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FEDERAL RESERVE BAN K OF D ALLAS
D A L L A S 13, T E X A S

Dallas, Texas, May 16, 1949

AMENDMENT T O REGULATION U

To All Banking Institutions in the
Eleventh Federal Reserve District:

There is reproduced on the reverse side of this letter an amendment
to Regulation U, issued by the Board of Governors of the Federal R e­
serve System effective today.
This amendment increases from 50 per cent to 75 per cent the loan
value of securities acquired through the exercise of subscription rights,
whether exercised by the original holder or by a purchaser of the rights.
The amendment specifies that extensions of credit for such purposes
shall be made through a separate loan and that substitutions or with­
drawals may not be made. N o new credit may be granted to a customer
under the preferential terms at any time that a previously made prefer­
ential credit has been outstanding more than nine months without being
reduced to the 50 percent basis generally applicable under the regulation.
Member banks are requested to file this letter in ring binders contain­
ing copies o f the regulations o f the Board of Governors of the Federal
Reserve System and bulletins of this bank.
,
Yours very truly,
R. R. G IL B E R T
President

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

AMENDMENT NO. 10 TO REGULATION U

ISSUED BY THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

Effective May 16, 1949, Regulation U is hereby amended by chang­
ing section 3 (p ) o f said regulation to read as follow s:
“ (p ) A loan need not comply with the other requirements of
this regulation if it is to enable the borrower to acquire a stock
by exercising a right to acquire such stock which is evidenced by
a warrant or certificate issued to stockholders and expiring within
90 days o f issuance, provided that (1 ) each such acquisition
under this subsection shall be treated separately, and the loan
when made shall not exceed 75 per cent o f the current market
value o f the stock so acquired as determined by any reasonable
method, (2 ) while the borrower has any loan outstanding at the
bank under this subsection no withdrawal or substitution o f stock
used to make such loan shall be permissible, except that when the
loan has become equal to or less than the maximum loan value o f
the stock as prescribed for section 1 in the supplement to this
regulation the stock and indebtedness may thereafter be treated as
subject to section 1 instead of this subsection, and (3 ) no loan
shall be made under this subsection at any time when the bor­
rower has any such loan at the bank which has been outstanding
more than 9 months without becoming eligible to be treated as
subject to section 1. In order to facilitate the exercise o f a right
under this subsection, a bank may permit the right to be with­
drawn from a loan subject to section 1 without regard to any
other requirement o f this regulation.”

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