Developments Of Note
FRB Issues Interim Rule on Merchant Banking Activities; Proposes Capital Charge for Nonfinancial Investments; and Amends Interim Rule Concerning Procedures and Qualifications to Elect FHC Status
The FRB issued an interim rule with respect to the merchant banking activities of financial holding companies ("FHCs"). The FRB also proposed a rule that would impose a capital charge on all investments made directly or indirectly by a bank holding company ("BHC") (whether or not it is also an FHC) in nonfinancial companies, whether pursuant to the merchant banking authority, Regulation K, Section 24 of the Federal Deposit Insurance Act, or the provisions of the BHC Act permitting investments in less than 5% of the voting stock of any company. Comments on both the interim rule and the proposal are due by May 22, 2000. Moreover, the FRB amended (the "Amendments") its interim rules which established procedures for BHCs and foreign banks to elect to become an FHC. Three of
