Circular
Report to Congress on Issuance of Subordinated Debt
January 22, 2001
Circular No. 11313

To All Depository Institutions in the Second Federal Reserve District:

The Board of Governors of the Federal Reserve System and the Secretary of the Treasury have released a joint report to Congress (pdf - 555kb) on The Feasibility and Desirability of Mandatory Subordinated Debt, in which the Board and the Secretary found that subordinated debt issuance by large depository institutions may encourage market discipline and generate other supervisory benefits. However, they chose not to recommend that Congress make subordinated debt issuance mandatory at this time.

The announcement is contained in a joint press release dated January 12, 2001.

Questions on this matter may be directed, at this Bank, to Darryll E. Hendricks, Senior Vice President.