Source: https://www.law.cornell.edu/cfr/text/12/204.132
Timestamp: 2015-07-31 23:33:12
Document Index: 25294169

Matched Legal Cases: ['art 204', '§ 204', '§ 204', '§ 204', 'art 204', 'art 204', 'art 204']

12 CFR 204.132 - Treatment of loan strip participations. | US Law | LII / Legal Information Institute
CFR › Title 12 › Chapter II › Subchapter A › Part 204 › Section 204.132 12 CFR 204.132 - Treatment of loan strip participations.
§ 204.132
Treatment of loan strip participations.
Effective March 31, 1988, the glossary section of the instructions for the Report of Condition and Income (FFIEC 031-034; OMB control number 7100-0036; available from a depository institution's primary federal regulator) (Call Report) was amended to clarify that certain short-term loan participation arrangements (sometimes known or styled as loan strips or strip participations) are regarded as borrowings rather than sales for Call Report purposes in certain circumstances. Through this interpretation, the Board is clarifying that such transactions should be treated as deposits for purposes of Regulation D.
These transactions involve the sale (or placement) of a short-term loan by a depository institution that has been made under a long-term commitment of the depository institution to advance funds. For example, a 90-day loan made under a five-year revolving line of credit may be sold to or placed with a third party by the depository institution originating the loan. The depository institution originating the loan is obligated to renew the 90-day note itself (by advancing funds to its customer at the end of the 90-day period) in the event the original participant does not wish to renew the credit. Since, under these arrangements, the depository institution is obligated to make another loan at the end of 90 days (absent any event of default on the part of the borrower), the depository institution selling the loan or participation in effect must buy back the loan or participation at the maturity of the 90-day loan sold to or funded by the purchaser at the option of the purchaser. Accordingly, these transactions bear the essential characteristics of a repurchase agreement and, therefore, are reportable and reservable under Regulation D.
Because many of these transactions give rise to deposit liabilities in the form of promissory notes, acknowledgments of advance or similar obligations (written or oral) as described in§ 204.2(a)(1)(vii) of Regulation D, the exemptions from the definition of deposit incorporated in that section may apply to the liability incurred by a depository institution when it offers or originates a loan strip facility. Thus, for example, loan strips sold to domestic offices of other depository institutions are exempt from Regulation D under § 204.2(a)(1)(vii)(A)(1) because they are obligations issued or undertaken and held for the account of a U.S. office of another depository institution. Similarly, some of these transactions result in Eurocurrency liabilities and are reportable and reservable as such.
Title 12 published on 2015-01-01.No entries appear in the Federal Register after this date, for 12 CFR Part 204.
Title 12 published on 2015-01-01The following are ALL rules, proposed rules, and notices (chronologically) published in the Federal Register relating to 12 CFR Part 204 after this date.2015-04-16; vol. 80 # 73 - Thursday, April 16, 201580 FR 20448 - Regulation D: Reserve Requirements for Depository Institutions
typeregulations.gov FR Doc.2015-08743 RIN7100-AE31 Docket No.R-1513 FEDERAL RESERVE SYSTEM Notice of proposed rulemaking; request for public comment. Comments must be received by May 18, 2015. 12 CFR Part 204 SummaryThe Board is requesting comment on proposed amendments to Regulation D (Reserve Requirements of Depository Institutions) regarding the payment of interest on certain balances maintained at Federal Reserve Banks by or on behalf of eligible institutions. Specifically, the Board proposes to amend Regulation D to permit interest payments on certain balances to be based on a daily rate rather than on a maintenance period average rate. The proposed amendments should help to enhance the role of such rates of interest in moving the federal funds rate into the target range established by the FOMC, particularly on occasions when changes in those rates do not coincide with the beginning of a maintenance period.