The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
X-4602 Ma~r SUBJ::CT: 11 ,. 1926. ?Totes of Par-ent Corporations Re~:>resentirig Jorrowings to be Advanced to Subsidiaries. Dsar Sir: Acting pursuant to the request of the recent Governors Co:aference the Board has voted to place unon the program for the next Conference of Governors for their consideration, certain 0"Ue£tions wn:'-c':1 have arisen with regard to the :Board's rulin5 U~Jon the eligibility for rediscount of no·tes of a corporation represe:1ting borrowings of funds to be advanced to s~bsidiaries, which wa~ c:>ntained in tho Board's circular letter of Decornber 30, 1925, X-4484. These questions were raised in a letter from the Governor of the Federal Reserve Bank of Cleveland ar.d comr~ented on in a memoratidwa from the Eoard 1 s Cou;.1.sel, copies of w:llich were transmitted to e11 Governors with the Board's letter X-4560 of March lG, 1920. ?ending a reconsideration of these questions by the next Governors Conference and for the ~iaanc~ of Federal reserve banks in the mea.nt::.me, the Board hol.-is that notes of a parent corporation representing borrowings of funds to be advanced to subsidiaries will not be eligible for rediscount at a Federal rescrv~ b~rk unless thoy com)ly with all of the conditions laid down in the :Board's circular letter o-:: December 30, 1925. Accordingly, t~e notos of a parent coryoration the proceeds of which huve been :advw1ced or loaned to its subsidiaries, will not be elie;ible pfor rediscount, if the parent corporation also makes advancesfto other corporations than its own subsidiaries. Very trul;r yours, D. R. Crissinger G o v e r n o r.
@FedFRASER