To the Chief Executive Officers of All State Member Banks and Bank Holding Companies in the Second Federal Reserve District:
In a press release dated January 31, 2001, the federal banking regulatory agencies announced that they have expanded their guidance intended to strengthen the supervision of institutions with significant subprime lending programs. The expanded guidance is directed primarily to those institutions that have subprime lending programs that equal or exceed 25% of their Tier 1 regulatory capital.
Guidance on subprime lending was originally issued in March 1999 and is contained in our Circular No. 11142, dated March 11, 1999.