OCC 2004-22
OCC Bulletin
Subject: Complex Structured Finance
Transactions
Description: Notice of Joint Statement
with Request for Comment
Date: May 19, 2004

TO:  Chief Executive Officers of National Banks,
Department and Division Heads, All Examining
Personnel, and Other Interested Parties

PURPOSE

The Office of the Comptroller of the Currency,
the Board of Governors of the Federal Reserve System,
the Federal Deposit Insurance Corporation, the Office of Thrift 
Supervision, and the Securities and Exchange Commission
("the agencies") are requesting public comment on the
attached interagency statement concerning the complex
structured finance activities of financial
institutions.  The statement was published in the Federal
Register on May 19. The comment period on the proposed statement
will end on June 18, 2004.

SUMMARY

Complex structured finance activities typically involve the
structuring of cash flows and the allocation of risk among
borrowers and investors to meet the specific objectives of the
customer in more efficient ways. They often involve professionals
from multiple disciplines within a financial institution and may
be associated with the creation or use of one or more special
purpose entities designed to address the economic, legal, tax, or
accounting objectives of the customer. Although in the vast
majority of cases, structured finance products and the roles
played by financial institutions with respect to these products
serve legitimate business purposes of customers, institutions may
be exposed to substantial reputation and legal risks if they
enter into transactions without sufficient due diligence,
oversight, and internal controls.

The interagency statement describes the types of internal
controls and risk management procedures that can assist financial
institutions to identify and address the reputation, legal and
other risks associated with complex structured transactions. The
statement, among other things, provides that financial
institutions should have effective policies and procedures in
place to identify those complex structured finance transactions
that may involve heightened reputation and legal risk, to ensure
that these transactions receive enhanced scrutiny by the
institution, and to ensure that the institution does not
participate in illegal or inappropriate transactions. The
statement also emphasizes the critical role of an institution's
board of directors and senior management in establishing a
corporate-wide culture that fosters integrity, compliance with
the law, and overall good business ethics.


FOR FURTHER INFORMATION CONTACT:

Kathy Dick, deputy comptroller for Risk Evaluation at  (202) 874-
4660; Grace Dailey, deputy comptroller for Large Banks at  (202)
874-4610; or Ellen Broadman, director, Securities and Corporate
Practices Division at (202) 874-5210.



___________________________
Emory W. Rushton
Senior Deputy Comptroller and Chief National Bank Examiner



___________________________
Douglas W. Roeder
Senior Deputy Comptroller for Large Bank Supervision


Attachment - Interagency Statement
[http://www.occ.treas.gov/fr/fedregister/69fr28980.pdf]