Skip to main content
U.S. flag
An official website of the United States government
Dot gov
The .gov means it’s official. 
Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you’re on a federal government site.
Https
The site is secure. 
The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.
INACTIVE
This page is no longer active. Its content has expired or been rescinded by the FDIC.
Financial Institution Letter

Complex Structured Finance Activities Interagency Statement on Sound Practices for Activities With Elevated Risk

May 16, 2006
Notes
 


Summary: The FDIC, along with the other federal banking agencies and the Securities and Exchange Commission, is issuing the attached statement for public comment. The statement informs financial institutions of the internal controls and risk-management procedures that should be used to identify, manage and address the heightened legal or reputational risks that may arise from their involvement in certain complex structured finance transactions. The FDIC will accept comments on this statement through June 15, 2006.

Highlights:

The attached interagency statement:

  • Focuses on complex structured finance transactions entered into by institutions when the transactions

    • circumvent regulatory or financial reporting requirements or

    • evade tax liabilities or involve other illegal and/or improper behavior

    and, therefore, warrant enhanced review due to the potential legal and reputational risks that
    arise.

  • Illustrates the types of complex structured finance transactions that warrant increased review by the institution's senior management and board of directors.

  • Describes the types of internal controls and risk-management procedures that the agencies believe should enable a financial institution to identify, monitor and control the heightened legal and reputational risk associated with various types of complex structured finance transactions.

  • Applies primarily to large financial institutions. The statement generally does not apply to smaller institutions or to traditional structured finance transactions, such as securitizations and most types of derivative transactions.

Distribution:
FDIC-Supervised Banks (Commercial and Savings)

Suggested Routing:
Chief Executive Officer
Chief Financial Officer
Chief Accounting Officer
Chief Risk Officer

Bobby R. Bean, Sr. Quantitative Risk Analyst, at
bbean@fdic.gov or (202) 898-3575

Note:
FDIC financial institution letters (FILs) may be accessed from the FDIC's Web site at www.fdic.gov/news/financial-institution-letters/2006/index.html .

To receive FILs electronically, please visit http://www.fdic.gov/about/subscriptions/fil.html .

Paper copies of FDIC financial institution letters may be obtained through the FDIC's Public Information Center, 3501 North Fairfax Drive, Room E-1002, Arlington, VA (1-877-275-3342 or 703-562-2200).




Additional Related Topics:

  • Internal Controls
  • Risk Management Policies and Procedures
  • Legal and Reputational Risks
FIL-45-2006
Attachment(s)
Interagency Statement on Sound Practices Concerning Elevated Risk Complex Structured Finance Activities

Last Updated: May 16, 2006