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Fe d e r a l Re se rv e bank of Da l l a s DALLAS, TEXAS June 2, 1958 T o the Member Banks o f the Eleventh Federal Reserve District: Attached for your information is Bulletin No. 12 o f this Bank, entitled Advances to and Discounts for Member Banks. This bulletin contains general information concerning the principal kinds of credit accommodations available to member banks, and the procedures to be followed in applying for such credit, at the Federal Reserve Bank o f Dallas. The Bank’s activities in this field are governed principally by Sections 13, 13a, and 1 0 (b ) of the Federal Reserve A ct and Regula tion A of the Board o f Governors o f the Federal Reserve System. W hile the substance o f various provisions o f Regulation A is included here, member banks should consult that Regulation for a more com plete statement o f the terms and conditions applying to such credit facilities. A ll references herein to the Federal Reserve Bank o f Dallas include the Head Office and its branches at El Paso, Houston, and San Antonio. Federal Reserve credit is extended by each o f these offices to applying member banks in its territory. Copies of the forms mentioned herein are available to member banks without cost or obligation. This bulletin should be inserted in the ring binder o f Bulletins and Regulations previously supplied to mem ber banks. Please acknowledge receipt o f the bulletin on the enclosed postal card. Yours very truly, Watrous H. Irons President This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) FEDERAL RESERVE BANK OF DALLAS BULLETIN NO. 12 JUNE 2, 1958 ADVANCES TO AND DISCOUNTS FOR MEMBER BANKS T o the Member Banks o f the Eleventh Federal Reserve District: 1. The Federal Reserve Bank o f Dallas extends credit directly to member banks in the form o f advances against Government obligations, eligible paper, and other specified types o f collateral, and by discount of eligible paper. 2. Federal Reserve credit generally is extended on a short-term basis to a member bank in order to enable it to adjust its asset position when necessary because of developments such as a sudden withdrawal o f deposits or seasonal requirements for credit beyond those which reasonably can be met by use of the bank’s own resources. Under ordinary conditions, the continuous use o f Federal Reserve credit by a member bank over a considerable period o f time is not regarded as appropriate. 3. The Federal Reserve Bank is required by law1 to keep itself informed of the general character and amount o f the loans and investments o f its member banks with a view to ascertaining whether undue use is being made o f bank credit for the speculative carrying o f or trading in securities, real estate, or commodi ties, or for any other purpose inconsistent with the maintenance of sound credit conditions. Thus, the Federal Reserve Bank o f Dallas requires certain informa tion from its member banks (usually submitted on the loan or discount applica tion form ) in order to be assured that Federal Reserve credit is being used for appropriate purposes, and that the granting o f any credit requested is consistent with the general principles applicable to extensions o f credit under Regulation A o f the Board o f Governors o f the Federal Reserve System. Rates 4. Rates o f discount are fixed by the Directors o f the Federal Reserve Bank, subject to review and determination o f the Board o f Governors o f the Federal Reserve System. Current rates are set forth separately in the Bank’s Operating Bulletin No. 1. Authorization of Officers To Borrow 5. Before a member bank may obtain an advance from the Federal Reserve Bank o f Dallas or discount its bills receivable with this Bank, it must file with this Bank, or the appropriate branch office, a duly certified copy o f a resolution adopted by its board o f directors authorizing specified officers (by title) to obtain such advances and to discount such paper. Member banks are required to use Form BD-1 Rev., supplied by the Federal Reserve Bank, which sets forth the text o f such a resolution. 1Paragraph 8, Section 4 o f the Federal Reserve Act, and Foreword to Regulation A o f the Board o f Governors o f the Federal Reserve System. — 2— BULLETIN No. 12 6. Resolutions filed with the Federal Reserve Bank of Dallas remain in effect until cancelled or superseded by a new resolution. Many member banks in the Eleventh District have resolutions on file which are many years old, and as some o f these resolutions contain special provisions or limitations, these banks may want to review their respective resolutions to determine if, for any reason, they want to submit new resolutions. ADVANCES Application, Note, and Collateral 7. A member bank desiring an advance and having on file with the Federal Reserve Bank o f Dallas a resolution of the kind described in paragraph 5 above, should submit, not later than 2 :00 p.m. on the business day the advance is desired, (1 ) its application therefor on the appropriate form specified in the following paragraphs for the type of advance desired; (2 ) its promissory note and pledge o f collateral (the form specified in following paragraphs for type of collateral to be pledged) for the amount o f the advance desired, made payable on the date on which the advance is to be repaid; and (3 ) all collateral for the advance (fo r full discussion o f the pledging o f collateral, see paragraphs 34 through 4 4 ). The note and the application should be signed manually in ink by one o f the authorized officers designated in the resolution, Form BD-1 Rev., and whose signature is on file with the Federal Reserve Bank2. Attention is called to the fact that the note and collateral form should be signed in two places — on the promissory note and on the pledge o f collateral. 