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FEDERAL RESERVE BANK
OF NEW YORK
C ir c u la r N o . 3 4 G O T
J u n e 17, 1949
J

[
ADVANCES AND DISCOUNTS
Amendment to Regulation A of the Board of Governors of
the Federal Reserve System
and
Revision of Operating Circular No. 12
To all Member Banks in the
Second Federal Reserve District:

W e transmit herewith a copy o f the amendment to Regulation A, “ Discounts for and Advances
to Member Banks by Federal Reserve Banks” , adopted by the Board o f Governors o f the Federal
Reserve System, effective February 17, 1949, and a copy o f our Operating Circular No. 12, Revised
June 17, 1949, which supersedes Operating Circular No. 12, dated December 8, 1947. The amend­
ment permits Federal Reserve Banks to accept from member banks for discount notes evidencing
loans by member banks made pursuant to the commodity loan programs o f the Commodity Credit
Corporation, and to accept such notes, and certain certificates o f interest issued by Commodity
Credit Corporation, as security for advances to member banks. This bank has concluded arrange­
ments with the Commodity Credit Corporation to perform this service fo r member banks in this
district.
Section 1 (h ) o f Regulation A has been amended to provide, in effect, that the requirement
that a note be negotiable in order to be eligible for discount with a Federal Reserve Bank, and
fo r acceptance as security for an advance pursuant to section 2 (a ) of the Regulation, shall not
be applicable to any note which evidences a loan made pursuant to a commodity loan program
o f the Commodity Credit Corporation and which is subject to the Corporation’s commitment to
purchase. The Regulation also has been amended to provide that a certificate of interest issued
by the Commodity Credit Corporation may be accepted as security fo r an advance made to a
member bank under section 2 (a ) of the Regulation when such certificate evidences the deposit,
in a pool o f notes operated by the Corporation, o f notes which comply with the maturity require­
ments o f section 1(a) o f the Regulation and evidence loans made pursuant to a commodity loan
program o f the Corporation.
W e have revised our Operating Circular No. 12 to conform to the amendment to Regulation A.
The conform ing changes o f substance are contained in two new paragraphs (14 and 20), with
subsequent paragraphs renumbered. A form o f application fo r rediscount or advance has been
prepared fo r use in connection with the rediscount o f the above described notes, or the pledge
o f such notes or o f such certificates as collateral to notes evidencing advances to member banks
(our Form L. & D. 129D). Inasmuch as the form of note prescribed by the Commodity Credit
Corporation provides fo r endorsement without recourse, the form of application provides, as to
each such note discounted with us, that the discounting member bank shall be liable as fully as
though it had endorsed the note with recourse, and shall guarantee its payment, waiving demand,
notice and protest.
The provision o f section 1(h) o f Regulation A , effective September 11,1944, waiving the nego­
tiability requirement in the case o f any note evidencing a loan which is the subject o f a guarantee
or commitment made pursuant to Executive Order No. 9112 or the Contract Settlement A ct of 1944,
has been eliminated because it is now obsolete.
Additional copies o f this circular, of the amendment to Regulation A and o f our revised oper­
ating circular may be obtained upon request. The form o f application for rediscount or advance
referred to above also will be furnished upon request.




A

llan

S prou l,

President.

DISCOUNTS FOR AN D ADVANCES TO MEMBER BANKS
B Y FEDERAL RESERVE BANKS

AM E N D M E N T T O R E GULATION A
I ssued

by the

B oard

of

G overnors

of the

F ederal R eserve S ystem

Effective February 17, 1949, Regulation A is amended in the
following respects:
1. The last sentence* of subsection (7i) of section 1 is amended
to read as follows:
The requirement of this section that a note be negotiable shall
not be applicable with respect to any note evidencing a loan which
is made pursuant to a commodity loan program of the Commodity
Credit Corporation and which is subject to a commitment to
purchase by the Commodity Credit Corporation.
2. Subsection (a) of section 2 is amended by adding thereto a
new sentence reading as follows:
In the event notes which evidence loans made pursuant to a
commodity loan program of the Commodity Credit Corporation
and which comply with the maturity requirements of subsection
(a) of section 1 of this regulation have been deposited in a pool
of notes operated by the Commodity Credit Corporation, the
certificate of interest issued by the Commodity Credit Corporation
which evidences the deposit of such notes may be accepted as
security for an advance made to a member bank under this
subsection.

*
This sentence was added to the Regulation in 1942 and constitutes the third
sentence of subsection (ft) of section 1.




PRINTED IN N EW YORK


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102