination Council (FFIEC). Specifically, the act      provides for the current State Liaison Committee of the FFIEC (which is      composed of five representatives of state supervisory agencies for      depository institutions) to elect a chairperson, and adds this      chairperson as a full voting member of the FFIEC.

#### Elimination of Certain Reporting Requirements Relating to      Insider Lending 

The Regulatory Relief Act eliminated certain reporting      requirements previously imposed on banks and their executive officers      and principal shareholders that the federal banking agencies did not      find particularly useful in monitoring insider lending or preventing      insider abuse. Specifically, the act eliminated the statutory      provisions that previously required
      - an executive officer of a bank to file a report        with the bank's board of directors whenever the executive officer        obtained a loan from  another  bank in an amount that exceeded        the amount the executive officer could obtain from his or her own bank        (12 USC 375a(g)(6))
      - a bank to file a separate report with its        quarterly Call Report concerning any loans the bank made to its        executive officers since its previous Call Report (12 USC 375a(g)(9)),        and 
      - an executive officer or principal shareholder        of a bank to file an annual report with the bank's board of directors        if the officer or shareholder had a loan outstanding from a  correspondent  bank of the bank (12 USC 1972(2)(G)).

Although the act eliminated these reporting requirements,      it did not alter the statutory and regulatory limits and restrictions      on lending to insiders or the ability of the federal banking agencies      to examine for potential insider lending abuses as part of the      supervisory process. On December 6, 2006, the Board adopted, on an      interim basis, and requested public comment on amendments to the      Board's Regulation O (12 CFR 215) that implement the elimination of      these reporting requirements. *See* 71 FR 71,472 (December 11,      2006).

#### Streamlining the Supervisory Process for Bank Merger Transactions 

The Regulatory Relief Act streamlines the supervisory process for      Bank Merger Act (12 USC 1828(c)) transactions in two respects. First,      it eliminates the need for the responsible agency in a Bank Merger Act      transaction to request a report on the competitive effects of the      transaction from *each* of the other federal banking agencies,      as well as the Attorney General. Instead, the act requires that the      responsible agency request a competitive factors report only from the      Attorney General and provide a copy of the request to the FDIC (if it      is not the responsible agency). Second, the Regulatory Relief Act      allows the reviewing agency for a Bank Merger Act transaction to avoid      requesting a competitive factors report from the other federal banking      agencies *and* the Attorney General if the transaction      involves affiliated institutions. The act also eliminates the      post-approval waiting period for bank mergers involving affiliated      institutions, as these transactions typically do not present any      competitive issues. The act does not, however, alter in any way the      reviewing agency's obligation to conduct a competitive analysis of a      proposed Merger Act transaction.

#### Amendment Allowing the Board to Grant Exceptions from the      Attribution Rule in Section 2(g)(2) of the Bank Holding Company Act 

Section 2(g)(2) of the Bank Holding Company Act (BHC Act) (12 USC      1841(g)(2)) provides that in all circumstances, a company is deemed to      control any shares that are held by a trust for the benefit of the      company or its shareholders, members, or employees. This attribution      rule was intended to prevent a bank holding company from using a trust      established for the benefit of its management, shareholders, or      employees to evade the BHC Act's restrictions on the acquisition of      shares of banks and nonbanking companies. However, the rule can create      inappropriate results in situations in which the bank holding company      does not have the ability to control, directly or indirectly, the      shares acquired by the trust. Accordingly, the Regulatory Relief Act      allows the Board to waive application of this attribution rule if the      Board determines that the exception is appropriate in light of the      facts and circumstances of the case and the purposes of the BHC Act.      Such an exception might be appropriate, for example, if the shares are      held by the trust as part of a participant-directed and widely held      401(k) plan and the plan's investment options are selected by an      independent fiduciary (and not by the bank holding company or its      officers, directors, or employees).

#### Streamlining Reports of Condition 

The Regulatory Relief Act requires the Board and the other      federal banking agencies to conduct a review of the Call Report forms      within one year of enactment, and at least once every five years      thereafter, and to eliminate any information or schedule that the      agencies determine is no longer necessary or appropriate.

#### Increase in Asset Threshold for the Small Depository Institution      Exception under the Depository Institution Management Interlocks Act 

The Depository Institution Management Interlocks Act, among other      things, generally prohibits a management official of one depository      organization from serving as a management official of any other      nonaffiliated depository organization if the organizations have offices      located in the same metropolitan statistical area. The act provides an      exception from this restriction if each of the depository organizations      involved has less than a specified amount of total assets. The      Regulatory Relief Act raised this specified amount from $20 million to      $50 million, thus allowing a greater number of small depository      organizations to qualify for the exception.

