Banking

Bank and thrift regulators issue an advisory letter containing techniques that financial institutions can use to manage risks associated with mortgage banking activities ( www.federalreserve.gov/boarddocs/press/bcreg/2003/20030225/attachment.pdf ). Prepared by the Office of the Controller of the Currency, the Federal Reserve Board, the Federal Deposit Insurance Corp. and the Office of Thrift Supervision, the guidance addresses the accounting for and valuation and hedging of mortgage-related assets as well as management information systems and internal auditing considerations. The agencies say they may increase capital reserve requirements for financial institutions that ignore these recommendations.