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FEDERAL RESERVE BANK
OF N EW YORK
r Circular No. 0 0 9 6 "1
L January 11, 1968 J

Exemption of Banks and Financial Institutions
From U. S. Department of Commerce Foreign Direct Investment Program
To All BanTcs and Other Financial Institutions
in the Second Federal Reserve District:

Printed below i an excerpt from the Federal Register of January 6, 1968, containing the text
s
of a notice issued by the Board of Governors of the Federal Reserve System. It relates to the
exemption of the banks and financial institutions that are subject to the Federal Reserve foreign
credit restraint programs from the regulations of the Secretary of Commerce on foreign direct
investments.
Additional copies of this circular will be furnished upon request.
A

lfred

H

ayes,

President.

FEDERAL RESERVE SYSTEM
B A N K S A N D F IN A N C IA L INSTITU­
TIO N S: CAPITAL TRANSFER A B R O A D
By Executive Order 11387 (Jan. 1,1968,
33 F.R. 47), the President prohibited per­
sons owning 10 percent or more of a for­
eign business venture from engaging in
transfers of capital abroad except as au­
thorized by the Secretary of Commerce,
and also authorized the Secretary to re­
quire such persons to repatriate to the
United States their earnings from such
foreign business ventures and their
short-term financial assets abroad, in­
cluding bank deposits. However, the
President ordered the Secretary of Com­
merce to exempt from said requirements,
to the extent delineated by the Board of
Governors of the Federal Reserve Sys­
tem, banks and financial institutions
certified by the Board as being subject
to the Federal Reserve foreign credit
restraint program.
On January 2, 1968, the Board trans­
mitted to the Secretary of Commerce the
letter set forth below, which certified
that banks and financial institutions of
the kinds described therein are subject
to said program, the terms of which are
stated in the revised Guidelines issued
by the Board of Governors January 1,
1968. The Board delineated for exemption
all banks and financial institutions with­
in the enumerated categories, with the
exception of any bank or financial in­
stitution that is subject to the reporting
provisions of the Guidelines and fails to
report in substantial compliance with
those reporting provisions.
In accordance with the President’s
Order, the “Foreign Direct Investment
Regulations” of the Secretary of Com­
merce, published in the F e d e r a l R e g is t e r
of January 3, 19f}a (33 F.R. 49), exempted




banks and financial institutions “ to the
extent that may be delineated from time
to time by the Board of Governors” . Ac­
cordingly, all banks and financial insti­
tutions included in the Board’s list are
now exempt from said regulations of the
Secretary of Commerce, subject to the
specified exception.
Dated at Washington, D.C., the 4th
day of January 1968.
By order of the Board of Governors.
[seal]

R obert

C.

H

olland,

Secretary.

B

oard o f

G

overnors of th e

S

F ederal R

eserve

ystem

O FFICE O F T H E C H A IR M A N

January 2 ,1 9 6 8 .

The Honorable Alexander B. Trowbridge,
Secretary of Commerce,
Washington, D.C. 20230.
D e a r Mr. S e c r e t a r y : In accordance with
the provisions of section 1 (c) of Executive
Order 11,387, dated January 1,1968, the Board
of Governors of the Federal Reserve System
certifies that the following banks and finan­
cial institutions are subject to the foreign
credit restraint programs referred to in said
section 1 (c ):
1. Banks that accept deposits that the de­
positor has a legal right to withdraw on
demand.
2. Savings banks, both stock and mutual.
3. Trust companies, and trust departments
of banks.
4. Casualty, fire, marine, and life insurance
companies, both stock and mutual.
5. Management
investment
companies
(both open-end and closed-en d), as definedr'
in sections 4 and 5 of the Investment Com­
pany Act of 1940.
6. Organizations engaged principally in ex­
tending credit through consumer, com m er­
cial, or Industrial loans; financing of sales or
lease transactions; leasing of personal prop­
erty; or purchasing o f accounts receivable
or similar claims.

7. Organizations engaged principally In
underwriting or dealing in securities or act­
ing as broker in securities transactions.
8. Employee retirement and pension funds
and similar employee-beneflt funds.
9. Foundations, trusts, institutions, and
other nonprofit organizations principally de­
voted to the advancement o f art, education,
health, philanthropy, recreation, religion, re­
search, orvsimilar areas o f activity directed at
contributing to th e general welfare.
10. Corporations organized under section
25(a) o f the Federal Reserve Act (so-called
“ Edge A ct corporations” ) and corporations
having an agreement or undertaking w ith the
Board o f Governors under section 25 o f said
Act (so-called “ Agreement corporations” ) .
11. U.S. branches o f foreign banks and fi­
nancial institutions o f the kinds described
in the foregoing enum eration.
In accordance w ith the provisions of
said section 1 (c ), the Board o f Governors
delineates for exem ption from the provisions
o f section 1 o f said Executive order all banks
and financial institutions of the categories
enumerated above, w ith the exception o f any
bank or financial Institution that Is subject
to the reporting provisions o f said programs
b u t is n ot reporting (or covered b y reports
filed by another or others on its behalf) in
substantial com pliance with said reporting
provisions.
The foregoing certification and delinea­
tion are subject to m odification or termina­
tion with respect to any category o r individ­
ual bank or financial institution, in the event
that (a) the foreign credit restraint programs
referred to in section 1(c) o f said Executive
order are so modified that such category or
Individual bank or financial institution is no
longer subject to said programs or (b ) the
Board o f Governors determines that m odifi­
cation or term ination of said delineation is
necessary or appropriate in the pu blic In­
terest. Any such m odification or term ination
will be com m unicated by the Board to the
Secretary o f Commerce.
Sincerely yours,
W m . McC. M artin , Jr.
[F.R.

Doc.

68-318; Filed,
8:48 a.m.]

Jan.

5,

1968;

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