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Tuesday, January 3, 2017

OCC Finalizes Rule Banning Industrial, Commercial Metal Dealing

The OCC has finalized a rule prohibiting national banks from dealing or investing in industrial and commercial metals. The rule was issued following the federal regulatory agencies’ review of bank activities, as required by Dodd Frank Act Section 620.

Under the final rule, banks will no longer be permitted to deal or invest in metals and alloys in forms primarily suited for industrial or commercial purposes, such as copper cathodes, aluminum T-bars and gold jewelry. The rule – which exempts the buying and selling of exchange, coin and bullion – principally targets bank involvement in the copper market, which was permitted under an OCC interpretive letter issued two decades ago.

The final rule takes effect April 1, and includes a divestiture period for institutions that had previously acquired industrial or commercial metal through dealing or investing. Banks will have one year to dispose of those metals, and the OCC may grant up to four separate one-year extensions to allow banks additional time to do so.

In a comment letter on the proposal, the ABA Securities Association called for additional clarity on the permissibility of other common financing activities. While the OCC did not adopt ABASA’s suggested changes to the proposed rule text, the agency indicated a willingness to use a “facts and circumstances” analysis when evaluating certain transactions or financial arrangements.

Read the final rule.
Read ABA's comment letter.

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