Dear Blair:
Q. We currently have 10 accounts that are set up as repurchase agreement accounts. These accounts are tied to a non interest bearing checking account. Those accounts have the account agreement and the required disclosures. We have a separate repurchase agreement signed by the customer.
Our auditors are telling me that we need an account disclosure that goes with the repurchase agreement. Since the repurchase agreement is not FDIC covered and we have tied investments to the account for collateral purposes what kind of disclosure are we required?
A. I disagree with your auditors. The account of your customer that holds the purchased securities is not a deposit account and therefore does not require any of the disclosures that a deposit account requires. You have numerous disclosures in your repurchase agreement and you provide notifications every time there is a transaction in the repurchase account. That is all the disclosures that the account requires.
Blair Rugh is one of the preeminent experts on United States banking laws and regulations. He has authored compliance manuals recognized by the banking industry as the definitive treatise on banking law and regulation. He has extensive experience as a speaker to bankers' associations and has written numerous articles published in banking journals. For access to more of Blair's compliance expertise, sign up for TriNovus' weekly Bank Regulatory Compliance Update at www.trinovus.com.
Showing posts with label regulatory. Show all posts
Showing posts with label regulatory. Show all posts
Thursday, July 8, 2010
You Ask, Blair Answers
Dear Blair:
Q. My bank is exempt from submitting credit card agreements to the Federal Reserve.
Under 226.58(e), we must provide the agreements for all open card accounts either on our website or promptly upon customer request. When we provide the agreements, do we need to provide the actual card agreement & account opening table (pricing information)?
Or, do we need to revise the account opening table to be consistent with 226.58(c)(8)(ii)? If we need to revise the account opening table to be consistent with 226.58(c)(8)(ii), would we need to make the following revisions?
1. Delete the reference to the Fed’s credit card website.
2. Delete the billing rights information.
3. If the rate is variable, remove the actual rate from the table & state the
index + margin (or range of margins).
4. If the rate is fixed, the only changes needed are 1. & 2.
A. You are correct in your analysis of the requirement. You first provide your agreement and the pricing information as an addendum to it. There is no provision for providing extraneous information such as the reference to the Fed's website or the billing rights information. As to the rate, you disclose both the rate and if it is a variable rate the margin and index on which it is calculated.
Blair Rugh is one of the preeminent experts on United States banking laws and regulations. He has authored compliance manuals recognized by the banking industry as the definitive treatise on banking law and regulation. He has extensive experience as a speaker to bankers' associations and has written numerous articles published in banking journals. For access to more of Blair's compliance expertise, sign up for TriNovus' weekly Bank Regulatory Compliance Update at www.trinovus.com.
Q. My bank is exempt from submitting credit card agreements to the Federal Reserve.
Under 226.58(e), we must provide the agreements for all open card accounts either on our website or promptly upon customer request. When we provide the agreements, do we need to provide the actual card agreement & account opening table (pricing information)?
Or, do we need to revise the account opening table to be consistent with 226.58(c)(8)(ii)? If we need to revise the account opening table to be consistent with 226.58(c)(8)(ii), would we need to make the following revisions?
1. Delete the reference to the Fed’s credit card website.
2. Delete the billing rights information.
3. If the rate is variable, remove the actual rate from the table & state the
index + margin (or range of margins).
4. If the rate is fixed, the only changes needed are 1. & 2.
A. You are correct in your analysis of the requirement. You first provide your agreement and the pricing information as an addendum to it. There is no provision for providing extraneous information such as the reference to the Fed's website or the billing rights information. As to the rate, you disclose both the rate and if it is a variable rate the margin and index on which it is calculated.
Blair Rugh is one of the preeminent experts on United States banking laws and regulations. He has authored compliance manuals recognized by the banking industry as the definitive treatise on banking law and regulation. He has extensive experience as a speaker to bankers' associations and has written numerous articles published in banking journals. For access to more of Blair's compliance expertise, sign up for TriNovus' weekly Bank Regulatory Compliance Update at www.trinovus.com.
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