8. I f a note o f a member bank is written so as to fall due on a Saturday, Sunday, or holiday, it will be discounted, and discount will be taken for the additional number o f days necessary to mature the note on the next succeeding business day o f this Bank. 9. In the event that, pursuant to Regulation A , the Federal Reserve Bank should require additional or marginal collateral in connection with any advance, the borrowing bank will be so notified. Advances Against Specific Types of Collateral Indicated Below: U. S. Government Securities 10. The Federal Reserve Bank o f Dallas makes advances,3 for periods usually not exceeding 15 days,4 secured by the deposit or pledge of bonds, notes, certificates o f indebtedness, or Treasury bills of the United States. Such securi ties are acceptable for collateral purposes at par value, regardless o f market value. Signatures of member bank officers are submitted to the Accounting Department o f the Federal Reserve Bank o f Dallas on request on Form AC 149 or Form A C ISO. Authorized under paragraph 8, Section 13 o f the Federal Reserve Act, and Section 2 (a ) o f Regulation A. 4Under paragraph 13, Section 13 o f the Federal Reserve Act, the Federal Reserve Bank is authorized to make advances for periods not exceeding 90 days to individuals, part nerships, and corporations (including member banks) secured by direct obligations of the United States. Advances to member banks on the security o f direct obligations normally are made for short periods, however, usually not exceeding 15 days. — 3— BULLETIN No. 12 11. Application for such advances should be made on Form L D 77, accom panied by an executed promissory note and pledge o f collateral, Form L D 90. Obligations of U. S. Government-Owned Corporations 12. The Federal Reserve Bank o f Dallas makes advances to member banks, for periods usually not exceeding 15 days, secured b y : (a ) Debentures or other such obligations o f the Federal Intermediate Credit Banks having maturities not exceeding six months from the date o f advance ;5 and (b ) Commodity Credit Corporation certificates o f interest6 issued by the corporation showing that there have been deposited in a pool o f notes operated by the corporation notes evidencing loans made pursuant to commodity loan programs o f the corporation and complying with the maturity requirements of Section 3 (a ) of Regulation A. 13. Application for advances secured by obligations of the Federal Inter mediate Credit Banks [item (a ) of paragraph 12 above] should be made on Form L D 77, accompanied by an executed promissory note and pledge o f col lateral, Form L D 90. 14. Commodity Credit Corporation certificates of interest [item (b ) o f paragraph 12 above] submitted as collateral to an advance should be listed on Form BD 29, accompanied by an executed promissory note and pledge o f col lateral, Form L D 90, and by properly executed assignments (see paragraph 4 4 ). Eligible Paper 15. The Federal Reserve Bank is authorized7 to make advances to member banks, for periods not exceeding 90 days,8 secured by eligible paper. The bor rowing bank may find it more convenient to use the eligible paper as collateral to its own note (F orm L D 90) than to rediscount the paper. For a partial list of the types o f collateral acceptable as security for such an advance, see para graph 22. 16. Eligible paper submitted as collateral to an advance should be listed on Form BD 29 (on which is shown the due date, the rate o f interest or discount charged, the name o f the borrower, his net worth, etc.), accompanied by an executed promissory note and pledge o f collateral, Form L D 90. 17. The total principal amount o f eligible paper serving as collateral should equal or exceed the amount o f the advance for which application is being made. 18. The Federal Reserve Bank cannot accept as collateral to an advance any paper which, by reason o f any provision, alteration, or omission is not negotiable under the Negotiable Instruments Law. 5Paragraph 8, Section 13 of the Federal Reserve Act, and Section 2 (a ) o f Regulation A o f the Board o f Governors o f the Federal Reserve System. 6The Federal Reserve Banks are authorized by Regulation A to make advances on Commodity Credit Corporation certificates o f interest for periods up to 90 days; however, the Federal Reserve Bank o f Dallas accepts such security for an advance for a period in excess o f IS days only in unusual circumstances. 7Paragraph 8, Section 13 o f the Federal Reserve Act, and Section 2 (b) o f Regulation A o f the Board o f Governors o f the Federal Reserve System. 