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X-7605 (INTERPRETATION OF BANKING ACT OF 1933) Copies to be sent to all Federal reserve banks. September 22, 1933. Mr* Frederic H. Curtiss, Federal Reserve Agent, Federal Reserve Bank of Boston, Boston, Massachusetts. Dear Mr. Curtiss: Reference is made to your letter of July 19, 1933, headed Inquiry No. 30, submitting to the Board a request of the President of The Trust Company, , , for permission not to publish a report of condition of The Real Estate Trust. From the information which you have furnished to the Board, it appears that certain property was conveyed to trustees, in accordance with the terms of an instrument of trust, to be held and managed for the benefit of such persons as might from time to time be the holders of transferable certificates issued by the trustees. This arrangement is known as Real Estate Trust, and a majority of the trustees of this trust are directors of The Trust Company, a member bank of the Federal Reserve System. Under Section 9 of the Federal Reserve Act, as amended by Section 5(c) of the Banking Act of 1933, each State member bank is required to obtain a report of condition from each of its affiliates and to publish such report under the same conditions as govern its own condition reports. Section 2, subparagraph (b), subdivision (3) of the Banking Act of 1933, provides, among other things, that Mr. Frederic H. Curtiss 2- X-7605 tho term "affiliate" shall include any business trust of which a majority of its trustees are directors of any one member bank. It would seem clear that __________ Real Estate Trust is a business trust, as that term is used in said section; that it is an "affiliate" of the member bank within the language of the Act, since a majority of its trustees are directors of the member bank; and that the member bank is required by said Section 9 to obtain a report of such affiliate and to publish the report under the same conditions as govern its own condition reports. Your attention is called to the requirement that each state member bank must publish the reports of its affiliates "under the same conditions as govern its own condition reports". In view of the fact that the Federal Reserve Act does not require the publication of reports submitted to the Federal Reserve Board and Fed- eral reserve banks by State member banks, the only reasonable construction that can be given to that requirement is that reports of affiliates of State member banks must be published only if the State law requires such State banks to publish their own reports, and accordingly, it will not be necessary for The Trust Company to publish the report of Real Estate Trust unless publication of its own condition report is required under State law. You are further advised that there will be no objection to The Trust Company publishing with any report of Real Estate Trust an explanatory statement as to the Mr. Frederic H. Curtiss -3- X-7605 actual relationship which exists between the member bank and its affiliate. Very truly yours, (.Signed) L. P. Bethea L. P. Bethea, Assistant Secretary,
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