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F ederal Reserve Bank of Dallas DALLAS, T E X A S 75222 C irc u la r No. 78-97 J u ly 20, 1978 REGULATION Y— BANK HOLDING COMPANIES Notice of P r o p o se d A mendment TO ALL MEMBER BANKS, BANK HOLDING COMPANIES, AND OTHERS CONCERNED IN THE ELEVENTH FEDERAL RESERVE DISTRICT: T h e Board of G o v e rn o rs of th e Federal R e s e r v e System has is s u e d for p u b lic comment a p r o p o s e d a m e ndm ent to its R egulation Y w hich would make c h e c k v erification a n a c tiv ity p e r m is s i b le for b a n k holding com pany s u b s i d i a r i e s . T h e Board h a s b e fo re it an applic ation to e n g a g e in c h e c k verificatio n w hich the a p p lic a n t d e s c r i b e s a s follows: T h e b a n k holding com pany would e s t a b lis h a s u b s i d i a r y , to e n g a g e in c h e c k v e rific a tio n . M erchants would pay a fee to s u b s c r i b e to th e s e r v i c e s of th e v e rifica tio n com p a n y . T h e com pany would a u t h o r iz e s u b s c r i b i n g m e r c h a n t s to a c c e p t c e r t a i n p e rs o n a l c h e c k s as p a y m e n t for goods a n d s e r v i c e s . If a n a u th o r iz e d c h e c k t u r n s out to b e b a d , the s u b s i d i a r y will b u y it from the m e r c h a n t . T h e Board may a c t on the s u b je c t ap p lic atio n p r i o r to the final d e c isio n on the a c tiv ity . P r in te d on th e following p a g e s is the te x t of the B o a r d 's prop osal as subm itted to th e F e d e r a l R e g i s t e r . Any comments should be su bm itte d in w ritin g a nd r e c e iv e d by the S e c r e t a r y , Board of G o v e r n o r s of th e Federal R e s e r v e S ystem , W ashington, D .C . 20551, no la te r th a n A u g u s t 14, 1978. All m a te ria ls subm itte d should in c lu d e th e d o c k e t n u m b e r R -017 1. Sincerely you rs, Robert H . Boykin F irs t Vice President This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) FEDERAL RESERVE SYSTEM (12 CFR P a r t 225) (R egulation Y) BANK HOLDING COMPANIES (Docket No. R-0171) P ro p o se d Rulemaking Relating to P r o v id in g Check Verification S e r v ic e s BARNETT BANKS OF FLORIDA, INC. Formation of V e r i f ic a tio n s , Inc. to P ro v id e Check Verification S e r v ic e s AGENCY: Board of G o v e rn o rs of the Federal R e s e r v e S ystem . ACTION: P ro p o se d r u l e a n d action on individual a p p lic atio n . SUMMARY: T h e Board p r o p o s e s to a d o p t a re g u la tio n that would p e rm it ba n k holding com panies to e n g a g e in p r o v id i n g c h e c k v e rifica tio n s e r v i c e s , s u b je c t to p a r t i c u l a r p r o c e d u r e s in individu al c a s e s . T h e Board will also c o n s i d e r a ctin g by o r d e r , p r i o r to action on the p r o p o s e d r u l e , on the ap p lic atio n of B a rn e tt Banks of F lo rid a , I n c . , to p r o v id e ch eck ve rification s e r v i c e s th r o u g h a new ly formed s u b s i d i a r y . V e rific a tio n s , Inc. DATE: Comments m ust be r e c e i v e d on or b e fo re A u g u s t 14, 1978. ADDRESS: S e c r e t a r y , Board of G o v e r n o r s of the F ederal R e s e r v e S ystem , W ashington, D .C . 20551. All material subm itted shou ld in c lu d e th e d o c k e t n u m b e r R -017 1. FOR FURTHER INFORMATION CONTACT: J u l i u s L. L o e s e r, S e n io r A ttorney (202/452-3236) o r J . H a rry J o r g e n s o n , A ttorne y (202/452-3778), Board of G o v e r n o r s of the Federal R e s e r v e S y ste m , W ashington, D .C . 20551. SUPPLEMENTARY INFORMATION: T h e Board of G o v e rn o rs h a s re c e iv e d a n app lic atio n filed by B a r n e tt Banks of F lo rid a , I n c . , J a c k s o n v i l l e , Florida ( " A p p l i c a n t " ) , p u r s u a n t to section 4(c) (8) of the Bank Holding Company Act (12 U . S . C . § 1843(c) (8)) a n d section 225.4(b) (2) of the B o a r d 's Regulation Y (12 CFR § 2 2 5 .4(b ) ( 2 ) ) , for p r i o r a p p r o v a l to e n g a g e d e n o v o t h r o u g h a s u b s i d i a r y to b e known a s V e rific a tio n s , Inc. in p r o v id i n g ch ec k ve rifica tio n s e r v i c e s to m erchants. - 2 - A p p