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FED ER A L RESERVE BANK OF DALLAS DALLAS, TE X A S 75222 Circular No. 79-177 October 31, 1979 AMENDMENT TO AN INTERPRETATION OF REGULATION Q C red it Unions Included Within the Category of Institutions From Whom Member Banks May Borrow Federal Funds TO ALL MEMBER BANKS AND OTHERS CONCERNED IN THE ELEVENTH FEDERAL RESERVE DISTRICT: Acting u n d er au tho rity g ran ted in Section 19(a) of the Federal R eserve Act, the Board of G overnors of the Federal R eserve System has modi fied existing interpretation 2 1 7 .137 of Regulation Q to include c re d it unions within the category of institutions from whom member banks may borrow "Federal Funds" a r e managed liabilities that may be subject to r e s e r v e req u irem en ts u n d er Regulation D. Printed on the following pages is the text of the Board's o r d e r as submitted for publication in the Federal R e g is te r . Any questions co ncerning Regulation Q should be d ire cted to the Con sum er Affairs Section of o u r Bank S upervision and Regulations Department, Ext. 6171. Sincerely y o u rs , Robert H . Boykin F irst Vice P residen t B a n k s a nd o th e rs are e n c o u ra g e d to use th e fo llo w in g in c o m in g W A T S n u m b e rs in c o n ta c tin g th is Bank: 1-800-442-7140 (in tra s ta te ) a n d 1-800-527-9200 (in te rs ta te ). F or c a lls p la c e d lo c a lly , p le a se use 651 p lu s th e e x te n s io n re fe rre d to above. This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) TITLE 12 — CHAPTER II — SUBCHAPTER A — BANKS AND BANKING FEDERAL RESERVE SYSTEM BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM [Regulation Q] (Docket No. R-0218) Member Bank Participation in "Federal Funds" Market AGENCY: Board of Governors of the Federal Reserve System. ACTION: Final interpretation. SUMMARY: The Board of Governors has modified an existing interpretation of Regulation Q concerning the Federal funds market to include credit unions within the category of institutions from whom member banks may borrow Federal funds. EFFECTIVE DATE: Immediately. FOR FURTHER INFORMATION CONTACT: Gilbert T. Schwartz, Assistant General Counsel (202/452-3623), or Paul S. Pilecki, Attorney (202/452-3281), Legal Division, Board of Governors of the Federal Reserve System, Washington, D. C. 20551. SUPPLEMENTARY INFORMATION: On April 13, 1979, the Board solicited public comment (44 F e d . R e g . 23867) on a proposal to apply reserve requirements to certain member bank Federal funds borrowings and to certain repurchase agreements entered into by member banks. The Board also proposed that the term "bank" be expanded to include credit unions. The Board has determined that credit unions should be included within the category of institutions from whom member banks may borrow Federal funds. It should be noted that member bank borrowings from credit unions in the form of Federal funds are managed liabilities that may be subject to marginal reserve requirements (12 CFR 204.5(f) as amended effective October 6, 1979). Effective immediately, 12 C FR 217.137 is amended by deleting the first paragraph and adding a new first paragraph as follows: 217.137 Member bank participation in "Federal funds" mark e t : Since the adoption of section 217.1(f) in 1966, an exemption frcm Regulation Q has existed for member bank obligations in nondeposit form to another bank. As used in such exemption, "bank" includes a member bank, a nonmember commercial bank, a savings bank (mutual or stock), a building or savings and loan association or cooperative bank. - 2 the Export-Import Bank of the United States, Minbanc Capital Corp., a foreign bank, or a credit union. It also includes bank subsidiaries that engage in business in which their parents are authorized to engage and subsidiaries the stock of which is by statute explicitly eligible for purchase by national banks. These institutions are considered to be "banks" also for the purposes of Regulation D (12 C FR 204). * * * * * * * * This action is taken pursuant to the Board's authority under section 19(a) of the Federal Reserve Act (12 U.S.C. § 461) to determine what types of obligations issued by a member bank shall be deemed a deposit. By order of the Board of Governors, October 6, 1979. (signed) Theodore E. Allison Theodore E. Allison Secretary of the Board [SEAL]
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