#### Protection of Confidential Information Received by Federal Banking      Agencies from Foreign Banking Supervisors 

The Regulatory Relief Act clarifies the authority of the Board      and the other federal banking agencies to maintain the confidentiality      of information obtained from a foreign regulatory or supervisory      authority. Specifically, the act provides that a federal banking agency      may not be compelled to disclose information received from a foreign      regulatory or supervisory authority if public disclosure of the      information would violate the law of the foreign country and the      federal banking agency obtained the information in connection with the      administration and enforcement of the federal banking laws or under a      memorandum of understanding between the foreign authority and the      agency. The act, however, would not authorize the agencies to withhold      such information from Congress or if the information was sought under a      court order in an action initiated by the United States or the agency.

#### Modification to Cross-Marketing Restrictions Applicable to      Merchant Banking Investments 

Another provision of the Regulatory Relief Act allows the      depository institution subsidiaries of a financial holding company,      with prior Board approval, to engage in cross-marketing activities      through "statement stuffers" and Internet web sites with      nonfinancial portfolio companies held by the financial holding company      under the GLB Act's merchant banking authority. Previously, the      depository institution subsidiaries of a financial holding company were      permitted to engage, with Board approval, in these limited types of      cross-marketing activities only with portfolio companies held by the      financial holding company under the GLB Act's insurance company      investment authority.

#### Change in Bank Control Act Amendments 

The Regulatory Relief Act expands the factors that the Board and      the other federal banking agencies may consider in determining whether      to disapprove, or extend the time period for processing, a notice filed      under the Change in Bank Control Act (CIBC Act). In particular, the act      allows the appropriate federal banking agency to disapprove a CIBC Act      notice if the agency determines that the future prospects of the      institution to be acquired might jeopardize the stability of the      institution or the interests of depositors. (Currently, the financial      and managerial factors in the CIBC Act focus on the resources      of the acquiring person, not the institution to be acquired.) In      addition, the act allows an agency to extend the time for processing a      CIBC Act notice for up to an additional two 45-day periods (beyond the      initial 60-day review period and discretionary 30-day extension) if the      agency determines that additional time is needed to analyze (1) the      future prospects of the institution to be acquired or (2) the safety      and soundness of any plans by the acquiring person to make major      changes in the business, corporate structure, or management of the      institution.

#### Amendments to Allow D.C.-Chartered Banks to Become State Member      Banks 

The Regulatory Relief Act makes several technical changes to the      Federal Reserve Act to allow banks chartered in the District of      Columbia to become state member banks.

### Enforcement-Related Provisions 

#### Amendments Expanding the Agencies' Suspension Authority 

The Federal Deposit Insurance Act (FDI Act) currently allows the      appropriate federal banking agency to suspend, remove, or prohibit an      institution-affiliated party (IAP) from participating in the affairs of      the depository institution with which he or she is affiliated if the      IAP is charged with or convicted of certain crimes involving      dishonesty, breach of trust, or money laundering. *See* 12 USC      1818(g)(1). The Regulatory Relief Act expands this authority by      allowing the appropriate federal banking agency to suspend an IAP that      has been charged with such a crime from participating in the affairs of *any* depository institution (not just the institution at      which the IAP then serves). In addition, the act clarifies that the      appropriate agency may suspend, remove, or prohibit an IAP even if the      IAP is no longer associated with any depository institution at the time      the action is taken.

#### Restricting the Ability of Convicted Individuals to Participate in      the Affairs of a Bank Holding Company or Edge Act or Agreement      Corporation 

Section 19 of the Federal Deposit Insurance Act (12 USC 1829)      automatically prohibits a person that has been convicted of a crime      involving dishonesty, a breach of trust, or money laundering from      participating in the affairs of an insured depository institution      without the consent of the FDIC. The Regulatory Relief Act extends this      prohibition so that persons convicted of such crimes also may not      participate in the affairs of a bank holding company (other than a      foreign bank), an Edge or agreement corporation, or a savings and loan      holding company unless the individual receives the prior consent of the      Board or the OTS, as appropriate. The Regulatory Relief Act also gives      the Board and the OTS additional discretionary authority to remove a      person convicted of such a crime from, respectively, a nonbank      subsidiary of a bank holding company or a savings and loan holding      company.

#### Authority to Enforce Deposit Insurance Conditions 

Section 8 of the Federal Deposit Insurance Act currently permits      the appropriate federal banking agency for an insured depository      institution to enforce a written condition imposed by that agency on      the institution or an IAP of the institution. The Regulatory Relief Act      amended section 8 of the FDI Act to allow the appropriate federal      banking agency for an institution to enforce a condition imposed on an      insured depository institution by another federal banking agency. This      will allow, for example, the Board (as the appropriate agency for a      state member bank) to enforce a condition imposed on a state member      bank by the FDIC in connection with the bank's application for deposit      insurance.

