Commercial Bank
Examination Manual
April 2008 Update
The April 2008 update to the Commercial Bank Examination Manual has been published (supplement no. 29). The manual comprises the Federal Reserve System’s regulatory, supervisory, and examination guidance for state member banks. The new supplement includes guidance on the following subjects:
- Confidentiality Provisions in Third-Party Agreements. Section 1000.1, “Examination Strategy and Risk-Focused Examination,” is revised (1) to provide supervisory guidance as to the prohibition on the disclosure of confidential supervisory information, and (2) to clarify the Federal Reserve’s expectations regarding confidentiality provisions in agreements between a banking organization and its counterparties (for example, mutual funds, hedge funds, and other trading counterparties) or other third parties. Confidential supervisory information includes any information related to an examination of a banking organization. It is contrary to Federal Reserve regulation and policy for agreements to contain confidentiality provisions that (1) restrict the banking organization from providing information to Federal Reserve supervisory staff; (2) require or permit, without the prior approval of the Federal Reserve, the banking organization to disclose to a counterparty that any information will be or was provided to Federal Reserve supervisory staff; or (3) require or permit, without the prior approval of the Federal Reserve, the banking organization to inform a counterparty of a current or upcoming Federal Reserve examination or any nonpublic Federal Reserve supervisory initiative or action. (See SR letters 07-19 and 97-17.)
- Communication of Examination Findings. Section 6000.1, “Commercial Bank Report of Examination,” includes revisions to the general examination reporting guidance and the report preparation instructions. In order to be effective, the communication of examination findings must be (1) written in clear and concise language; (2) prioritized based upon importance; and (3) focused on any significant matters that require attention. To improve consistency and clarity in written communications, the Federal Reserve’s examination and supervisory staff are to use defined standardized terminology to differentiate among (1) Matters Requiring Immediate Attention; (2) Matters Requiring Attention; and (3) Observations. Communications are to specify a timeframe in which the banking organization must complete any required action. (See SR letter 08-01 and its attachment.)
A more detailed summary of changes is included with the update package. The public may obtain the manual and the updates (including pricing information) from Publications Fulfillment, Board of Governors of the Federal Reserve System, 20th and C Streets, N.W., Washington, DC 20551; telephone (202) 452-3244; or send a facsimile to (202) 728-5886.