8However, borrowings by member banks are generally for short periods. — 4— BULLETIN No. 12 Advances on Other Security, Including Ineligible Paper, Under Section 1 0 (b ) of the Federal Reserve Act 19. W hen a member bank holds collateral that is not eligible for rediscount or as security for an advance as described above, the collateral, if satisfactory to the Federal Reserve Bank, may be submitted as security for a “ Section 1 0 (b )” advance, for periods not exceeding four months, at a rate which shall not be less than one-half o f one percent above the existing discount rate. Am ong the types o f collateral which may be acceptable for such an advance are those listed b elow : (a ) Paper which would be eligible for discount by Federal Reserve banks except by reason o f the fact that the period o f its maturity is greater than that permitted for paper eligible for discount; (b ) Obligations evidencing loans upon the security o f stock, which have been made in conformity with the provisions o f Regulation U o f the Board of Governors o f the Federal Reserve System ; ( c ) Obligations insured under the provisions o f Title I or Title II o f the National Housing A c t ; (d ) Debentures, bonds, or other such obligations issued by Federal Home Loan Banks or issued under authority o f the Federal Farm Loan Act, without regard to the maturity of such obligations; and (e ) Notes, revenue bonds, and warrants which constitute general obliga tions o f any State or any political subdivision thereof. In addition, when in its judgment circumstances make it advisable to do so, the Federal Reserve Bank o f Dallas may accept as security for advances under Section 1 0 (b ) any assets other than those set forth above which its finds satis factory. 20. Application for advances secured by any o f the collateral referred to in paragraph 19 above should be made on Form L D 129-A, accompanied by “ Schedule 1 — Secured and Unsecured Notes,” Form L D 129-B, or “ Schedule 2 — Bonds, Warrants, and Other Securities,” Form L D 129-C. The promissory note and pledge o f collateral should be executed on Form LD 128. Forms used in connection with advances under Section 1 0 (b ) are more easily identified because they are printed on green paper. DISCOUNTS 21. The Federal Reserve Bank may discount9 for a member bank eligible paper which bears the endorsement o f the bank and which meets the require ments set forth in Regulation A . It should be said again, however, that the borrowing bank may find it more convenient to use the eligible paper as collateral to its own note (Form L D 90) than to discount the paper to the maturity o f each individual note. 22. The principal categories of eligible paper a re : (a ) Commercial and Industrial Paper. Negotiable notes, drafts, or bills o f exchange issued or draw n: 9Paragraph 2, Section 13 and paragraph 1, Section 13 (a) o f the Federal Reserve Act, and Section 3 o f Regulation A . — 5— BULLETIN No. 12 (1 ) T o produce, purchase, carry, or market goods in one or more o f the steps o f the process o f production, manufacture, or distribution; (2 ) T o meet current operating expenses o f a commercial or indus trial business; or (3 ) T o carry or trade in bonds, notes, Treasury bills, or certifi cates o f indebtedness o f the United States. Eligible and acceptable commercial and industrial paper must have a maturity not exceeding 90 days from date o f discount. (b ) Agricultural and Livestock Paper. Negotiable notes, drafts or bills o f exchange o f farmers and ranchers, or cooperative associations thereof, issued or draw n: (1 ) T o produce, purchase, carry or market crops, livestock, or livestock products in one or more o f the steps o f the process o f production or distribution; or (2 ) T o meet operating expenses o f an agricultural or livestock business. Eligible and acceptable agricultural and livestock paper must have a maturity not exceeding nine months from date o f discount. ( c ) Bills o f Exchange Payable at Sight or on Demand. Negotiable bills o f exchange payable at sight or on demand which grow out of the domestic shipment or the exportation of nonperishable, readily marketable staples (as defined in Regulation A ) and are secured by bills o f lading or other shipping documents conveying or secur ing title to such staples.1 * 0 (d ) Construction Loans. Negotiable notes which represent loans made to finance the construction o f a residential or a farm building whether or not secured by a lien upon real estate. Such notes should be accompanied by a valid and binding agreement requiring an acceptable lender (mortgage company, etc.) to advance the full amount o f the loan upon the completion o f the construction o f such residential or farm building. Such notes should mature not more than six months from the date the loan is made and not more than 90 days from the date of discount by this bank. (e ) Factors Paper. Notes, drafts, and bills of exchange o f factors issued as such for the purpose o f making advances exclusively to producers o f staple agricultural products in their raw state. Such paper should have a maturity not in excess o f 90 days from date o f discount. ( f ) Bankers' Acceptances. Bankers’ acceptances o f the kind described in Section 13 o f the Federal Reserve A ct and which comply with the requirements of Section 3 o f Regulation A .11 10For further information on bills o f exchange, see Bulletin No. 3 o f the Federal Reserve Bank o f Dallas. A copy of this Bulletin is provided each member bank in its Ring Binder containing bulletins and regulations. xlSee also Bulletin No. 2 o f the Federal Reserve Bank of Dallas contained in the Ring Binder previously supplied to member banks. ~6 — BULLETIN No. 12 23. Notes are not eligible if their proceeds have been used for permanent or fixed investments, such as land, buildings, machinery, improvements, general investments, or for other fixed capital purposes, or for financing transactions o f a purely speculative character, or for the purpose o f carrying or trading in stocks, bonds, or other investment securities (except direct obligations of the United States). 