Office of Thrift Supervision

Board of Governors of the Federal Reserve System
Office of the Comptroller of the Currency
Federal Deposit Insurance Corporation
Office of Thrift Supervision
Securities and Exchange Commission

Agencies Issue Final Statement Concerning Elevated Risk Complex Structured Finance Activities

Five federal agencies on Friday issued a final statement on the complex structured finance activities of financial institutions. The statement describes the types of internal controls and risk management procedures that should help financial institutions identify, manage, and address the heightened legal and reputational risks that may arise from certain complex structured finance transactions (CSFTs).

The final statement is substantially similar to the revised statement issued for comment in May 2006, but has been modified in certain respects to address comments received on the revised statement. Like the proposal issued in May, the final statement takes a risk-and principles-based approach to addressing the risks CSFTs may pose to institutions and focuses on those CSFTs that may present elevated levels of legal or reputational risk to institutions.

The final statement was issued by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Office of Thrift Supervision and the Securities and Exchange Commission. The statement represents supervisory guidance for institutions supervised by the four banking agencies and a policy statement for institutions supervised by the Securities and Exchange Commission. Because the statement focuses on sound practices related to elevated risk CSFTs -- transactions that typically are conducted by a limited number of large financial institutions -- it will not affect or apply to the vast majority of financial institutions, including most small institutions.

The final statement is attached and will be published in the Federal Register shortly.

Final Statement

Media Contacts:

Federal Reserve	Deborah Lagomarsino	(202)  452-2955
FDIC	David Barr	(202)  898-6992
OCC	Kevin Mukri	(202)  874-5770
OTS	Kevin Petrasic	(202)  906-6677
SEC	John Heine	(202)  551-4120

The Office of Thrift Supervision, an office of the Department of the Treasury, regulates and supervises the nation's thrift industry. OTS's mission is to ensure the safety and soundness of, and compliance with consumer protection laws by, thrift institutions, and to support their role as home mortgage lenders and providers of other community credit and financial services. OTS also oversees the activities and operations of thrift holding companies that own or control thrift institutions. Copies of OTS news releases and other documents are available at the OTS web page at www.ots.treas.gov.

Created: Friday, 1/5/2007