First National Bank is a member of a multibank holding company. The bank makes ARM loans and occasionally purchases ARM loans from its affiliate national and state banks as well as from nonaffiliated banks. Which of the following practices is NOT acceptable under the OCC ARM regulation?
Under OCC ARM regulations, a national bank cannot mandate that its affiliates use a specific index for ARM loans. The bank's practice of requiring its national bank affiliates to use the national prime rate as published in The Wall Street Journal for any ARM loans it purchases is not acceptable. This restriction aims to prevent potential conflicts of interest and maintain the independence of interest rate adjustments by different institutions.
Answer: A