Related Organizations

Section 23B and the "Arm’s-Length Requirement"

Section 23B requires that transactions between a bank (or its subsidiary) and its affiliates be conducted on terms and under conditions that are at least as favorable to the bank as those prevailing at the time for comparable transactions with nonaffiliated companies. A bank may pay no more than fair market value for the assets it purchases and must receive at least fair market value for the assets it sells. For purposes of section 23B, Regulation W excludes from the definition of "affiliate" all insured depository institutions.

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