24. Notes dependent upon real-estate security are not acceptable at the Federal Reserve Bank o f Dallas for any purpose since this Bank does not have facilities for properly determining the value o f such security. 25. Notes payable on demand are not eligible or acceptable. 26. Notes o f borrowers who are not engaged in commercial, industrial, agricultural, or livestock activities, such as professional or salaried men, are not eligible. 27. A note, draft, or bill of exchange which otherwise meets the require ments o f eligibility is not rendered ineligible because o f the nature o f the goods or other collateral pledged to secure i t ; the security may even be other paper which is ineligible for discount. 28. There is a distinction to be made between eligibility and acceptability. The Federal Reserve A ct and the Regulations of the Board of Governors of the Federal Reserve System determine the classes o f paper which are eligible for discount with the Federal Reserve Banks, but each o f the Federal'Reserve Banks determines to its own satisfaction the acceptability o f the paper offered by member banks. Credit acceptability depends upon the security behind the obligation or upon the financial responsibility o f the maker and/or the endorser or guarantor. 29. Negotiability is a prerequisite to eligibility, and paper cannot be accepted for rediscount which, by reason o f any provision, alteration or omis sion, is rendered nonnegotiable under the Negotiable Instruments Law. 30. The aggregate o f paper on which any person, partnership, association, or corporation is liable as maker, acceptor, endorser, drawer, or guarantor which is discounted for a national bank must at no time exceed 10 percent o f the bank’s unimpaired capital and surplus, except as provided by Section 5200 o f the National Banking A ct, as amended.12 31. The Federal Reserve Bank is not permitted by law13 to discount for a state member bank the paper o f any one borrower who is liable for borrowed money to such bank in an amount greater than that which could be borrowed from such bank were it a national bank. 32. Application for discount should be made on Form BD 29, except for bills o f exchange payable at sight or on demand, in which case Form L D 62 should be used. I f there is insufficient space on one copy o f the required form, the listing o f paper and accompanying information should be continued on another copy o f the same form. 12Paragraph 5, Section 13 o f the Federal Reserve Act, and Regulation A o f the Board o f Governors o f the Federal Reserve System. For an enumeration of the exceptions see Regulation A. 13Paragraph 13, Section 9 o f the Federal Reserve Act. — 7— BULLETIN No. 12 33. Paper submitted to the Federal Reserve Bank o f Dallas for discount must be processed and approved for discount by the Bank’s Discount Committee before any credit can be granted. However, any credit for approved paper that may be extended by the Federal Reserve Bank will be granted as of the date the paper was received by the Bank, unless the Bank is otherwise instructed. REQUIREMENTS AS TO FORM OF COLLATERAL PLEDGED FOR ADVANCES AND DISCOUNTS Obligations o f the United States 34. W hen obligations pledged as collateral are regular bearer securities held in custody at the Federal Reserve Bank o f Dallas, the borrowing bank needs only to list these securities on the collateral pledge agreement (which is part of the promissory note, Form L D 9 0 ), showing a description o f the securities and the custody receipt number. 35. All such securities offered as collateral should not mature earlier than the date on which the note is made payable (except those securities which are to be exchanged for similar securities before the maturity date o f the note). 36. Securities which are to be pledged to the Federal Reserve Bank of Dallas and are held elsewhere, other than by a correspondent bank, should be transferred to the Reserve Bank. I f they are held by a correspondent bank, arrangements may be made for the Federal Reserve Bank to accept a custody receipt.14 Information concerning the procedure to be followed in pledging securities held by a correspondent bank will be supplied upon request. This procedure is necessarily lengthy, and arrangements must be completed before credit is extended. Member banks in the past have elected to transfer the securi ties to the Federal Reserve Bank o f Dallas or, in appropriate instances, to follow the procedure outlined in paragraph 37 below. 