Federal Reserve Requests Comment on Reg Z, "Anti-Tying"

August 25, 2003

The Federal Reserve Board is requesting public comment on an official interpretation of the anti-tying restrictions in section 106 of the Bank Holding Company Act Amendments of 1970 and related supervisory guidance.

Section 106 generally prohibits a bank from conditioning the availability or price of one product on a requirement that the customer also obtain another product from the bank or an affiliate. The Board's proposed interpretation of section 106 provides banking organizations and their customers a comprehensive guide to the special anti-tying restrictions applicable to banks under section 106. The related supervisory guidance describes the types of policies and procedures that should help banks ensure and monitor their compliance with section 106.

The Board also proposed to adopt an exception under section 106 for the financial subsidiaries of state nonmember banks. The exception would treat financial subsidiaries of state nonmember banks, like financial subsidiaries of national and state member banks under current law, as an affiliate (and not a subsidiary) of the parent bank for purposes of section 106.

The proposed interpretation, supervisory guidance and financial subsidiary exception will be published in the Federal Register. Comment is requested by September 30, 2003.

Contact ALTA at 202-296-3671 or communications@alta.org.

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