The Office of the Comptroller of the Currency issues
Bulletin 2002-39, Investment Portfolio Credit Risks: Safekeeping
Arrangements ( www.occ.treas.gov/ftp/bulletin/2002-39.doc
), alerting national banks to potentially significant credit risks
inherent in custody relationships involving their own assets.
Recently, several financial institutions suffered losses when deposit
brokers (entities that broker, among other things, certificates of
deposit), to which they had sent funds for the purchase and
safekeeping of CDs, failed. The OCC guidance consequently emphasizes
the risks of entrusting assets to even registered broker/dealers and
the importance of reviewing their credit histories, and it outlines
steps banks can take to see that FDIC insurance covers their purchased
CDs.
Banking
