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346 S-120 Sec. 5136 R.S.-14 INTBRPRETATION OF LAW OR REGULATION (Copies to be sent to all Federal Reserve banks) October 17, 1958. Mr. , Executive 5ecretar,y, Municipal Housing Authority, City Hall, ~--. . . ____, This refers to your letter of October 12, 1958, requesting advice as to whether a &tate member bank of the Federal Reserve System may underwrite bonds issued qy the (name of cit,y) Municipal Housing Authority for the erection of a slum-clearance project in the City of under the regulations of the United States Housing Authority. Under tho provisions of sectiun 9 of the Federal Reserve Act, State member banks of the Federal Reserve System are subject to the same limitations and conditions with respect to the purchasing, selling, m1derwriting, and holding of investment securities and stock as are applicable in the case of national banks under section 5156 of the Revised Statutes. This section of the Revised Statutes forbids the underwriting of all kinds of securities except those specifically exempted from the provisions of the section. It is our understanding that bonds issued qy a municipal housing authorit.Y are not general obligations of a State or political subdivision thereof and, accordingly, that these bonds do not fall within the class of obligations exempted by the statute. It follows, therefore, that State member banks may not underwrite such bonds. Al tl'.ough your, question was whether a State member ban..'lc may underwrite these bonds, it seems probable that you also desire information upon the question whether a State member bank may purchase such bonds for purposes crf investment. The office of the Comptroller of the Currency has ruled that the bonds, notes, or debentures issued qy public housing agencies and representing the 10 per cent local participation in the cost of low-rent housing or slum-clearance projects under the United States Housing Act of 1937 are investment securities which are eligible for purchase by a national bank within the limitations as to amount prescribed by section 5156 of the Revised Statutes. It is our view that State member banks of the Federal Reserve System also have authorit,y to 347 -2- S-120 Sec. 5156 R.S.-14 purchase, for purposes of investment and subject to the limitations stated above, the bonds, notes, or debentures issued by such public housing agencies. There is inclosed herewith for your information a cop,y of the Investment Securities Regulation of the Comptroller of tho Currency which contains at page 5 the provisions of section 5156 of the Revised Stututes and section 9 of the Federal Reserve Act. Very truly yours, (Signed) L. P. Bethea L. P. Bethea, Assistant Secretary.
@FedFRASER