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Supervision and Regulation News

July 30, 2007

The Fair Value Option and the Applicability of the Market Risk Capital Rule 
The Federal Reserve Board recently issued SR 07-11, which reminds banking organizations that reporting an amount of gross trading assets and liabilities that equals 10 percent or more of total assets, or $1 billion or more, may subject a banking organization to the market risk capital rule. The market risk capital rule requires banking organizations subject to the rule to have in place adequate risk management processes (including but not limited to Value-at-Risk model(s) approved by the Federal Reserve) and capital sufficient to support the market risk of their covered positions.

Latest Beige Book Available 
In the latest Beige Book, all 12 Reserve Banks indicated that economic activity continued to expand in June and early July. Details, including individual Reserve Bank summaries, are available in the full report.

Federal Financial Regulators Issue Statement on Enforcement of BSA/AML Requirements 
In a press release, the federal financial regulatory agencies issued a statement on their policies for enforcing specific anti-money laundering requirements of the Bank Secrecy Act.

Federal, State Agencies Announce Pilot Project to Improve Supervision of Subprime Mortgage Lenders 
According to a joint press release, three federal agencies and two associations of state regulators will cooperate in an innovative pilot project to conduct targeted consumer-protection compliance reviews of selected non-depository lenders with significant subprime mortgage operations.