FIL-48-2012: Revised Standards of Creditworthiness for Investment Securities

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Financial Institution Letter

Revised Standards of Creditworthiness for Investment Securities FIL-48-2012
November 16, 2012





Summary: The FDIC is issuing this Financial Institution Letter (FIL) to remind FDIC-supervised institutions of recent regulatory changes regarding the permissibility of certain investment activities. On June 4, 2012, the Office of the Comptroller of the Currency (OCC) adopted a final rule (OCC final rule) and related guidance that removes references to credit ratings in OCC regulations pertaining to investment securities (77 FR 35253 and 35259) consistent with section 939A of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Under part 362 of the FDIC’s regulations, insured state banks generally are prohibited from engaging in an investment activity that is not permissible for a national bank under OCC regulations, including the requirements of the OCC final rule.

The acquisition of a corporate debt security by a federal or state savings association is subject to section 28(d) of the Federal Deposit Insurance (FDI) Act and the requirements of a final rule (FDIC final rule) adopted by the FDIC on July 18, 2012 (77 FR 43151), described in FIL-34-2012 (available at http://www.fdic.gov/news/news/financial/2012/fil12034.html). The FDIC's rule regarding corporate debt securities investments by federal and state savings associations is largely consistent with the OCC final rule and related guidance regarding due diligence considerations and creditworthiness standards for investment securities.

Statement of Applicability to Institutions Under $1 Billion in Total Assets: This FIL applies to all FDIC-supervised institutions, including those with less than $1 billion in assets.

 

Distribution:
FDIC-Supervised Institutions

Complete Financial Institution Letter: http://www.fdic.gov/news/news/financial/2012/fil12048.html

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