Contact Us

If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.

Please fill out the contact form below and we will reply as soon as possible.

  • Courses
  • Tutoring
  • Home
  • Economics, Finance, & Analytics
  • Banking, Lending, and Credit Industry

Regulation W - Explained

What is Regulation W?

Written by Jason Gordon

Updated at April 18th, 2022

Contact Us

If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.

Please fill out the contact form below and we will reply as soon as possible.

  • Marketing, Advertising, Sales & PR
    Principles of Marketing Sales Advertising Public Relations SEO, Social Media, Direct Marketing
  • Accounting, Taxation, and Reporting
    Managerial & Financial Accounting & Reporting Business Taxation
  • Professionalism & Career Development
  • Law, Transactions, & Risk Management
    Government, Legal System, Administrative Law, & Constitutional Law Legal Disputes - Civil & Criminal Law Agency Law HR, Employment, Labor, & Discrimination Business Entities, Corporate Governance & Ownership Business Transactions, Antitrust, & Securities Law Real Estate, Personal, & Intellectual Property Commercial Law: Contract, Payments, Security Interests, & Bankruptcy Consumer Protection Insurance & Risk Management Immigration Law Environmental Protection Law Inheritance, Estates, and Trusts
  • Business Management & Operations
    Operations, Project, & Supply Chain Management Strategy, Entrepreneurship, & Innovation Business Ethics & Social Responsibility Global Business, International Law & Relations Business Communications & Negotiation Management, Leadership, & Organizational Behavior
  • Economics, Finance, & Analytics
    Economic Analysis & Monetary Policy Research, Quantitative Analysis, & Decision Science Investments, Trading, and Financial Markets Banking, Lending, and Credit Industry Business Finance, Personal Finance, and Valuation Principles
  • Courses
+ More

Table of Contents

What is Regulation W?How Does Regulation W Work?

What is Regulation W?

Regulation W is an administrative regulation promulgated by the US Federal Reserve Bank pursuant to the Federal Reserve Act. It regulates certain transactions between depository institutions and their affiliates who are members of the US Federal Reserve System, insured state non-member banks, and insured savings and loan associations.

Back to:BANKING, LENDING, & CREDIT INDUSTRY

How Does Regulation W Work?

Regulation W consolidates the rulemaking authority granted to the Federal Reserve pursuant to section 23A and 23B of the Federal Reserve Act. It regulates Covered Transactions, such as the extension of credit to an affiliate, investment in securities issued by an affiliate, asset purchases from an affiliate, issuance of a guarantee on behalf of an affiliate, and acceptance of securities issued by an affiliate as collateral for credit. Regulation W limits the amount or value of loans and places security or collateral requirements in covered transactions. No transaction with a single affiliate can exceed 10% of an institution's capital. Further, all affiliate transactions cannot exceed 20% of the institutions held capital. Any extension of credit must be secured by collateral constituting between 100% and 130% of the value of the credit extended - depending upon the transaction. Further, banks are not allowed to purchase specified low-quality assets. Regulation W allows the Reserve Bank to grant exemptions from these requirements - though many such exemptions require approval from the Federal Deposit Insurance Corporation (FDIC).

regulation w

Was this article helpful?

Yes
No

Related Articles

  • Regional Development Bank - Explained
  • Clearinghouse Automated Payment System (CHAPS) - Explained
  • Lombard Rate - Explained
  • Annualize - Explained



©2011-2021. The Business Professor, LLC.
  • Privacy

  • Questions

Definition by Author

0
0
Expand