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 W ILLIAM H. W ALLACE DALLAS. TEXA S 7 5 2 2 2 F IR S T V IC E P R E S ID E N T April 12, 1985 Circular 85-43 TO: The Chief Executive Officer of all member banks, bank holding companies, and others concerned in the Eleventh Federal Reserve District SUBJECT Announcement that Citicorp has withdrawn its application to engage in underwriting and dealing in corporate debt securities, plus the Board's preliminary analysis of the application DETAILS The Board of Governors of the Federal Reserve System has recently announced that Citicorp has withdrawn its application to engage in the underwriting and dealing in corporate debt securities and certain other debt obligations. The proposal would have allowed bank holding companies to underwrite a volume of securities equal to or greater than the volume handled by the largest securities underwriters. The Board's preliminary analysis indicated that the application was inconsistent with the Glass-Steagal1 Act. In addition, the Board believes that proposals that alter the framework of commercial banking should be addressed by Congress. ATTACHMENTS The Board's press release7 is attached. MORE INFORMATION For further information, please contact this Bank's Legal Department at (214) 651-6228. Sincerely yours, For additional copies of any circular please contact the Public Affairs Department at (214) 651-6289. Banks and others are encouraged to use the following incoming WATS numbers in contacting this Bank (800) 442-7140 (intrastate) and (800) 527-9200 (interstate). This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) FEDERALRESERVEpressrelease For immediate release February 27, The Federal Reserve Board has announced has withdrawn Act to its application engage, underwriting (including through and in notice of the that Citicorp Holding Company subsidiary, debt municipal in securities revenue bonds, and certain other debt obligations. The application was withdrawn before to publish Bank corporate paper), securities the wholly-owned dealing commercial mortgage-backed a under 1985 proposal the Board decided in the Federal whether Register providing an opportunity for public comment on the proposal. The which Citicorp required Glass-Steagall affiliated with an the interpretation Act's prohibition companies and certain other under application engaged securities Bank Holding presented of on the a scope member Company Act that the being in underwriting as well these proposal of banks principally activities, novel as a finding activities are closely related to banking and a proper incident thereto. Citicorp engaged within argued principally the because it activities activity, meaning would to in of that the section 20 than subsidiary proposed voluntarily less its of limit 20 percent would securities not activities the Glass-Steagall the volume of the including underwriting and dealing be Act of these firm's total in U.S. Government - and other allowed permissible bank holding 2- securities. companies securities equal to or securities underwriters to greater or, This formula underwrite than indeed, that would would a of volume the have have of largest permitted the acquisition by bank holding companies of the largest investment banking firms whose underwriting activities Government and other permissible (other securities) than of constitute only a minor portion of their total activities. While the Board, in accordance with its established withdrawal the application, * practice, Board's has allowed preliminary the analysis of indicated that the the application would be inconsistent with the Glass-Steagall Act. The appropriate Board forum considerations Citicorp, conduct of by the for that the resolution would dramatically Congress in commercial the Congress of involved in proposals, that established believes the public such as alter and the the policy that advanced by the Glass-Steagall banking is framework Act for investment the banking busine ss es . The Board believes that certain changes framework are appropriate and desirable and has, supported holding sponsor, and to legislation to authorize control and distribute the underwrite 1-4 family commercial and residential paper. The deal in bank this accordingly, companies securities of mutual municipal mortgage-backed Board in urges revenue funds bonds, securities early to and Congressional I consideration of this and other banking need legislative resolution. structure issues that
@FedFRASER