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F ederal

reserve

bank

DALLAS, TEXAS

Dallas

of

75222

Circular No. 7*+-37
January 31, 197*+

PROPOSED AMENDMENT TO REGULATION F
(Disclosure of Standby Letters of Credit)

To All State Member Banks
in the Eleventh Federal Reserve District:
The Board of Governors of the Federal Reserve System
announced on January 25, 197*+? a proposed amendment to Regula­
tion F, "Securities of Member State Banks" which would require
disclosure of amounts of standby letters of credit on financial
statements of banks that are subject to the regulation. Our
Circular No. 7*+-28, dated January 23, 197*+? transmitted a
proposed amendment to Regulation H also dealing with standby
letters of credit.
The Board invites public comment on the proposal.
Such comments should be submitted in writing to the Secretary,
Board of Governors of the Federal Reserve System, Washington,
D. C. 20551j to be received not later than March 15, 197*+.
A copy of the proposed amendment is enclosed.
Yours very truly,
P . E . Coldwell
President
Enclosure (l)

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

FEDERAL RESERVE SYSTEM
[Reg. FJ
Part 206— Securities of Member State Banks
Disclosure of Standby Letters of Credit

The Board proposes to amend the disclosure requirements of
Regulation F, "Securities of Member State Bank" to require disclosure
of the amounts of outstanding standby letters of credit on financial
statements of banks that are subject to the regulation.

Such disclosure

would more adequately inform the public of a bank’s potential liabilities.
A standby letter of credit is any letter of credit or similar
arrangement, however named or described, other than a commercial letter
of credit issued to facilitate the sale of goods, of the character under
which sight drafts or bankers* acceptances of the kind eligible, or which
would become eligible, for discount by a Federal Reserve Bank under
Regulation A, could be drawn.

Standby letters of credit were the subject

of a proposed amendment to the Board’s Regulation H (12 CFR 203) "Membership
of State Banking Institutions of the Federal Reserve System," by Board
action dated January 17, 1974.
This notice is published for comment pursuant to Section 553(b)
of Title 5, United States Code, and Section 262.2(a) of the Rules of Pro­
cedure of the Board of Governors.

The proposal would be adopted pursuant

to the Board's authority under Section 12 (i) of the Securities Exchange Act
of 1934 (12 U.S.C. 78).
Any comments should be submitted in writing to the Secretary,
Board of Governors of the Federal Reserve System, Washington, D. C. 20551,

- 2 -

to be received not later than March 15, 1974.

Such material will be

available for inspection and copying on request, except as provided for
in section 261.6(a) of the Board’s Rules Regarding Availability of
Information.
To implement its proposal, the Board is considering amending
Regulation F [12 CFR 206] as follows:
§ 206.7

Form and Content of Financial Statements

*

*

(c)

*

*

*

Provisions of general application***
(9)
"(viii)

General notes to balance sheets***
Standby Letters of Credit.

State the amount and

briefly describe the general terms of outstanding "standby letters of
credit".

A "standby letter of credit" is any letter of credit or similar

arrangement, however named or described, other than a commercial letter of
credit issued to facilitate the sale of goods, of the character under which
sight drafts or bankers’ acceptances of the kind eligible, or which would
become eligible, for discount by a Federal Reserve bank under Regulation A,
could be drawn.

It would include, but not be limited to, letters of credit

attached to promissory notes, i.e.. so-called "documented discount notes."

*

*

*

*

*

By order of the Board of Governors, January 25, 1974.

(Signed) Chester B. Feldberg

[SEAL]

Chester B. Feldberg
Secretary of the Board

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