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385 X-7932 F E D E R A L R E S E R V E B O A R D STATEMENT FOR THE PRESS June 25, 1934 For release at 3:00 p. m . PERMIT TO MEMBER BANKS RELATING TO PARTICIPATION IN UNDERWRITING AND DEALING IN MUNICIPAL AND OTHER SECURITIES. Section 32 of the Banking Act of 1933 prohibits correspondent relationships between member banks of the Federal Reserve System and dealers in securities unless there is a perait therefor issued by the Federal Reserve Board, Such correspondent relationships include regu- lar associations between member banks and dealers in securities in connection with underwriting and dealing in securities, and Section 52 does not contain any exception based upon the kind of securities underwritten or dealt in. However, paragraph "Seventh" of Section 5136 of the Revised Statutes of the United States as amended by the Banking Act of 1933, specifically excepts certain municipal and other obligations from the restrictions upon underwrit ing and dealing in securities by national banks contained in such Section 5136. These restrictions and the exceptions thereto are also made applicable to State member banks by the provisions of Section 9 of the Federal Reserve Act as amended. The Federal Reserve Board is authorized by Section 32 to issue permits fbr correspondent relationships between member banks and dealers whenever it finds that it is not incompatible with the public interest to do so, and the Board has decided that it is not incompatible X-793S with the public interest to grant peimits authorizing correspondent relationships between member banks and dealers in securities in connection with underwriting and dealing in the securities exempted from the restrictions contained in Section 5136 of the Revised statutes. Heretofore, the Federal Reserve Board has followed the practice of issuing individual permits covering such correspondent relationships, but in order to relieve member banks and dealers from the burden of preparing and filing formal applications in cases of the kind herein described, the Board has granted a blanket permit under Section 32 for the period until December 1, 1934, authorizing correspondent relationships between any member bank or banks and any dealer or dealers in securities in connection with underwriting and dealing in those securities excepted from the restrictions contained in Section 5336 of the Revised Statutes, namely: obligations of the United States, general obligations of any State or of any political subdivision thereof, obligations issued under authority of the Federal Faint Loan Act, obligations issued by the Federal Home Loan Banks, and/or obligations issued by the Home Owners' Loan Corporation. Each member bank which exercises the privilege granted by such permit shall furnish to the Federal Reserve Agent at the Federal reserve bank in the district in which the member bank is located, such information concerning its operations under this permit as the Federal Reserve Board may require.
@FedFRASER