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F ederal R eserve Bank OF DALLAS ROBERT D. M c T E E R , J R . P R E S ID E N T AND C H IE F E X E C U T IV E June 7, 1991 O F F IC E R DALLAS, TEXAS 7 5 2 2 2 Notice 91-46 TO: The Chief Executive Officer of each member bank and others concerned in the Eleventh Federal Reserve District SUBJECT Request for Comments on Proposed Amendments to Regulation G (Securities Credit by Persons Other than Banks, Brokers, or Dealers) and Regulation U (Credit by Banks for the Purpose of Purchasing or Carrying Margin Stocks) DETAILS The Federal Reserve Board has requested public comment on proposed amendments to Regulation G (Securities Credit by Persons Other than Banks, Brokers, or Dealers) and Regulation U (Credit by Banks for the Purpose of Purchasing or Carrying Margin Stocks). Regulations G and U both permit the transfer of loans between lenders even if the amount of the loan outstanding exceeds the maximum loan value of the collateral securing the credit at the time of transfer. This treatment is currently limited to transfers of such credits from one Regulation U lender to another Regulation U lender or from one Regulation G lender to another Regulation G lender. The proposed amendments primarily reduce distinctions between lenders subject to Regulations G and U. The goal is to allow transfers of such loans between Regulation G lenders and Regulation U lenders. The Board must receive comments by June 24, 1991. Comments should be addressed to William W. Wiles, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, N.W., Washington, D.C. 20551. All comments should refer to Docket No. R-0730. ATTACHMENT Attached is a copy of the Board’s notice as it appears on pages 23252-54, Vol. 56, No. 98, of the Federal Register dated May 21, 1991. MORE INFORMATION For more information, please contact Eugene Coy at (214) 744-7480. For additional copies of this Bank’s notice, please contact the Public Affairs Department at (214) 651-6289. Sincerely yours, For additional copies, bankers and others are encouraged to use one of the following toll-free numbers in contacting the Federal Reserve Bank of Dallas: Dallas Office (800) 333-4460; El Paso Branch Intrastate (800) 592-1631, Interstate (800) 351-1012; Houston Branch Intrastate (800) 392-4162, Interstate (800) 221-0363; San Antonio Branch Intrastate (800) 292-5810. This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) 23252 Federal Register / Vol. 56. No. 98 / Tuesday, May 21, 1991 / Proposed Rules the loan to bring it into conformity with the initial margin requirem ents of Regulation U. PART 207—SECURITIES CREDIT BY PERSONS OTHER THAN BANKS, BROKERS, OR DEALERS 12 CFR Parts 207 and 221 The Transfer Provision in Regulation U (Docket No. R-0730] W hen Regulation U first becam e effective on May 1,1936, a bank w as permitted to “accept the transfer of a loan from another lender * * * w ithout following the requirem ents of this regulation as to the making of a loan, provided the loan is not increased and the collateral for the loan is not changed.” However, a subsequent am endm ent to Regulation U, effective shortly thereafter, changed the phrase "from another lender" to “from another bank.” 1. The authority citation for p art 207 continues to read as follows: Authority: Secs. 3, 7, 8,17, and 23 of the FEDERAL RESERVE SYSTEM RIN 7100-AA99 Securities Credit Transactions; Regulations G and U; Transfers of Credit May 16, 1991. Board of Governors of the Federal Reserve System. A CTION: Proposed rule. A GENCY: The Board is proposing for public comment am endm ents to SUM MARY: Regulations G and U (12 CFR parts 207 and 221) to permit transfers of loans betw een lenders subject to Regulation G and lenders subject to Regulation U on the same b asis as transfers betw een two lenders subject to the sam e regulation. Adoption of these am endm ents would partially reverse a 1936 am endm ent to Regulation U and further the Board’s goal of reducing unnecessary distinctions betw een lenders subject to Regulation G and lenders subject to Regulation U. D A TES: Comments should be received on or before June 24,1991. A D D R E S S E S : Comments, which should refer to Docket R-0730, m ay be mailed to Mr. William W. Wiles, Secretary, Board of Governors of the Federal Reserve System, 20th Street & Constitution Avenue, NW., Washington, DC 20551, or delivered at the C Street Entrance b etw een 8:45 a.m. and 5:15 p.m. w eekdays to room B-2223. Comments may be inspected in room B1122 betw een 8:45 a.m. and 5:15 p.m. weekdays. FOR FU R TH ER INFORM ATION C O N T A CT : Laura Homer, Securities Credit Officer, or Scott Holz, Attorney, Division of Banking Supervision and Regulation (202) 452-2781. For the hearing im paired only, Dorothea Thompson, Telecommunications Device for the Deaf (TDD) (202) 452-3544. S U PPLE M E N T A RY INFORM ATION: Regulations G and U each permit the transfer of a validly-made, regulated loan betw een lenders even if the