Institute Comments on OCC Proposal Related to National Bank Subsidiaries

Washington, DC, February 15, 2000 - The Institute filed a comment letter regarding Office of the Comptroller of the Currency (OCC) proposed rules to implement provisions of the Gramm-Leach-Bliley Act.

In particular, the OCC has proposed to revise its regulations governing national banks as follows. Section 5.34, relating to operating subsidiaries, would be amended to permit a bank to engage in certain types of activities through an operating subsidiary by providing the OCC notice of such activities, rather than having to file an application with the OCC prior to engaging in such activities. In addition, Section 5.39 would be created to govern the regulation of financial subsidiaries of a national bank.

The Institute's comment letter expresses support for the revisions to Section 5.34 and, in particular, the provision of subdivision (e)(3) of the rule. This subdivision would clarify that, consistent with the functional regulation provisions of the Gramm-Leach-Bliley Act, the OCC's examination and supervisory authority over operating subsidiaries is subject to the limitations and requirements of Section 45 of the Federal Deposit Insurance Act and Section 115 of the Gramm-Leach-Bliley Act. Because proposed Section 5.39 does not include a similar provision recognizing the functional regulation provision of the Gramm-Leach-Bliley Act, the Institute's letter recommends that this proposed new rule be revised to include such a provision.