The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
federal Reserve bank of Dallas DALLAS, TEX AS 7 5 2 2 2 Circular No. 68-87 April 3, 1968 AMENDMENTS TO REGULATION G T o N o n b a n k Lenders a n d Others Concerned in the Eleventh Federal Reserve District: The Board of Governors of the Federal Reserve System has adopted amendments to its Regulation G, effective April 17, 1968. Attached is a copy of the press release, which also relates to amend ments to Regulations T and U, regarding the amendments. A copy of the amendments is enclosed. Yours very truly, P. E. Coldwell President Enclosures (2) This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) CREDIT B Y P E R S O N S O T H E R T H A N BANKS, BROKERS, O R DEALERS FOR T HE PURPOSE OF PURCHASING O R C A R R Y I N G R E G I S T E R E D E Q U I T Y SECURITIES AMENDMENTS T O REGULATION G (12 CFR 207) ISSUED BY T H E BOARD OF GOVERNORS OF T H E FED ERA L RESERVE SYSTEM L ender Acting as Agent 1. Effective immediately section 207.4(f) is revoked. 2. Effective April 17, 1968, section 207.4(f) is added as follows: SECTION 207.4 — M ISCELLANEOUS PROVISION S. * * * ( f) Acting as agent. (1) No person shall act as agent of any lender, bank, or creditor subject to Parts 207, 220, or 221 of this Chapter (Regulations G, T, and U ) in respect of any transaction which such person knows or should know is connected with an extension or mainte nance of credit secured directly or indirectly by any registered equity security unless a statement signed by such lender, bank, or creditor is filed with, and accepted in good faith by such person, to the effect that such lender, bank, or creditor does not extend or maintain credit to or for customers in violation of such Parts. (2) For the purpose of this paragraph, activities of an “agent” include, for example, but are not limited to receiving securities to be used as collateral, determining whether the market value of collateral is adequate, and requiring the deposit of additional collateral or the reduc tion of credit. (3) In determining whether a transaction involves an extension of credit, whether such credit is secured directly or indirectly by any registered equity security, and whether such person can rely in good faith on the statement described in subparagraph (1) of this paragraph, such person shall (i) be alert to the circumstances surrounding the transaction, and (ii) if he has information that would cause a prudent man not to accept such statement without inquiry, must have investigated and be satisfied that the credit either is not subject to such Part or is extended and maintained in conformity with the provisions of such Part. * * * For im m ediate r e l e a s e . March 2 9 , 1968. The Board o f Governors tod ay announced t h a t i t has amended i t s s t o c k m arket c r e d i t R e g u l a t io n s G, T, and U, t o e a s e t h e r e s t r i c t i o n s on b a n k s , b r o k e r s , and o t h e r l e n d e r s c o v e r e d by th e r e g u l a t i o n s w h ich a c t as a g e n t s i n h a n d lin g t r a n s a c t i o n s i n v o l v i n g lo a n s on s e c u r i t i e s . These p r o v i s i o n s o f t h e r e g u l a t i o n s ( s e c t i o n 2 0 7 . 4 ( f ) o f R e g u la t io n G, s e c t i o n 2 2 0 . 4 ( f ) o f R e g u la t io n T , and s e c t i o n 2 2 1 . 3 (u ) o f R e g u la t io n U) had b e e n t e m p o r a r ily suspended by th e Board on February 2 9 , 1 9 6 8 , The new p r o v i s i o n s w i l l b e e f f e c t i v e on A p r i l 1 7 , 1968. The amendments p r o v id e t h a t t h e p r o h i b i t i o n s o f th e "agency" s e c t i o n s o n ly a p p ly where th e bank, b r o k e r , o r o t h e r le n d e r knows or sh o u ld know t h a t t h e s e r v i c e s i t perform s a s a g e n t a r e c o n n e c te d w i t h a lo a n s e c u r e d i n su c h a way t h a t th e a g e n t would have had t o o b s e r v e th e r e q u ir e m e n ts o f th e r e g u l a t i o n i f i t had i t s e l f made th e l o a n . T h is change i s d e s ig n e d t o m i t i g a t e a d m i n i s t r a t i v e burdens i n v o lv e d i n h a n d lin g a s u b s t a n t i a l volum e o f m i n i s t e r i a l agency t r a n s a c t i o n s . As to b a n k s, two f u r t h e r ch an ges are d e s ig n e d t o make th e r e g u l a t i o n more w ork ab le w i t h i n t h e framework o f e x i s t i n g i n t e r n a t i o n a l bank ing r e l a t i o n s h i p s . The f i r s t p e r m its d o m e s tic banks to h an d le t r a n s a c t i o n s as a g e n t on b e h a l f o f f o r e i g n banks i n r e l i a n c e on an a s s u r a n c e by th e f o r e i g n bank t h a t i t w i l l n o t ask i t s U. S . a g e n t bank t o h a n d le t r a n s a c t i o n s c o n n e c te d w i t h s e c u r i t i e s lo a n s t o U. S . -2- c itiz e n s . The secon d p e r m its U. S . c i t i z e n s l i v i n g abroad t o borrow from f o r e i g n banks a g a i n s t c o l l a t e r a l c o n s i s t i n g o f r e g i s t e r e d s t o c k s , and have th e c o l l a t e r a l h an d led by a U. S . bank , i f th e b orrow er f i l e s a s ta t e m e n t c o r r e s p o n d in g t o t h a t w h ich must be f i l e d under s i m i l a r c ir c u m s ta n c e s by a borrow er i n th e U n ite d S t a t e s , show ing t h a t th e p u rp ose o f th e l o a n i s n o t t o p u rch a se or c a r r y r e g i s t e r e d s t o c k s .
@FedFRASER