New York Clearing House Blasts Restrictions In New Reg W

In an outspoken and lengthy comment letter, the New York Clearing House Association urged the Federal Reserve to use regulatory flexibility to make its big, newly proposed Regulation W less restrictive and "more workable with respect to the myriad transactions engaged in the course of modern banking." The first target for its criticisms was the proposed Reg W's prohibition on a bank's engaging in any new transactions with affiliates at all if at the time it already had transactions aggregating at an amount exceeding 10% of the capital and surplus of the bank. This would be a whole new limit, said NYCHA, going beyond the 20% ceiling permitted by statute.   The Clearing House took issue with the Fed on several of the new Reg W's limitations on what constituted collateral for purposes of affiliate transactions. The Fed said that securities issued by the bank itself were not eligible collateral, nor were intangible assets nor letters of credit. NYCHA had disagreements with all these positions.   On another subject NYCHA tangled with Reg W over the purchase of low quality assets. "The proposal would appear to contain an absolute prohibition" against buying them from affiliates. The Clearing House pointed out that the law permitted an exclusion from 23A for such purchases and suggested it be enlarged.