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FED ER AL RESERVE BANK
O F NEW YORK

Circular No. 8 5 3 3 * 1
March 8, 1979

[

J

AMENDMENT TO REGULATION Y
Sale of Money Orders, Travelers Checks, and U.S. Savings Bonds
at Nonbank Offices of Bank Holding Companies
To A ll Bank Holding Companies, and Others Concerned,
in the Second Federal Reserve D istrict:

Following is the text of a statement issued February 26 by the Board of Governors of the
Federal Reserve System:
The Federal Reserve Board today announced an amendment to its Regulation Y to permit bank holding
companies to sell money orders, travelers checks and U.S. savings bonds to the public at their nonbank offices.
The Board fixed a maximum face value of $1,000 on the money orders sold at offices of bank holding companies
and their subsidiaries. A t the same time, the Board declined to adopt an amendment that was earlier proposed
that would have permitted bank holding companies to sell variable denominated instruments and financial man­
agement courses. The Board announced that it would consider specific proposals by bank holding companies
to furnish consumer-oriented financial management courses on a case-by-case basis.
In a related action the Board announced its approval of an application by Citicorp, New York, New York,
to sell money orders, travelers checks and U.S. savings bonds and to provide consumer-oriented financial man­
agement courses at eight offices in Utah of its subsidiary, Citicorp Person-to-Person Financial Centers.

Enclosed is a copy of the Regulation Y amendment, effective April 2, 1979. Questions regarding
this matter may be directed to our Domestic Banking Applications Department (Tel. No. 212791-5861).




Pau l A . V

olcker,

President.

Board of Governors of the Federal Reserve System
BANK HOLDING COMPANIES AND CHANGE IN BANK CONTROL
A M E N D M E N T T O R E G U L A T IO N Y
( effective April 2, 1979)
Board will consider proposals by bank holding
companies to engage in these activities on a
case-by-case basis.

Nonbank Activities

AGENCY: Board of Governors of the Federal
Reserve System.

Similarly, that part of the proposed rule that
would have authorized the sale of “ variable
denominated instruments” engendered confu­
sion among commenters, and on the basis of
submissions by Citicorp it now appears that
there is no present need for this authorization
in a regulation o f industry-wide applicability.
For those reasons the Board has declined to
adopt that part of the proposed rule.

ACTION: Final rule.
SU M M ARY: The Board has adopted a final
rule, substantially as proposed in February
1978, that adds the sale of money orders, trav­
elers checks, and U.S. savings bonds to the list
of those activities permissible for bank holding
companies. The Board declined to add the pro­
vision of financial management courses to that
list as it had originally proposed.

EFFECTIVE DATE: April 2, 1979.
FOR FURTHER INFORMATION CON­
TACT: Robert E. Mannion, Associate General
Counsel (202/452-3274), or James M cAfee,
Senior Attorney (202/452-3707), Legal D ivi­
sion, Board of Governors of the Federal R e­
serve System, Washington, D.C. 20551.

SUPPLEMENTARY INFORMATION: In
conjunction with an application by Citicorp,
New York, New York, the Board in February
1978 published notice of a proposed amendment
to its Regulation Y that would add the retail
sale of money orders and other instruments,
travelers checks, U.S. savings bonds, financial
management courses, and other educational ma­
terials relating to financial matters to the list of
activities permissible for bank holding com ­
panies and their nonbank subsidiaries. 43 Fed.
Reg. 7,440 (19 78 ). The comments received in
response to that proposal did not adequately
explore the appropriate boundaries on an indus­
try-wide basis for educational activities of bank
holding companies, and as a consequence the
Board has declined to adopt that part of the
proposed rule relating to financial management
courses and educational materials. Instead, the

The balance of the proposal, which the Board
has adopted as a final rule, authorizes the retail
sale to the public by bank holding companies of
money orders, travelers checks, and U .S. sav­
ings bonds at offices operated by them and their
nonbank subsidiaries, subject to Board approval
of specific proposals. The Board found that
these activities have been traditionally engaged
in by banks and that their provision by bank
holding companies was likely in the usual case
to yield net benefits to the public. A fuller
discussion of the Board’s consideration of the
proposed activities is included in its Order re­
garding the associated application by Citicorp
to engage in the activities at several offices in
Utah, which has been published in the notice
section of this issue of the Federal Register
[vol. 44, no. 44 — March 5, 1979] for the
information of interested persons. In response
to several comments on that application, the
Board stressed in its Order that this action
concerned the retail sale of travelers checks and
money orders and did not authorize their issu­
ance by bank holding companies, and that Board
authorization o f activities under section 4 (c ) (8)
of the A ct did not exempt bank holding com ­
panies from complying with licensing, bonding,
and other requirements of law applicable to
persons engaged in those activities. The Board
has also denied several requests for hearings

For this Regulation to be complete, retain:
1) Regulation Y pamphlet, as amended effective April 5, 1978.
2 ) Amendments effective January 1, 1979 and March 10, 1979.

3) This slip sheet.
PRINTED IN NEW YORK

[Enc. Cir. No. 8533]



( over)

that were not relevant to the proposal as it has
been adopted, for the reasons explained in its
Order.
The Board has added a condition to the final
rule that was not in the proposed rule that
would restrict money orders sold under this
authority to a face value of $1,000. The purpose
of this restriction is to conform the authorization
to earlier Board actions respecting the issuance
of such instruments by insuring that they retain
their character as consumer instruments.
(2 )
This action is taken pursuant to the
Board’s authority under sections 4 ( c ) ( 8 ) and




5 (b ) of the Bank H olding Company Act, 12
U.S.C. §§ 1 8 4 3 (c )(8 ) and 1844(b).
Text of Amendment
Effective April 2,1979, section 225.4(a) of the
Board’s Regulation Y (12 C.F.R. § 2 2 5 .4 (a ))
is amended by adding the following new para­
graph (1 3 ) immediately following § 225.4(a)
( 12) :
*
*
*
(13) The sale at retail of money orders
having a face value of not more than $1,000
and travelers checks and the sale of U.S.
savings bonds.