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Sunday, January 1, 2006

Bankers' Bank Exemption Proposed

In response to inquiries concerning whether certain non-depository entities may permissibly do business with bankers' banks, the Board of Governors recently proposed revisions to the bankers' bank exemption from reserve requirements in Regulation D.

Generally, qualified bankers' banks may only do business with other banks, certain individuals in banking and certain bank-owned organizations. The proposal expands the range of customers with which a bankers' bank may permissibly do business by allowing the Board to determine, on a case-by-case basis, whether an entity may become a bankers' bank customer to a limited extent.

Summary HMDA Reports Released

In September, the Federal Financial Institutions Examination Council released the 2005 Home Mortgage Disclosure (HMDA) summary statistical reports for each lender and an aggregate report for each metropolitan statistical area. Preliminary indications are that the data will show that the proportion of mortgage loans with prices above the price reporting thresholds increased from 2004 to 2005.

Note that the frequently asked questions indicate that conclusions of discrimination should not be drawn based on the data alone. Pricing disparities may indicate the need for closer scrutiny, but key pricing determinants, such as credit history, debt-to-income ratios, and loan-to-value ratios (which are not included in the data), provide the additional information needed to draw definitive conclusions.

HMDA reporters are encouraged to analyze their data in preparation for questions they may receive. Additional perspective may be found at

Regulation E Recent Amendments and Final Rules for Payroll Cards

The Federal Reserve Board has approved the final rule to provide that payroll card accounts are covered by Regulation E—Electronic Funds Transfer. The final rule, effective July 1, 2007, gives financial institutions flexibility by not requiring periodic statements if the transaction information is available by: telephone, electronically, and upon the consumer's request (in writing).

A number of recent amendments to the regulation and revisions to the staff commentary take effect on Jan. 1. In addition, the Board is requesting public comment on an interim final rule which provides additional clarification regarding Regulation E's coverage of electronic collection of insufficient funds fees and notice requirements for electronic check conversion transactions. Read more at