On October 12, 2012, the Maine Bureau of Financial Institutions issued notice that it has proposed a complete repeal and replacement of Regulation 28: Loans to One Borrower Limitations. Regulation 28 establishes certain lending limits for Maine-chartered financial institutions. The purpose of the new Regulation is to establish guidelines for determining credit exposure from derivative transactions in connection with loans. Derivative transactions can include swaps, loans, options and other financial agreements, and are an important tool in managing the risks underlying financial transactions. Beginning in January of 2013, the Dodd-Frank Act will prohibit state-charted financial institutions from engaging in derivative transactions unless state law requires them to identify and manage credit risks associated with derivative transactions. The proposed Regulation 28 implements various methods for financial institutions to use in considering these risks, adopting a number of methodologies used in the OCC’s new interim final rule for national banks.
The Bureau anticipates that it may amend the proposed Regulation 28 before it becomes final, to incorporate future amendments to the OCC’s rule. The deadline for public comment on the new regulation is November 19, 2012.