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F

ederal

Re s e r v e Ba n k
DALLAS, TEXAS

of

Dallas

75222
Circular No. 76-54
A pril 7, 1976

A m e ric a n R e v o lu tio n B ic en ten n ia l

PROPOSAL TO AMEND REGULATION Y
BANK HOLDING COMPANIES

TO ALL BANKS
AND OTHERS CONCERNED IN THE
ELEVENTH FEDERAL RESERVE DISTRICT:
T h e B o a rd o f G o v e r n o r s of t h e F e d e r a l R e s e r v e S y s te m i n v i t e s p u b l i c
c o m m en t on its p r o p o s a l to a d d a n e w n o n b a n k a c t i v i t y to t h e lis t of p e r m i s s i b l e
a c t i v i t i e s fo r b a n k h o l d i n g c o m p a n i e s .
T h e p r o p o s a l —to e n g a g e in t h e s a l e of m o n e y o r d e r s o r m o n e y o r d e r ­
lik e p a y m e n t i n s t r u m e n t s o f v a r i o u s d e n o m i n a t i o n s — w a s m a d e in c o n n e c tio n w ith
a p p l i c a t i o n s b y b a n k h o ld i n g c o m p a n ie s to e n g a g e in t h i s a c t i v i t y a n d is p r i n t e d
o n t h e fo llo w in g p a g e s .
T h e B o a r d in v i te s c o m m en t on w h e t h e r t h e p r o p o s e d a c t i v i t y is " so
c l o s e l y r e l a t e d to b a n k i n g o r m a n a g in g a n d c o n t r o l l i n g b a n k s a s to b e a p r o p e r
i n c i d e n t t h e r e t o " t h a t it s h o u l d b e p e r m i t t e d u n d e r t h e B a n k H o ld in g C o m p a n y A c t.
T h e B o a rd a l s o i n v i t e s c o m m e n t on w h e t h e r t h e a p p l i c a t i o n s to e n g a g e in
t h e n e w a c t i v i t y c a n b e e x p e c t e d to p r o d u c e p u b l i c b e n e f i t s t h a t o u tw e i g h a n y
adverse consequences.
I n t e r e s t e d p e r s o n s a r e in v i t e d to s u b m i t r e l e v a n t d a t a , v i e w s , o r a r g u ­
m e n ts in w r i t i n g to t h e S e c r e t a r y , B o a r d o f G o v e r n o r s of t h e F e d e r a l R e s e r v e S y s ­
te m , W a s h i n g to n , D . C . 20551, to b e r e c e i v e d n o t la te r t h a n A p r il 30, 1976. All
m a t e r i a l s s u b m i t t e d s h o u l d in c l u d e t h e d o c k e t n u m b e r R -0030.
S in ce rely y o u rs ,
T . W. P la n t
F i r s t V ice P r e s i d e n t

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

[12 CFR Part 225]
[Regulation Y]
BANK HOLDING COMPANIES
[Docket No. R-0030]
Issuance of Payment Instruments

The Board of Governors has received two applications filed
pursuant to section 4(c)(8) of the Bank Holding Company Act (12 U.S.C.
1848(c)(8)) and § 225.4(b)(2) of the Board's Regulation Y (12 CFR
225.4(b)(2)), for prior approval to acquire (retain) shares of companies
to be engaged in the issuance of certain payment instruments.

The

activities which are the subject of the two applications have not
previously been determined by the Board of Governors to be closely
related to banking.
(1) Citicorp, New York, New York, has applied to acquire
voting shares of Citicorp Services, Inc., New York, New York, and
thereby to engage de novo in the activity of issuing and offering on
a consignment basis, general purpose variable denominated payment
instruments to vendors or agents who would then sell the payment instru­
ments to the general public.

The denominations of the payment instruments

would be specified by the purchasers.
(2) Republic of Texas Corporation, Dallas, Texas, has applied
to retain the shares of Republic Commerce Company, and thereby to retain
indirect ownership or control of shares of Republic Money Orders, Inc.,
and Republic Money Orders of California, Inc.

Applicant proposes to

-2continue to engage in the activity of issuing money orders to third
party agents who would then sell the money orders to the general public.
Section 4(c)(8) of the Bank Holding Company Act provides
that a bank holding company may, with Board approval, acquire "shares
of any company the activities of which the Board after due notice and
opportunity for hearing has determined (by order or regulation) to
be so closely related to banking or managing or controlling banks as
to be a proper incident thereto."
Money orders and variable denominated payment instruments
are substitutes for such other payment media as currency, personal
checks, certified checks, and cashiers checks.

Although there are

some technical differences between money orders and variable denomi­
nated payment instruments, they are similar in their essential charac­
teristics and purpose.

Accordingly, it appears appropriate to consider

the two proposals together.

The Applicants state that the respective

proposed activities are so closely related to banking as to be a proper
incident thereto.
In connection with these applications, the Board will also
consider amending its Regulation Y (12 CFR 225.4(a)) to add the activity
of issuing payment instruments of this type to the list of activities
the Board has previously determined to be closely related to banking.
Interested persons may express their views on the question of whether
the issuance of money orders and variable denominated payment instruments

-3 -

is so closely related to banking or managing or controlling banks as
to be a proper incident thereto.
Interested persons may also express their views on the ques-*
tion of whether consummation of the individual subject proposals can
"reasonably be expected to produce benefits to the public, such as
greater convenience, increased competition, or gains in efficiency,
that outweigh possible adverse effects, such as undue concentration
of resources, decreased or unfair competition, conflicts of interests,
or unsound banking practices."
Any requests for a hearing on these questions should be accom­
panied by a statement summarizing the evidence the person requesting
the hearing proposes to submit or to elicit at the hearing and a state­
ment of the reasons why this matter should not be resolved without
a hearing.
The applications may be inspected at the offices of the Board
of Governors or at the respective Federal Reserve Banks of the bank
companies.
Any views or requests for hearing should be submitted in
writing and received by the Secretary, Board of Governors of the Federal
Reserve System, Washington, D.C. 20551, not later than April 30, 1976.
All material submitted should include the docket number R-0030.
Board of Governors of the Federal Reserve System, March 26, 1976.

(Signed) Theodore E. Allison
Theodore E. Allison
Secretary of the Board
[SEAL]

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