Announcements.

CHAIRMAN GREENSPAN'S STATEMENT REGARDING ANOTHER TERM IN OFFICE

On April 23, 2003, Federal Reserve Chairman Alan Greenspan responded to the President's comments on his term in office:

The President and I have not discussed this but I greatly appreciate his confidence. I have been privileged to be appointed by five Presidents to various positions. If President Bush nominates me, and the Senate confirms his choice, I would have every intention of serving.

FEDERAL OPEN MARKET COMMITTEE DIRECTIVE

The Federal Open Market Committee, on May 6, 2003, decided to keep its target for the federal funds rate unchanged at 1 1/4 percent.

Recent readings on production and employment, though mostly reflecting decisions made before the conclusion of hostilities, have proven disappointing. However, the ebbing of geopolitical tensions has rolled back oil prices, bolstered consumer confidence, and strengthened debt and equity markets. These developments, along with the accommodative stance of monetary policy and ongoing growth in productivity, should foster an improving economic climate over time.

Voting for the FOMC monetary policy action were Alan Greenspan, Chairman; William J. McDonough, Vice Chairman; Ben S. Bernanke; Susan S. Bies; J. Alfred Broaddus, Jr.; Roger W. Ferguson, Jr.; Edward M. Gramlich; Jack Guynn; Donald L. Kohn; Michael H. Moskow; Mark W. Olson; and Robert T. Parry.

TREASURY AND FEDERAL FINANCIAL REGULATORS ISSUE FINAL RULES ON CUSTOMER IDENTIFICATION

The Department of the Treasury, the Financial Crimes Enforcement Network, and the seven federal financial regulators on April 30, 2003, issued final rules that require certain financial institutions to establish procedures to verify the identity of new account holders.

The rules announced were developed jointly by the Treasury Department, Treasury's Financial Crimes Enforcement Network, and the seven federal functional regulators, including the Board of Governors of the Federal Reserve System, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the Securities and Exchange Commission.

These regulations are part of the Administration's continuing work to implement the USA PATRIOT Act and prevent money laundering, terrorist financing, identity theft, and other forms of fraud while also providing financial institutions the flexibility they need to effectively implement the rules.

These final regulations implement section 326 of the USA PATRIOT Act, which directs that regulations be issued requiring that financial institutions implement reasonable procedures to (1) verify the identity of any person opening an account; (2) maintain records of the information used to verify the person's identity; and (3) determine whether the person appears on any list of known or suspected terrorists or terrorist organizations.

The regulations apply to banks and trust companies, savings associations, credit unions, securities brokers and dealers, mutual funds, futures commission merchants, and futures introducing brokers.

Institutions subject to the final rules will be required to establish a program for obtaining identifying information from customers opening new accounts. The regulations will require that institutions implement procedures for collecting standard information such as a customer's name, address, date of birth, and a taxpayer identification number (for U.S. persons, typically a social security number and for non-U.S. persons, a similar number from a government-issued document).

A financial institution's program is also required, among other things, to contain procedures to verify the identity of customers within a reasonable period of time. Many financial institutions may rely on examining standard identification such as a driver's license or passport. However, the final rule gives financial institutions the flexibility to implement procedures to verify identity in other ways appropriate to their individual circumstances.

Financial institutions will have until October 1, 2003, to come into full compliance. Publication of the final rules are expected in the Federal Register.

BANKING AGENCIES PUBLISH BASEL ACCORD CONSULTATIVE PAPER

The Basel Committee on Banking Supervision, based in Basel, Switzerland, released its third consultative paper on the new Basel Capital Accord for comment on April 29, 2003. The paper seeks to continue the consultation process on revising the 1988 Capital Accord. Comments are invited by July 31, 2003.

The Basel Committee released the previous consultative paper on the new Accord in January 2001. The proposals have been substantially revised since that time to reflect the comments received on the 2001 document, as well as comments on several other documents released by the Basel Committee. Particular focus has been given to the Internal Ratings Based Approaches for commercial and retail credits, securitization, and the quantitative methodologies for operational risk. These changes reflect the continuing development of the new Accord and do not reflect a fundamental change to the overall framework, which established minimum capital for credit, market, and operational risks. The framework also encompasses supervisory review of capital adequacy and market discipline through enhanced disclosure.

The U.S. agencies plan to follow the release of this consultative paper with an Advance Notice of Proposed Rulemaking (ANPR) in the next few months. This ANPR will be based on the Committee's third consultative paper and will focus on how the U.S. agencies intend to implement domestic changes that reflect the specific nature of U.S. banks and banking. The ANPR will also provide a proposal on the scope of application of the new Accord (that is, the criteria in the U.S. rule governing the population of U.S. banks that will be required to comply with Basel II). Banks and other interested parties will be given the opportunity to comment on the ANPR proposals, as well as on the Notice of Proposed Rulemaking that will follow the ANPR.

