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Board of Governors of the Federal Reserve System
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Federal Reserve Board of Governors

Federal Reserve Act


Section 23. Interbank Liabilities*

(a) Purpose. The purpose of this section is to limit the risks that the failure of a large depository institution (whether or not that institution is an insured depository institution) would pose to insured depository institutions.

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(b) Aggregate Limits On Insured Depository Institutions' Exposure To Other Depository Institutions. The Board shall, by regulation or order, prescribe standards that have the effect of limiting the risks posed by an insured depository institution's exposure to any other depository institution.

[12 USC 371b-2(b). As added by act of Dec. 19, 1991 (105 Stat. 2362).]

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(c) Exposure Defined.

  1. In General. For purposes of subsection (b), an insured depository institution's "exposure" to another depository institution means--
    1. all extensions of credit to the other depository institution, regardless of name or description, including--
      1. all deposits at the other depository institution;
      2. all purchases of securities or other assets from the other depository institution subject to an agreement to repurchase; and
      3. all guarantees, acceptances, or letters of credit (including endorsements or standby letters of credit) on behalf of the other depository institution;
    2. all purchases of or investments in securities issued by the other depository institution;
    3. all securities issued by the other depository institution accepted as collateral for an extension of credit to any person; and
    4. all similar transactions that the Board by regulation determines to be exposure for purposes of this section.
  2. Exemptions. The Board may, at its discretion, by regulation or order, exempt transactions from the definition of "exposure" if it finds the exemptions to be in the public interest and consistent with the purpose of this section.
  3. Attribution Rule. For purposes of this section, any transaction by an insured depository institution with any person is a transaction with another depository institution to the extent that the proceeds of the transaction are used for the benefit of, or transferred to, that other depository institution.

[12 USC 371b-2(c). As added by act of Dec. 19, 1991 (105 Stat. 2362.]

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(d) Insured Depository Institution. For purposes of this section, the term "insured depository institution" has the same meaning as in section 3 of the Federal Deposit Insurance Act.

[12 USC 371b-2(d). As added by act of Dec. 19, 1991 (105 Stat. 2362).]

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(e) Rulemaking Authority; Enforcement. The Board may issue such regulations and orders, including definitions consistent with this section, as may be necessary to administer and carry out the purpose of this section. The appropriate Federal banking agency shall enforce compliance with those regulations under section 8 of the Federal Deposit Insurance Act.

[12 USC 371b-2(e). As added by act of Dec. 19, 1991 (105 Stat. 2362).]

* The original section 23 was repealed by section 7 of the act of Sept. 8, 1959 (73 Stat. 457). This section 23 is effective Dec. 19, 1992.

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Last update: May 23, 2013