The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
s-i42 374 Reg. F-20 INTERPRETATION OF LAW OR REGULATION (Copies t o be s e n t t o a l l Federal r e s e r v e banks) January 1 2 , 1959 Honorable P r e s t o n Delano, Comptroller of t h e Currency, Washington,"D. C. Dear Mr. Delano: T h i s r e f e r s t o Mr. Upham's l e t t e r o f December 2 1 , 1938, r e q u e s t i n g t h e Board 1 s v i e w s concerning a q u e s t i o n r a i s e d by Mr. , S p e c i a l Deputy S e c r e t a r y o f Banking o f , , w i t h r e s p e c t t o the i n t e r p r e t a t i o n of t h e f o l l o w i n g f o o t n o t e appended t o s e c t i o n s 12 and 1 0 ( c ) of the B o a r d ' s R e g u l a t i o n F: "This does n o t prevent the bank from i n - . v e s t i n g t h e f u n d s of s e v e r a l t r u s t s i n a s i n g l e r e a l e s t a t e l o a n o f t h e kind which c o u l d be made by t h e bank under t h e p r o v i s i o n s o f s e c t i o n 24 o f t h e F e d e r a l Reserve A c t , a s amended, i f the bank owns no p a r t i c i p a t i o n i n t h e l o a n and h a s no i n t e r e s t t h e r e i n e x c e p t a s t r u s t e e or o t h e r f i d u c i a r y . " A f t e r s t a t i n g t h a t t h e ( S t a t e ) law p e r m i t s t h e i n v e s t m e n t of t r u s t funds i n r e a l e s t a t e l o a n s which a n a t i o n a l bank i s n o t p e r m i t t e d t o make under t h e p r o v i s i o n s of s e c t i o n 24 o f t h e F e d e r a l Reserve Act, Mr. i n q u i r e s whether the f o r e g o i n g f o o t n o t e p r e c l u d e s a n a t i o n a l bank from i n v e s t i n g t r u s t funds i n r e a l e s t a t e l o a n s which comply w i t h t h e S t a t e law w i t h r e s p e c t t o t r u s t i n v e s t m e n t s but which c o u l d not be made by t h e bank because t h e y r e p r e s e n t too large a percentage of the appraised value o f the s e c u r i t y . The f o o t n o t e p e r m i t s a n a t i o n a l bank t o i n v e s t f u n d s o f two or more t r u s t s i n p a r t i c i p a t i o n s i n a s i n g l e r e a l e s t a t e l o a n w i t h out r e g a r d t o t h e o t h e r w i s e a p p l i c a b l e p r o v i s i o n s o f s e c t i o n s 12 and 1 0 ( c ) o f R e g u l a t i o n F r e q u i r i n g t h p t t h e s e c u r i t i e s and i n v e s t ments o f e a c h t r u s t s h a l l be k e p t s e p a r a t e from t h o s e o f a l l o t h e r t r u s t s and p r o h i b i t i n g t h e c o l l e c t i v e i n v e s t m e n t o f t r u s t f u n d s ( e x c e p t a s p e r m i t t e d i n s e c t i o n 17, which r e l a t e s t o common t r u s t f u n d s ) . However, such p e r m i s s i o n i s q u a l i f i e d and t r u s t funds cann o t be i n v e s t e d pursuant t h e r e t o u n l e s s (1) r e g a r d l e s s of what cons t i t u t e s a l e g a l i n v e s t m e n t f o r t r u s t funds under t h e l a w s of t h e S-142 Reg. F-20 -2- p a r t i c u l a r S t a t e , t h e l o a n a t l e a s t c o m p l i e s w i t h t h e requirements of s e c t i o n 24 o f t h e F e d e r a l Reserve Act w i t h r e s p e c t t o the k i n d of r e a l e s t a t e l o a n s which n a t i o n a l banks may make w i t h t h e i r own f u n d s , and (2) t h e bank owns no p a r t i c i p a t i o n i n t h e l o a n and h a s no i n t e r e s t t h e r e i n e x c e p t a s f i d u c i a r y . The f o o t n o t e , o f c o u r s e , has no b e a r i n g upon the type of r e a l e s t a t e l o a n s i n which t r u s t funds may be i n v e s t e d e x c e p t where funds of two or more t r u s t s are invested in participations in a single real estate loan. Very t r u l y y o u r s , (Signed) L. P . Bethea L. P . B e t h e a , Assistant Secretary. * o w e o /O
@FedFRASER