The paper is available on the committee's web site at www.bis.org, on the Office of the Comptroller of the Currency's web site at www.occ.treas.gov, on the Federal Reserve Board's web site at www.federalreserve.gov, and on the Federal Deposit Insurance Corporation's web site at www.fdic.gov. Comments on the committee's third consultative paper on the new Basel Capital Accord may be sent to both the Basel Committee and the regulatory agencies.

PUBLICATION OF THE ANNUAL REPORT AND BUDGET REVIEW

The 89th Annual Report, 2002, of the Board of Governors of the Federal Reserve System, covering operations for the calendar year 2002, is now available from Publications Fulfillment, Mail Stop 127, Board of Governors of the Federal Reserve System, Washington, DC 20551, or phone [phone] or 3245. Also available from Publications Fulfillment is a separately printed companion document, Annual Report, Budget Review, 2003, which describes the budget expenses of the Federal Reserve Banks for 2003, the 2003 phase of the Board's current two-year (2003-04) budget, and income and expenses for 2001 and 2002. Both reports are also available on the Federal Reserve Board's web site: www.federalreserve.gov.

ENFORCEMENT ACTIONS

The Federal Reserve Board on April 21, 2003, announced the execution of a written agreement by and between the Premier Bank, Denver, Colorado, and the Federal Reserve Bank of Kansas City.

The Federal Reserve Board on April 22, 2003, announced the issuance of a consent order of assessment of a civil money penalty against the First Farmers Bank and Trust, Converse, Indiana, a state member bank. First Farmers Bank and Trust, without admitting to any allegations, consented to the issuance of the order in connection with its alleged violations of the Board's regulations implementing the National Flood Insurance Act.

The order requires First Farmers Bank and Trust to pay a civil money penalty of $3,850, which will be remitted to the Federal Emergency Management Agency for deposit into the National Flood Mitigation Fund.

The Federal Reserve Board on April 29, 2003, announced the execution of a written agreement by and among BANKFIRST Corporation, Sioux Falls, South Dakota, a registered bank holding company, and its subsidiary bank, BANKFIRST, also of Sioux Falls, South Dakota, and the Federal Reserve Bank of Minneapolis.

The Federal Reserve Board on April 30, 2003, announced the execution of a written agreement by and among the HSBC Bank USA, Buffalo, New York, the Federal Reserve Bank of New York, and the New York State Banking Department.

The Federal Reserve Board on May 1, 2003, announced the execution of a written agreement by and among The First State Bank of West Manchester, West Manchester, Ohio, the Federal Reserve Bank of Cleveland, and the Ohio Division of Financial Institutions.

TERMINATION OF ENFORCEMENT ORDERS

Federal and state banking regulators on May 5, 2003, announced the termination of two enforcement orders issued in 1995 against Daiwa Bank, Limited, of Osaka, Japan.

The first, the Order Issued upon Consent, was issued by the Federal Reserve Board on October 2, 1995, and amended on March 18, 1996.

The second, the Order to Terminate United States Banking Activities Issued upon Consent, was issued on November 1, 1995, and amended on February 2, 1996, by the Board, the Federal Deposit Insurance Corporation, the New York State Banking Department, and bank supervisory agencies in California, Florida, Georgia, Illinois, and Massachusetts.

The federal and state bank supervisory agencies issued enforcement orders to terminate Daiwa Bank's U.S. activities in 1995 due to the concealment from the regulators by the banking organization's senior management and some directors of losses of more than $1 billion that were associated with unreported trading activities. Since the supervisors ordered Daiwa Bank to terminate its U.S. activities, the bank has been operating in the United States under a liquidation plan.

CHAIRMAN GREENSPAN HAS SUCCESSFUL SURGERY

Chairman Greenspan, on April 22, 2003, spent a short time in a local hospital to be treated surgically for benign prostatic hypertrophy, an enlarged prostate. Tests were negative for prostate cancer.

Chairman Greenspan's surgery was routine and successful. He recuperated in the hospital overnight and expected to be back in his office later in the week.

BOARD STAFF CHANGES

The Board of Governors has approved the following change of assignments in the Division of Consumer and Community Affairs.

Sandra B. Braunstein, Senior Associate Director, will have direct oversight of the Consumer Policies program, in addition to her current oversight of the Community Affairs function and the Consumer Advisory Council.

Tonda E. Price, Assistant Director, will have direct oversight of the Consumer Complaint section, in addition to her current oversight of the Information Systems function and Division Administration.

William A. Ryback, Senior Associate Director, Division of Banking Supervision and Regulation, retired on June 3 after thirty-five years of combined service at the Board and the Office of the Comptroller of the Currency in international bank supervision.