District Circular Letters
July 25, 1997
FEDERAL RESERVE ACT--SECTIONS 23A and 23B:
TRANSACTIONS BETWEEN MEMBER BANKS AND SUBSIDIARIES
To Member Banks,
Bank Holding Companies, and Others Concerned
in the Twelfth Federal Reserve District
Proposed Application of Sections 23A and 23B of Federal Reserve Act
(Docket R-0977)
The Federal Reserve Board has requested comment on a proposal to apply
sections 23A and 23B of the Federal Reserve Act to transactions between
a member bank and any subsidiary that engages in activities that are impermissible
for the bank itself and that Congress has not previously exempted from
coverage by section 23A. Sections 23A and 23B restrict the ability of
a member bank to fund an affiliate through direct investment, loans, or
other transactions that might expose the member bank to risk.
Comment is requested by September 3, 1997.
The proposed treatment is largely consistent with the existing treatment
of these subsidiaries by the other banking agencies, which have applied
sections 23A and 23B in some form to transactions between a bank and such
subsidiaries.
Copies
Copies of the Board's notices (Docket R-0977)
are available from our Corporate Services Department. To request
copies to be sent via mail, please call (415) 974-2748. To request copies
to be sent via fax, please call (415) 974-3333, and specify document numbers
4162.
Additional Information
For additional information regarding these matters, please contact our
Banking Supervision and Regulation Department, at (415) 974-3007.
FEDERAL RESERVE BANK OF SAN FRANCISCO
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