The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
F ederal reserve bank of DALLAS, TEXAS Dallas 7S222 Circular No. 73-338 December 28, 1973 PROPOSED AMENDMENT TO REGULATION Y (Underwriting the Deductible Portion of Bankers Blanket Bond Insurance) To All Banks, Bank Holding Companies and Others Concerned in the Eleventh Federal Reserve District: Effective December 19, 1973, the Board of Governors of the Federal Reserve System announced they will consider the possible addition of underwriting the deductible portion of bankers blanket bond insurance to activities permissible to bank holding companies under Section 225.1+ of Regulation Y. Any comments or requests for a hearing should be addressed to the Secretary of the Board, Washington, D. C., 20551. Comments will be received through January 2b, 197^. A copy of the proposed release are attached. amendment and accompanying press Yours very truly, P. E. Coldwell, President Attachments This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) k FEDERAL press RESERVE release F o r im m e d ia te r e l e a s e D ecem ber 1 8 , 1973 The B oard o f G o v e rn o rs o f t h e F e d e r a l R e s e rv e S y stem s a i d to d a y i t w i l l c o n s i d e r p o s s i b l e a d d i t i o n o f u n d e r w r i t in g t h e d e d u c t i b l e p o r t i o n o f b a n k e r s b l a n k e t bond in s u r a n c e t o a c t i v i t i e s p e r m i s s i b l e t o b an k h o l d in g c o m p a n ie s . Comment w i l l be r e c e i v e d th r o u g h J a n u a r y 2 4 , 1974. The B oard w i l l c o n s i d e r th e q u e s t i o n i n c o n n e c tio n w i t h an a p p l i c a t i o n from C h a se M a n h a tta n C o r p o r a t i o n , New Y o rk , t o a c q u i r e t h e v o t i n g s h a r e s o f C h a se M a n h a tta n C a p tiv e I n s u r a n c e C o ., D e n v e r. The a p p l i c a t i o n s t a t e s t h a t t h e p r o p o s e d s u b s i d i a r y w ould e n g a g e i n u n d e r w r i t in g o f in s u r a n c e a g a i n s t l o s s e s d u e t o c r i m i n a l a c t s o f v a r i o u s k in d s an d o t h e r in s u r a n c e o f t h e ty p e a f f o r d e d t o b a n k s by b a n k e rs b l a n k e t bond i n s u r a n c e . As i n a u to m o b ile an d o t h e r i n s u r a n c e , t h e prem ium on b a n k e rs b l a n k e t bond i n s u r a n c e i s lo w e re d w hen t h e in s u r e d a c c e p t s p a r t o f t h e r i s k i n t h e form o f a p r e v i o u s l y a g re e d d e d u c ti o n from t h e am ount o f t h e l o s s t h a t t h e i n s u r e r i s o b l ig e d t o p a y . The p r o p o s e d s u b s i d i a r y w o u ld i n s u r e C h a se M a n h a tta n C o r p o r a t i o n , h o l d in g com pany f o r C h ase M a n h a tta n B an k , an d c e r t a i n o f i t s a f f i l i a t e s , a g a i n s t l o s s e s a r i s i n g from t h e d e d u c t i b l e p o r t i o n o f C h ase M a n h a tta n C o r p o r a t i o n 's b a n k e r s b l a n k e t bond i n s u r a n c e . The B oard i s p u b l i s h i n g n o t i c e o f r e c e i p t o f t h e a p p l i c a t i o n in th e F e d e ra l R e g is te r . The B oard I n v i t e d comment o n t h e q u e s t i o n -2 w h e th e r t h e p r o p o s e d a c t i v i t y i s c l o s e l y r e l a t e d t o b a n k in g , an d on t h e q u e s t i o n w h e th e r i t w ould r e s u l t i n b e n e f i t s t o t h e p u b l i c o u tw e ig h in g p o s s ib le a d v e rse e f f e c ts * Any v ie w s o r r e q u e s t s f o r a h e a r i n g s h o u ld b e a d d r e s s e d t o t h e S e c r e t a r y o f t h e B o ard (W a s h in g to n , D.C* 2 0 5 5 1 ) n o t l a t e r th a n J a n u a r y 2 5 , 1 9 7 4 . A c o p y o f t h e B o a r d 's o r d e r i s a t t a c h e d . 0 FEDERAL RESERVE SYSTEM [12 CFR Part 225] BANK HOLDING COMPANIES A p p l i c a t i o n t o E ngage i n t h e U n d e r w r itin g o f B a n k e rs B la n k e t Bond I n s u r a n c e ( D e d u c tib le P o r t i o n O n l y ) ; and P o s s i b l e R u le M aking W ith R e s p e c t T h e r e t o , The B o ard o f G o v e rn o rs h a s r e c e i v e d t h e f o ll o w i n g a p p l i c a t i o n f i l e d p u r s u a n t t o s e c t i o n 4 ( c ) ( 8 ) o f t h e Bank H o ld in g Company A c t (12 U .S .C . 