lic a n t p r o p o s e s to e n g a g e in p r o v i d i n g c h e c k v e rifica tio n s e r v i c e s a s follows: In c o n s id e ra tio n of fees paid by a s u b s c r i b i n g m e r c h a n t . V e rific a tio n s , Inc. will a u t h o r i z e a c c e p ta n c e by the m e r c h a n t of c e r t a i n p e rs o n a l c h e c k s te n d e r e d by th e m e r c h a n t 's c u s to m e r s in p a y m e n t of goods a n d s e r v i c e s . In the e v e n t a v a lid ly a u th o r iz e d c h e c k is s u b s e q u e n t l y d i s h o n o r e d , V e rifi c a t io n s , Inc. will p u r c h a s e s u c h ch ec k from the m e rc h a n t. Section 4(c) (8) of the Bank Holding Company Act p ro v id e s th a t a b a n k h olding company may, with Board a p p r o v a l , a c q u i r e " s h a r e s of a n y company the a c tiv itie s of which the Board a fte r d u e notice a nd o p p o r tu n i ty for h e a r i n g has d e te r m in e d (by o r d e r o r r e g u l a tion) to b e so closely re la te d to b a n k in g a s to be a p r o p e r in c id e n t t h e r e t o . " A p p lic a n t b e lieves th a t th e p r o p o s e d activity is so c lo se ly r e la te d to b a n k in g a s to be a p r o p e r in c id e n t th e r e to a n d th e Board b e lie v e s th a t a re a s o n a b le b a s i s e x is ts for A p p lic a n t's o p inion. In connection with th is a p p lic a t io n , the Board will c o n s i d e r a m e n d in g Regulation Y (12 CFR § 2 2 5 .4 (a )) to a d d th e activity of p r o v id i n g c h e c k v e rifica tio n s e r v i c e s to the list of activ itie s th a t the Board h a s p r e v i o u s l y d e te r m in e d to be p e r m i s s i b l e for b a n k holding com p a n i e s . I n te re s te d p e r s o n s may e x p r e s s t h e i r vie w s on the q u e stio n w h e th e r p r o v id i n g c h e c k ve rifica tion s e r v i c e s is "so c lo se ly re la te d to b a n k in g o r m anag ing o r c o n tro llin g b a n k s a s to be a p r o p e r in c id e n t th e re to " w ithin th e meaning of section 4(c) (8) . T h e Board will also c o n s i d e r a ctin g b y o r d e r , p r i o r to action on the p ro p o s e d r u l e , on th e applic ation of B a r n e tt B anks of F lo r id a , I n c . , to p r o v id e c h e c k verification s e r v i c e s th r o u g h a new ly formed s u b s i d i a r y . V e rific a tio n s , Inc. In te re s te d p e r s o n s may a lso e x p r e s s t h e ir vie w s on th e q u e s tio n w h e th e r consum m ation of the p ropo sa l by A p p lic a n t can " r e a s o n a b ly be e x p e c te d to p r o d u c e b e n efits to the p u b lic s u c h a s g r e a t e r c o n v e n i e n c e , in c r e a s e d com petition, o r g a in s in efficiency, th a t outw eigh p o s s ib le a d v e r s e effects, such as u n d u e c o n c e n tra tio n of r e s o u r c e s , d e c r e a s e d o r u n f a ir c om petition, conflicts of i n t e r e s t s , o r u n s o 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 for a h e a r in g on t h e s e q u e s ti o n s should be accom panied by a s ta t e ment s um m a riz in g th e e v id e n c e th e p e r s o n r e q u e s t i n g the h e a r i n g p ro p o s e s to s u b m it or to elicit a t th e h e a r in g a n d a statem ent of the r e a s o n s w hy th is m atter should not b e re s o lv e d w ithout a h e a r i n g . T h e app lic atio n of B a r n e t t Banks of F lo r id a , I n c . , may be in s p e c te d at th e of fices of e it h e r the Board of G o v e r n o r s o r the Fe d e ra l R e s e r v e Bank of A t l a n t a . E x p r e s s io n s of view s r e c e iv e d by th e B oard may be in s p e c te d a t th e offices of the Board of G o v e r n o r s . Any v ie w s o r r e q u e s t s for h e a r i n g e i t h e r on the p r o p o s e d ru le o r on the in d iv id ual ap plic ation should be su b m itte d in w r iti n g a n d r e c e iv e d b y th e S e c r e t a r y , Board of Gov e r n o r s of th e Federal R e s e r v e S ystem , W ash ing ton , D .C . 20551, not later than A u g u st 14, 1978. Board of G o v e r n o r s of th e Federal R e s e r v e S y stem , J u l y 12, 1978. T h e o d o r e E. Allison S e c r e t a r y of th e Board (SEAL)
@FedFRASER