Banking Regulators' Statement on Application of Sarbanes-Oxley

The Federal Reserve Board, the Office of the Comptroller of the Currency and the Office of Thrift Supervision issued a "Statement on Application of Recent Corporate Governance Initiatives to Non-Public Banking Organizations" to address the questions they have received concerning whether they intend to require banking organizations that are not public companies to comply with the provisions of the Sarbanes-Oxley Act . The statement reiterates that public banking organizations must comply with the provisions of Sarbanes-Oxley. All insured depository institutions that have assets of $500 million or more, regardless of whether they are registrants, are subject to the audit and reporting requirements of the Federal Deposit Insurance Corporation Improvement Act (FDICIA) of 1991 and therefore are subject to SEC's requirements and interpretations concerning auditor independence.

The policy clarifies that the agencies do not expect to take steps to apply the board's composition, director independence, audit committee, auditor independence and other corporate governance requirements of the Sarbanes-Oxley Act to non-public banking organizations that are not otherwise subject to these requirements. The policy statement states that the agencies however, encourage all non-public banking organizations to periodically review their policies and procedures relating to corporate governance and auditing matters. This review should ensure that such policies and procedures are consistent with applicable law, regulations, and supervisory guidance and remain appropriate in light of the organization's size, operations, and resources.

For purposes of this statement, banking organizations include national banks, state member banks, savings associations, and bank and savings and loan holding companies.

The FDIC has also issued a related Financial Institutions Letter (FIL 17-2003), entitled "Corporate Governance, Audits and Reporting Requirements," in March 2003