Full text of Federal Reserve Bank of New York Circulars : 7372. Proposed Amendment to Regulation Y

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FED E R A L RESER VE BANK
OF NEW YORK
r Circular No. 7 3 7 2 1
L
A pril 3, 1974
J

PROPOSED AMENDMENT TO REGULATION Y
Underwriting and Dealing in Government Securities by Bank Holding Companies
t

T o A ll Bank H olding Companies, and O thers Concerned,
in the Second Federal R eserve D istrict:

Following is the text of a statement issued April 2 by the Board of Governors of the Federal
Reserve System:
The Board of Governors of the Federal Reserve System today published for comment notice of possible
extension of permissible activities of bank holding companies to dealing in and underwriting certain United
States and State and municipal securities.
The Board said it would consider whether to amend Regulation Y — regulating bank holding companies—
to include this activity, together with an application from United Bancorp, of Roseburg, Oregon, to estab­
lish a subsidiary— United Bancorp Municipals, Inc.— to underwrite and deal in such securities.
The Board took no position on the activity at this time.
The possible extension o f bank holding company activities would include underwriting and dealing in
obligations o f the United States, general obligations of any State and of political subdivisions of States,
as well as other securities that State-chartered member banks of the Federal Reserve System may deal in
or underwrite.
The Board invited comment as to whether such activity by bank holding companies would be so closely
related to banking or managing banks as to be eligible under the Bank H olding Company A ct as a “ proper
incident” to banking, and whether it would meet the A ct’s requirement that it would on balance be bene­
ficial to the public.
Comment on the application of United Bancorp, and on the possible addition to activities permissible
to bank holding companies, should be received in writing by the Secretary of the Board (Washington, D. C.
20551) not later than May 8, 1974.

Printed below is the text of the proposed amendment to Regulation Y. Comments thereon
should be submitted by May 8, and may be sent to our Bank Applications Department.
A lfred H a y e s ,

President.
(Reg. Y )
BANK HOLDING COMPANIES
Notice of Application to Engage in Underwriting and
Dealing in Certain Investment Securities and of Possible
Rule-making with Respect Thereto

The Board of Governors has received the following
application filed pursuant to section 4 ( c ) ( 8 ) of the
Bank H olding Company Act (12 U.S.C. 1 8 4 3 (c )(8 )
and 225.4 ( b ) ( 2 ) of the Board’s Regulation Y (12
C F R 2 2 5 .4 ( b ) ( 2 ) ) for prior approval to engage in




underwriting and dealing in obligations of the United
States, general obligations of any State and of any
political subdivision thereof, and others enumerated in
section 24 (Paragraph Seventh) of Title 12 of the
United States C ode:
( over)

United Bancorp, Roseburg, Oregon, has applied to
form de novo United Bancorp Municipals, Inc., Rose­
burg, Oregon.
The activity of underwriting and dealing in such
obligations has not heretofore been found by the Board
to be closely related to banking. Applicant states that
the proposed activity is being, and has been tradition­
ally, performed by banks, and is, in Applicant’s opinion,
closely related to banking. This notice is published
pursuant to section 225.4(a) of Regulation Y.
In connection with its consideration of this applica­
tion, the Board will also consider possible rule-making
to add the proposed activity to the list of activities the
Board has previously determined to be closely related
to banking.
T o implement the proposal, section 225.4(a) of R eg­
ulation Y would be amended by adding a subparagraph
to read as follow s:
S E C T IO N 225.4— N O N B A N K IN G A C T IV IT IE S
(a )
Activities closely related to banking or manag­
ing or controlling banks. * * * The following activities
have been determined by the Board to be so closely
related to banking or managing or controlling banks
as to be a proper incident thereto:
*

*

*

( ) Underwriting and dealing in such obligations of
the United States, general obligations of any State and
of any political subdivision thereof, and other obliga­




tions that State member banks o f the Federal Reserve
System may from time to time be authorized to under­
write and deal in.
*

*

*

Interested persons are invited to comment in writing
on the question of whether such underwriting and deal­
ing are so closely related to banking or managing or
controlling banks as to be a proper incident thereto.
Interested persons are also invited to comment in
writing on the question of whether consummation of
the subject proposal can “ reasonably be expected
to produce benefits to the public, such as greater con­
venience, increased competition, or gains in efficiency,
that outweigh possible adverse effects, such as undue
concentration of resources, decreased or unfair competi­
tion, conflicts of interest, or unsound banking practices.”
Written comments as they are received will be made
available for inspection and copying, except as provided
in section 261.6(a) of the Board’s Rules Regarding
Availability of Information (12 C F R 2 6 1 .6 (a )), in
R oom 1118 of the Board’s building, 20th Street and
Constitution Avenue, N .W ., Washington, D. C. The
applications may be inspected and copied at the offices
of the Board o f Governors or at the Federal Reserve
Bank of San Francisco.
Any comment on this proposal should be submitted
in writing and should be received by the Secretary,
Board of Governors of the Federal Reserve System,
Washington, D. C. 20551, not later than May 8, 1974.