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169 BOARD OF GOVERNORS OF' THE -. FEDERAL RESERVE SYSTEM WASHINI3TCN S-593 ADDREBB DP"P"ICIAL CDRREBPDNDENCE TD THE BOARD November 27, 1942. Dear Sir: '!'his refers to the Board's letter of October 1, 1942, (S-562), with respect to the computation of guarantee .fees payable to the Guarantor ln cases V'rhere the· first advance is made by the Financing Institution prior to the.actua.l execution of the guarantee agreement. A question has arisen as to the interpretation of the Board's letter in view of the provisions of section 11 of the standa.rd form of guarantee agreement dated May 14, 191+2• • • Under the provisions of the stands.rd form of guarantee agreement, the Financing Institution 1 s obligation for the payment of guarantee fees would not ordinarily begin before the datf~ of exE:cution of the guarant0e ·",grr~ement. In cases where for any reason it is necessary to make an advance e day or two r,>rior to the m:ecution of the guarantee agreern.ent aud thi3 advance is to be covered by the terms of the guarantee, it may be possible to provide by o.ppropriate language in the guarantee agreement either that the effective date of the agreemAnt she,ll be the da.te of the advance or that tho advance .in question t1hal1 be covered by the guarantee e.greement, in vrhich event the computation of the guarantee fee would begin with the dr::.t.e o.f the advance. Unless this is done, howev0r, the guarantee fee should not eover any period prior to the date on which the Guarantor becomes oblig:1ted to purchase the specified purcentage of tho 1oe_n, which ordinarily will be the date of exeoution of the guarantee agreement. We have conferred vvi th the War Department, Navy DepHrtment, and Mnritime Commission with respect to this matter, and they are in agreement with the views expressed above. Very truly yours, ~;?-. 7 / .JC--1".-/d4f.-.· L. P. Bethea, Assistant Secr'3t ary • • BANKS.
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