Sections 23A and 23B and Reg W were implemented for two main purposes: To limit the risks to a Bank from transactions between a Bank and its affiliates, To limit the ability of a Bank to transfer any subsidy arising from a Bank’s access to the Federal safety net to its affiliates.
Are all covered transactions subject to Reg W?
Determining Whether Regulation W Applies
The first is whether the transaction is between a bank and an “affiliate” of the bank. The second is whether the transaction is a “covered transaction.” Affiliate Definition. Regulation W applies to covered transactions between a bank and an affiliate of the bank.
What is Reg W 23B?
Section 23B provides that most transactions between a bank and its affiliates must be on terms and under circumstances, including credit standards, that are substantially the same or at least as favorable to the bank as those prevailing at the time for comparable transactions with or involving nonaffiliated companies.
What are 23A covered transactions?
Section 23A requires all covered transactions between a bank and its affiliate to be on terms and conditions consistent with safe and sound banking practices (Safety and Soundness Requirement ), subject to certain exemptions discussed below in Special Rules and Exemptions under Regulation W, and prohibits a bank from
What is Reg W affiliate?
Regulation W defines a bank’s affiliates quite broadly including any company that the bank directly or indirectly controls or that is sponsored and advised by a bank, as well as subsidiaries of the bank.
What does Reg W prohibit?
The quantitative limits of Regulation W only prohibit a member bank from engaging in a new covered transaction if the bank would be in excess of the 10 or 20 percent threshold after consummation of the new transaction.
What is considered a low quality asset under Reg W?
(10) the term “low-quality asset” means an asset that falls in any one or more of the following categories: (A) an asset classified as “substandard”, “doubtful”, or “loss” or treated as “other loans especially mentioned” in the most recent report of examination or inspection of an affiliate prepared by either a Federal