am ount of the loan outstanding exceeds the maximum loan value of the collateral securing the credit at the time of transfer. This treatm ent is currently limited to transfers of credit betw een Regulation U lenders (banks) or betw een Regulation G lenders. If a Regulation G lender w ants to transfer a regulated loan that is currently undersecured to a bank, the bank must treat the loan as a new loan, and the customer would be required to bring in additional collateral or pay down part of The Transfer Provision in Regulation G In 1968, Regulation G w as adopted by the Board to regulate lenders other than banks, brokers, or dealers. Unlike Regulations T and U, Regulation G did not originally have a provision on transfers of credit. An undermargined loan by a Regulation G lender could not be transferred to another Regulation G lender w ithout bringing the loan into compliance as if it w ere a new extension of credit. This lack of parallel treatm ent among margin regulations w as eliminated on December 6,1973, w hen Regulation G w as am ended to permit transfers from one Regulation G lender to another on the sam e basis as transfers from one b an k to another or from one broker to another. One of the goals of the comprehensive revision of Regulations G and U in 1983 w as to eliminate unnecessary differences betw een the regulations and m ake them as similar as possible. Allowing transfers betw een banks and Regulation G lenders would further this goal by reducing unnecessary distinctions betw een the two types of lenders. List of Subjects 12 CFR P ort 207 Banks, Banking, Credit, Federal Reserve System, Insurance companies, Margin, Margin requirements, N ational M arket System (NMS Security), Reporting and recordkeeping requirements, Savings and loan associations, Securities. 12 CFR p a rt 221 Banks, Banking, Credit, Federal Reserve System, Margin, Margin requirements, National M arket System (NMS Security), Reporting and recordkeeping requirements, Securities. Accordingly, pursuant to the Board’s authority under sections 7 a n d 23 of the Securities Exchange Act of 1934, as am ended (15 U.S.C. 73g and 78w), the Board proposes to am end 12 CFR parts 207 and 221 (Regulations G and U) as follows: Securities Exchange Act of 1934, as amended (15 U.S.C. 78c, 78g, 78h, 78q, and 78w). 2. In § 207.3, paragraphs (l)(l)(i), (ii) and (3) are revised to read as follows: § 207.3 General requirements. * * * * * (1) Transfers o f credit. (1) A transfer of a credit betw een customers or lenders or betw een a lender and a bank shall not be considered a new extension of credit if: (i) The original credit w as extended by a lender in compliance with this part or w as extended by a b ank in a m anner that would have complied with this part; (ii) The transfer is not m ade to evade this part or part 221 of this chapter; * * * * * (3) W hen a transfer is made betw een lenders or betw een a lender and a bank, ihe transferee shall obtain a copy of the Form FR G-3 or Form FR U -l originally filed with the transferor lender and retain the copy with its records of the transferee account. If no form w as originally filed with the transferor, the transferee m ay accept in good faith a statem ent from the transferor describing Ihe purpose of the loan and the collateral securing it. * * * * * PART 221—CREDIT BY BANKS FOR THE PURPOSE OF PURCHASING OR CARRYING KARGIN STOCKS 1. The authority citation for part 221 continues to read as follows: Authority: Secs. 3, 7, 8, and 23 of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78c, 70g, 78h and 78w). 2. In § 221.3, paragraphs (i)(l)(i), (ii) and (3) are revised to read a3 follows: § 221.3 Genera! requirements. * * * * * («) Transfers o f credit. (1) A transfer of a credit betw een customers or banks or betw een a bank and a lender subject to part 207 of this chapter shall not be considered a new extension of credit if: (i) The original credit w as extended by a bank in compliance with this part or by a lender subject to part 207 of this chapter in a m anner that would have complied with this part; (ii) The transfer is not m ade to evade this part or p art 207 of this chapter; * * * * * (3) W hen a transfer is m ade betw een banks or betw een a bank and a lender subject to p art 207 of this chapter, the transferee shall obtain a copy of the Federal Register / Vol. 56, No. 98 / Tuesday, May 21, 1991 / Proposed Rules Form FR U - l or Form FR G-3 originally filed with the transferor and retain the copy with its records of the transferee account. If no form w as originally filed with the transferor, the transferee may accept in good faith a statem ent from the transferor describing the purpose of the loan and the collateral securing it. By order of the Board of Governors of the Federal Reserve System. May 16,1991. William W. Wiles, Secretary o f the Board. [FR Doc. 91-11990 Filed 5-20-91; 8:45 am] B ILLING C O D E 6 2 1 0 - 0 1 - M 23253
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