#### Standards for Enforcing Written Conditions and Written Agreements 

The Regulatory Relief Act also amended section 8 of the Federal      Deposit Insurance Act to allow the appropriate federal banking agency      for an insured depository institution to enforce a written condition      imposed on the institution or an IAP, or a written agreement entered      into by the agency with the institution or IAP, without demonstrating      that the institution or IAP was unjustly enriched or acted in reckless      disregard of the law or a prior agency order. Similarly, the act allows      the appropriate federal banking agency for an undercapitalized      institution to enforce a written condition imposed on, or a written      agreement entered into with, the institution or an IAP without regard      to the limit in the FDI Act (12 USC 1831o(e)(2)(E)) that normally caps      the liability of a controlling shareholder under a capital restoration      plan.

#### Clarifying the Ability of the Banking Agencies to Enforce Conditions      Imposed in Connection with CIBC Act Notices 

The Regulatory Relief Act amends section 8(b) of the Federal      Deposit Insurance Act to provide that the appropriate federal banking      agency for an insured depository institution may enforce written      conditions imposed in connection with "any action on any application,      notice, or other request" by the depository institution or an IAP.      These changes are designed to clarify and confirm the      agencies' ability to enforce conditions imposed in connection      with a notice filed under the Change in Bank Control Act.

#### Board Approval of OCC Removal Actions 

The Regulatory Relief Act strikes the provision in the FDI Act      (*see* 12 USC 1818(e)(4)) that required the Board to issue a      final decision in any contested administrative action by the OCC to      remove or prohibit an IAP of a national bank. Thus, the OCC now has the      same authority as the Board, the FDIC, and the OTS to independently      remove or prohibit an IAP of an institution under the agency's      jurisdiction.

### Consumer-Related Provisions 

#### Public Welfare Investments by National and State Banks 

The Regulatory Relief Act makes several important modifications      to the statutes that authorize national and state member banks to make      "public welfare" investments. *See* 12 USC 24 (eleventh)      and 338a. First, it raises, from 10 percent of capital and surplus to      15 percent of capital and surplus, the aggregate amount of "public      welfare" investments that a national or state member bank may make      under these authorities.      1      In addition, the act refocuses      these investments on low- and moderate-income (LMI) families and      communities by providing that to be considered a "public welfare"      investment, an investment must primarily benefit LMI families or      communities (such as by providing housing, services, or jobs). The act      also clarifies that each "public welfare" investment made by a      national or state member bank, either directly or through a subsidiary,      must benefit primarily LMI communities or families.

#### Development of Model Privacy Disclosure Forms 

The Regulatory Relief Act requires the Board, the other federal      banking agencies, the National Credit Union Administration, the      Secretary of the Treasury, the Securities and Exchange Commission, and      the Federal Trade Commission to jointly develop a model form that may      be used by financial institutions, at their option, to fulfill the      initial and annual privacy policy disclosure requirements imposed by      section 503 of the Gramm-Leach-Bliley Act (12 USC 6803). The model form      must be issued in proposed form for public comment within 180 days of      enactment. The Board has been working extensively with the other      relevant agencies and conducting consumer testing to develop potential      model privacy forms that may be used by financial institutions.

### Studies and Reports 

#### GAO Study of Currency Transaction Reports 

The Regulatory Relief Act directs the Government Accountability      Office (GAO) to conduct a study of the volume of currency transaction      reports (CTRs) filed with the Secretary of the Treasury under the Bank      Secrecy Act. The study must evaluate, among other things, (1) the      extent to which depository institutions avail themselves of the current      exemption system for CTRs, (2) ways to improve the current exemption      system for CTRs, and (3) the usefulness of CTRs to law enforcement      agencies. The Regulatory Relief Act also provides that the study should      include recommendations for changes to the CTR exemption system that      would reduce burden without adversely affecting the reporting system's      effectiveness. The GAO must submit a report on its findings to Congress      by January 13, 2007.

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##       Unlawful Internet Gambling Enforcement Act of 2006 

The Unlawful Internet Gambling Enforcement Act of 2006, Pub. L.      109-347, (codified at 31 USC 5361 et seq.) prohibits a person engaged      in the business of betting or wagering from knowingly accepting credit,      electronic fund transfers, checks, drafts, or similar instruments drawn      on or payable through any financial institution in connection with the      participation of another person in unlawful Internet gambling      ("restricted transactions"). The act generally defines "unlawful      Internet gambling" as transmitting a bet by any means that involves      the use, at least in part, of the Internet and where such bet or wager      is unlawful under any applicable federal or state law in the state or      tribal lands in which the bet or wager is initiated, received, or      otherwise made.