1 8 4 3 ( c ) ( 8 ) ) a n d § 2 2 5 .4 ( b ) ( 2 ) o f t h e B o a r d 's R e g u l a ti o n Y (12 CFR 2 2 5 .4 ( b ) ( 2 ) ) f o r p r i o r a p p r o v a l t o a c q u i r e s h a r e s o f a com pany w h ic h w ill e n g a g e d e novo i n u n d e r w r i t i n g t h e d e d u c t i b l e p p r t i o n o f b a n k e r s b la n k e t bond in s u ra n c e : The C hase M a n h a tta n C o r p o r a t i o n , New Y o rk , New Y o rk , h a s a p p l i e d f o r p e r m i s s i o n t o a c q u i r e v o t i n g s h a r e s o f C h a se M a n h a tta n C a p tiv e I n s u r a n c e C o ., D e n v e r, C o lo r a d o . A p p l i c a n t s t a t e s t h a t t h e p ro p o s e d s u b s i d i a r y w ould e n g a g e i n t h e a c t i v i t y o f u n d e r w r i t i n g i n s u r a n c e f o r i t s e l f an d c e r t a i n o f i t s a f f i l i a t e s a g a i n s t r i s k s a r i s i n g o u t o f i n f i d e l i t y o f e m p lo y e e s , b u r g l a r y , r o b b e r y , l a r c e n y o r m y s te r io u s d i s a p p e a r a n c e o f p r o p e r t y fro m p r e m is e s o r i n t r a n s i t , f o r g e r y , a l t e r a t i o n o r c o u n t e r f e i t an d o t h e r i n s u r a n c e o f t h e ty p e a f f o r d e d b y t h e b a n k e r s b l a n k e t bond t o m a jo r b a n k in g I n s t i t u t i o n s i n t h e U n ite d S ta te s * A p p lic a n t f u r t h e r s t a t e s t h a t th e p ro p o se d u n d e r w r i t i n g a c t i v i t i e s w o u ld b e l i m i t e d t o i n s u r i n g t h e d e d u c t i b l e p o r t i o n o f th e b a n k e rs b la n k e t b o n d , i . e . , p r e s e n tly in s u re d . t h a t p o r t i o n o f t h e r i s k w h ic h i s n o t -2- The B o ard h a s n o t h e r e t o f o r e c o n s id e r e d w h e th e r t h e p ro p o s e d a c t i v i t i e s a r e c l o s e l y r e l a t e d to b a n k in g . A p p l i c a n t i s o f t h e o p i n io n t h a t t h e p r o p o s e d u n d e r w r i t i n g a c t i v i t i e s a r e so c l o s e l y r e l a t e d to b a n k in g o r m an ag in g o r c o n t r o l l i n g b a n k s a s t o b e a p r o p e r i n c i d e n t t h e r e t o and n o t i c e o f r e c e i p t o f t h e a p p l i c a t i o n i s b e in g p u b l is h e d p u r s u a n t t o § 2 2 5 .4 ( a ) o f t h e B o a r d 's R e g u l a ti o n Y. I n c o n n e c tio n w ith t h i s a p p l i c a t i o n , t h e B oard w ill a l s o con s i d e r p o s s i b l e ru le m a k in g t o add t h e p r o p o s e d a c t i v i t y t o t h e l i s t o f a c t i v i t i e s t h e B o ard h a s p r e v i o u s l y d e te r m in e d t o b e c l o s e l y r e l a t e d t o b a n k in g . I n t e r e s t e d p e r s o n s a t e i n v i t e d t o e x p r e s s t h e i r v ie w s on t h e q u e s t i o n o f w h e th e r t h e u n d e r w r i t in g o f t h e d e d u c t i b l e p o r t i o n o f b a n k e rs b l a n k e t bond in s u r a n c e i s so c l o s e l y r e l a t e d t o b a n k in g o r m an ag in g o r c o n t r o l l i n g b a n k s a s t o b e a p r o p e r i n c i d e n t t h e r e t o . I n t e r e s t e d p e r s o n s a r e i n v i t e d t o e x p r e s s t h e i r v ie w s o n t h e q u e s t i o n o f w h e th e r c o n su m m atio n o f t h e s u b j e c t p r o p o s a l c a n " r e a s o n a b l y be e x p e c te d t o p ro d u c e b e n e f i t s t o t h e p u b l i c , s u c h a s g r e a t e r c o n v e n i e n c e , i n c r e a s e d c o m p e t i t i o n , o r g a in s i n e f f i c i e n c y , t h a t o u tw e ig h p o s s i b l e a d v e r s e e f f e c t s , s u c h a s undue c o n c e n t r a t i o n o f r e s o u r c e s , d e c r e a s e d o r u n f a i r c o m p e t i t i o n , c o n f l i c t s o f i n t e r e s t s , o r u n so u n d b a n k in g p r a c t i c e s . " Any r e q u e s t f o r a h e a r i n g on t h i s q u e s t i o n , o r o n t h e i s s u e o f w h e th e r t h e u n d e r w r i t in g o f t h e d e d u c t i b l e p o r t i o n o f b a n k e r s b l a n k e t bo n d in s u r a n c e i s s o c l o s e l y r e l a t e d t o b a n k in g o r m an a g in g o r c o n t r o l l i n g b a n k s a s t o b e a p r o p e r i n c i d e n t t h e r e t o -3 - s h o u ld b e a c c o m p a n ie d by a s ta t e m e n t s u m m a riz in g t h e e v id e n c e t h e p e r s o n r e q u e s t i n g t h e h e a r i n g p r o p o s e s t o s u b m it o r t o e l i c i t a t t h e h e a r i n g and a s ta t e m e n t o f t h e r e a s o n s why t h i s m a t t e r s h o u ld n o t b e r e s o l v e d w ith o u t a h e a r i n g . The application may be inspected at the offices of the Board of Governors or at the Federal Reserve Bank of New York. Any v ie w s o r r e q u e s t s f o r h e a r i n g Bhould b e s u b m itte d i n w r i t i n g and r e c e i v e d by t h e S e c r e t a r y , B oard o f G o v e rn o rs o f t h e F e d e r a l R e s e rv e S y s te m , W a s h in g to n , D .C . 20551, n o t l a t e r th a n Ja n u a ry 2 5 , 1974. By order of the Board of Governors, effective December 1 8 , 1973. (Signed) Chester B . Feldberg C h e s te r B. F e ld b e rg S e c r e t a r y o f t h e B o a rd (SEAL)
@FedFRASER