INTERIM RULE GOVERNING THE MERCHANT BANKING ACTIVITIES OF FINANCIAL HOLDING COMPANIES.

The Federal Reserve Board and the Secretary of the Treasury jointly announced on March 17, 2000, their approval of an interim rule governing gov·ern
v. gov·erned, gov·ern·ing, gov·erns

v.tr.
1. To make and administer the public policy and affairs of; exercise sovereign authority in.

2. the merchant banking activities of financial holding companies.

The interim rule implements the merchant banking provisions of the Financial Modernization modernization

Transformation of a society from a rural and agrarian condition to a secular, urban, and industrial one. It is closely linked with industrialization. As societies modernize, the individual becomes increasingly important, gradually replacing the family, Act. It includes provisions on recordkeeping and reporting; risk-management practices; holding periods for merchant banking investments; corporate separateness and limits on involvement in management; and limits on exposure of financial holding companies to merchant banking investments. The interim rule was effective on March 17.

The Board also announced on March 17 that it is seeking public comment on a proposed rule, developed in consultation with the Secretary of the Treasury, that would govern the regulatory reg·u·late
tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates
1. To control or direct according to rule, principle, or law.

2. capital treatment for equity investments in nonfinancial Adj. 1. nonfinancial - not involving financial matters
financial, fiscal - involving financial matters; "fiscal responsibility" companies held by bank holding companies. The proposed rule would generally impose a 50 percent capital requirement on merchant banking investments and certain similar investments.

Comments will be accepted on the interim rule and the capital proposal until May 22, 2000. The interim rule and the capital proposal will be revised as appropriate after the comments are reviewed.

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Publication:	Federal Reserve Bulletin
Article Type:	Brief Article
Geographic Code:	1USA
Date:	May 1, 2000
Words:	183
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Topics:	Holding companies Management

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