The act charges the Secretary of the Treasury and the Board, in      consultation with the Attorney General, with developing regulations to      require each payment system that the agencies determine could be used      to process restricted payments (as well as financial transaction      providers participating in such payment systems) to establish      "policies and procedures reasonably designed to identify and block or      otherwise prevent or prohibit the acceptance of restricted      transactions." In prescribing the regulations, the Secretary and the      Board must identify the types of policies and procedures, including      nonexclusive examples, deemed by the agencies to be reasonably designed      to identify and block restricted transactions. To the extent practical,      any participant in a designated payment system must be permitted to      choose among alternative means of complying, including by relying on      and complying with the policies and procedures of the designated      payment system, so long as these policies and procedures comply with      the regulation. The act also requires the Secretary and the Board to      grant exemptions from any requirement imposed under the regulations to      particular types of transactions or designated payment systems if the      agencies jointly find that it is not reasonably practical to identify      and block, or otherwise prevent or prohibit, such restricted      transactions. The regulations must be published by July 10, 2007.

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##       Military Personnel Financial Services Protection Act 

The National Defense Authorization Act for Fiscal Year 2007, Pub.      L. No. 109-364, enacted on September 30, 2006, imposes restrictions on      and disclosure requirements for consumer credit provided to members of      the military and their families. The act charges the Department of      Defense (DOD) with defining "consumer credit" in its regulations      and permits the DOD to include all consumer credit apart from      residential mortgages, loans to fund the purchase of a motor vehicle,      and other personal property loans when the property purchased from the      proceeds of the loan serves as collateral for the loan. Requirements      for creditors include a 36 percent annual percentage rate (APR) cap,      which includes all fees, along with APR calculations and disclosures      that differ from the APR used in disclosures under the Truth in Lending      Act (TILA). The act mandates that all credit disclosures, including      TILA disclosures, be provided both orally and in writing prior to the      extension of credit.

Moreover, the act imposes limitations on lending to members of      the military and their dependents, such as prohibiting rollovers and      refinancings of consumer credit by the same creditor, and prohibiting      loans with prepayment penalties and mandatory arbitration clauses. The      act imposes criminal and monetary penalties for knowing violations and      voids contracts that are prohibited under the statute. The legislation      was intended, at least in part, to address concerns about payday loans,      installment loans that are secured by a motor vehicle (other than loans      for the purchase of a motor vehicle), and other forms of short-term      credit to military members and their dependents. In prescribing      regulations for this legislation, the DOD must consult with the Board,      among other federal agencies. The effective date of the act is October      1, 2007, regardless of whether the DOD adopts regulations. This statute      would become effective earlier if interim regulations are issued by the      DOD.

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##       Financial Netting Improvements Act of 2006 

In 2005, Congress passed comprehensive legislation to revise the      federal bankruptcy laws (Bankruptcy Abuse Prevention and Consumer      Protection Act of 2005, Pub. L. 109-8). Title IX of that act contained      amendments to banking laws and the Bankruptcy Code to provide increased      certainty that netting and close-out of financial market contracts      would be enforceable, even in the event of a counterparty      insolvency. Title IX also clarified certain duties and obligations of      the FDIC as receiver or conservator of an insured depository      institution.

The Financial Netting Improvements Act of 2006 (Pub. L. 109-390),      enacted on December 12, 2006, makes technical changes to the netting      and financial contract provisions that were added or revised by title      IX of the 2005 act. The 2006 act updates the descriptions of various      financial contracts ("securities contract," "forward contract,"      and "swap agreement") in the Federal Deposit Insurance Act, the      Federal Credit Union Act (FCUA), and the Bankruptcy Code to reflect      current market and regulatory practice. The 2006 act also revises      provisions in the Bankruptcy Code to clarify the rights of certain      counterparties to exercise self-help foreclosure-on-collateral rights,      setoff rights, and netting rights with respect to financial contracts      with a debtor. These provisions conform the Bankruptcy Code with      parallel provisions in the FDI Act and the FCUA. In addition, the 2006      act amends the FDI Act and the FCUA to clarify the conditions under      which a receiver of an insolvent depository institution can enforce a      financial contract that contains a "walkaway" clause (a clause that      would otherwise allow a contract participant to suspend, condition, or      extinguish a payment obligation when the other party becomes      insolvent). The 2006 act also makes other technical and conforming      revisions to the FDI Act, FCUA, Bankruptcy Code, Federal Deposit      Insurance Corporation Improvement Act of 1991, and Securities Investor      Protection Act of 1970. 

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      1. As under current law, a national or state member bank would      have to obtain the approval of the OCC or the Board, respectively, to      make "public welfare" investments that, in the aggregate, exceed 5 percent of the bank's capital and surplus.        Return to text

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