[Comments on Federal Reserve Requirements for Foreign Loans Made by U.S. Banks]

Pursuant to a congressional request, GAO provided information on federal reserve requirements for foreign loans made by U.S. banks. GAO advised that: (1) the average required reserve for the four most risky loan rating categories was 5.1 percent; (2) in addition to requiring reserves for loans rated in the value-impaired and loss categories, federal bank supervisory agencies should require reserves for loans rated in the other transfer risk problems and substandard categories, since they also carry considerable risk; and (3) federal bank supervisory agencies should primarily consider secondary market price data in setting reserve requirements, since those data principally reflect financial investors' risk assessments.