37. I f the borrowing bank wants to pledge securities which are lodged with a correspondent in another Federal Reserve city, the bank may have them delivered to the Federal Reserve Bank o f the city in which the correspondent bank is located. The borrowing bank should instruct its correspondent bank to deliver the securities to the latter’s Federal Reserve Bank to be held subject to the order of the Federal Reserve Bank o f Dallas for the account of the borrow ing bank. Under this arrangement, the Federal Reserve Bank receiving the securities will hold them only so long as they are pledged as collateral. W hen the securities no longer are pledged, the Federal Reserve Bank o f Dallas will wire instructions to the Federal Reserve Bank holding the securities to release them, and the borrowing bank should instruct its correspondent bank to withdraw them from its Federal Reserve Bank. 38. I f securities pledged are registered, they should be accompanied by the appropriate Treasury Department forms properly executed. In this connec tion, reference should be made to Treasury Department Form P.D. 1004 (P ow er o f A ttorney), and Treasury Department Form P.D. 1010 (Authoriz ing Resolution), and the instructions contained thereon. Such authorizing reso lution will be in addition to the regular authorization for borrowing from the Federal Reserve Bank o f Dallas, filed on Form BD-1 Rev. 14It is expected that securities held in correspondent banks in Dallas, El Paso, Houston, or San Antonio will be delivered to the local Federal Reserve Bank. — 8— BULLETIN No. 12 Securities Other Than Obligations of the United States 39. A ll such securities offered the Federal Reserve Bank o f Dallas as col lateral should be physically delivered to the Bank, and should be in such form, or accompanied by such instruments, as to make them readily transferable to the Bank without further action by the applicant member bank. Secured Notes 40. A n instrument o f credit should not be separated from the collateral pledged to secure it, and when paper offered is secured, the collateral, or evi dence thereof, together with instruments o f transfer, must accompany the paper. Warehouse Receipts 41. Warehouse receipts to be acceptable collateral must be negotiable, and endorsed whenever an endorsement is necessary to pass title. The warehouse man issuing the receipt should be entirely independent o f the borrower pledging such receipt, and must not have any financial interest in the goods described in the receipt except to the extent o f the usual lien for storage charges, etc. Insurance Policies 42. Insurance policies covering collateral should accompany paper and should have riders attached making loss payable to the offering bank as its interest may appear. Endorsement of Paper Pledged as Collateral 43. I f any paper pledged as collateral for an advance is payable to the order o f the applicant member bank, the paper should be endorsed without qualifica tion or restriction in the name o f such bank over the manual signature in ink o f an authorized officer o f the bank. CCC Certificates of Interest 44. W here certificates o f interest o f the Commodity Credit Corporation are pledged as security for an advance, such certificates should conform with, and be assigned in conform ity with, agreements, instructions, and regulations o f the Commodity Credit Corporation as to form and security, and should be accompanied by required documents. Certificates of interest should be assigned on CCC Form I. GENERAL INFORMATION REGARDING ADVANCES AND DISCOUNTS Method o f Disbursement 45. Proceeds o f an advance or discount are credited to the reserve account o f the member bank, after deduction o f discount. Collections 46. The note o f a borrowing member bank will be charged to its reserve account at maturity. Rediscounted notes are sent to the borrowing bank 10 days in advance o f maturity. The bank may remit by a draft drawn on its reserve account or on a correspondent bank before maturity, or it may elect to take no action therewith, in which case the rediscounted notes are charged to the bank’s reserve account. — 9— BULLETIN No. 12 Computation of Discount 47. In the case o f an advance by the Federal Reserve Bank to a member bank, this Bank, at the time of making the advance, will deduct from the face amount of the note discount at the then current rate, computed to the maturity of the note on a basis o f 365 days to the year, and will credit the balance to the reserve account o f the member bank. In computing discount, the Federal Reserve Bank excludes the date o f borrowing and includes the date of payment. The same procedures will apply to the discount o f eligible paper for a member bank, except that discount will be deducted from the unpaid principal amount o f the discounted paper; no consideration is given to any unpaid interest on dis counted eligible paper. Prepayment 48. A t any time before the date on which a note evidencing an advance is payable, a member bank, at its option, may pay all or part o f its obligation. The Federal Reserve Bank will then make an adjustment for the unearned discount. Advice o f partial or full payment prior to maturity may be handled by a letter or by telephone, to be followed by a letter of confirmation. Rediscounts may be prepaid in the same manner. Rebate of Unearned Discount: Change in Rate 49. I f a member bank pays before maturity all or part of its collateral note, or prepays rediscounted paper, the Federal