Proposals by banks to bail out frozen mortgage funds earlier this year got the cold shoulder from the banking regulator, the 2009 annual report from APRA shows.Banks were also refused clearance by APRA to buy back pools of mortgages financed through securitisation trusts, even where those financing arrangements were no longer economical, because they breached prudential rules.Whether the banks were big, medium or small and whether the funds involved were on the larger or smaller side are details lacking from the annual report of the Australian Prudential Regulation Authority. The references in the annual report add a little more light on the effort of banks to work through the funding and reputation stresses in their business in the first half of this calendar year.What APRA did write, in its measured language, was that it received requests from ADIs "to enter into arrangements that supported funds management schemes beyond what is viewed as acceptable by APRA."APRA said it was forced to write formally to ADIs in April to remind them they "must deal with securitisation and funds management vehicles and/or investors at arm's length and on market terms and conditions."A lot of the key themes on policy and priority dealt with in the APRA annual report (and which was signed off a month ago but published only last week) was covered by the APRA chair, John Laker, in his talk to the Abacus convention two weeks ago.One additional theme, though, was a reminder to boards on the need for independent risk advice, even though that advice will be coming all the same from their own management. "One lesson," APRA wrote, "is that boards must ensure they are fully briefed on risks by a risk management function that has authority and independence within the institution. "Another lesson is that boards must understand the risks involved in new endeavours and must challenge management on how such endeavours, particularly if complex in nature, support the core business."