Reserve Bank will rebate the unearned discount thereon. The rebate is calculated at the discount rate at which the advance or discount was made or at the then current rate, whichever is lower. Release and Disposition of Collateral 50. The Federal Reserve Bank of Dallas releases collateral to advances im mediately upon payment o f such advances; unless otherwise instructed, all paper held as collateral will be returned to the borrowing bank, while securities may be held in safekeeping, subject to the order o f the bank. Payments Received by Member Banks from Obligors 51. I f a member bank receives partial or full payment o f any promissory note, security or other collateral discounted by, or pledged with, the Federal Reserve Bank of Dallas, the member bank shall remit to this Bank for each such payment. Until paid over and delivered to the Federal Reserve Bank by the member bank, each such payment received by it shall be deemed held in trust for the account o f this Bank. Chattel Mortgages 52. The offering bank should see that copies o f the original mortgages are attached to the notes submitted and that they bear appropriate evidence that the original has been filed for record in accordance with legal requirements of the state (o r states) in which the bank and chattels are located. W here State Law requires it, the copy o f the mortgage should bear evidence that the original has been witnessed or acknowledged. The mortgage should describe the note as to date, due date, and amount, and should contain a provision giving a first and prior lien on the collateral to protect the note specifically described in the mort gage as against any other indebtedness which the maker of the note may owe the bank. The Federal Reserve Bank of Dallas, upon request, supplies to member banks without charge a form o f chattel mortgage, Form C 2. 10- BULLETIN No. 12 Financial Statements 53. Financial statements, including complete schedules of important items, must be submitted with all notes o f borrowers engaged in commercial or indus trial pursuits, regardless o f amount. Financial statements should be submitted with all unsecured notes o f farmers or stockmen in the amount of $1,000 or over. These statements should be supplemented by any other available informa tion as to the financial responsibility o f such person (including affiliated or subsidiary corporations or firm s). There also should be submitted financial statements of endorsers or guarantors, if any. 54. Financial statements need not be in any special form but should consist o f a complete and reasonably detailed balance sheet and profit and loss statement and a reconciliation o f net worth. The Federal Reserve Bank of Dallas may request additional information when it is deemed desirable for a better under standing o f the financial condition and operations of the borrower or other party liable on a note submitted for any purpose. Forms o f financial statements for commercial borrowers have been prepared by the Federal Reserve Bank o f Dal las for use by member banks and are designated Form C 5. Financial statements o f farmers and ranchers may be submitted on Form C 6.1 5 55. Financial statements furnished the Federal Reserve Bank should be originals or copies o f the original statements held in the files of the member bank. All financial statements submitted to the Federal Reserve Bank o f Dallas become the property o f the Bank and are not returned; therefore, when a mem ber bank submits original financial statements, it is expected to retain copies for its own files. I f statement copies are furnished the Reserve Bank, they should bear the following certification o f the member bank, signed by an authorized officer: “ This is a true copy o f the original signed financial statement held in our files.” Renewals 56. A member bank desiring to “ renew” its note at the Federal Reserve Bank o f Dallas must file an application for a new advance, following the same procedure required in obtaining the original advance. Paper Acquired from Nonmember Banks 57. Except with the permission of the Board of Governors o f the Federal Reserve System, the Federal Reserve Bank o f Dallas cannot discount or accept as security for an advance any assets acquired by a member bank from, or bear ing the signature or endorsement of, a nonmember bank, except assets otherwise eligible which were purchased by the offering bank on the open market or other wise acquired in good faith and not for the purpose of obtaining credit for a nonmember bank. Agreement to This Bulletin 58. A ny member bank which applies to the Federal Reserve Bank o f Dallas for an advance or discount shall be deemed by such action to have agreed to the 15The Federal Reserve Bank of Dallas also supplies to member banks Form C 7 on which may be posted, for the member bank’s own information, financial statement data over a period o f five years for comparative purposes. -1 1 - BULLETIN No. 12 terms and conditions set forth in this bulletin which are applicable to such trans actions. RIGHT TO AMEND 59. The Federal Reseiwe Bank o f Dallas reserves the right to withdraw, add to, or amend at any time, without notice, any of the provisions o f this bulle tin. Yours very truly, Watrous H. Irons President
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