December 1, 2008

[ ]

Dear [ ]:

This is in response to the request by [ ] 

“Bank”), [ ] for an exemption from section 23A of the 

Federal Reserve Act and the Board’s Regulation W to allow Bank to purchase certain 

assets from affiliated money market mutual funds.

A subsidiary of [ ], Bank’s ultimate parent 

bank holding company, serves as investment adviser to a family of money market mutual 

funds (“the Funds”). Bank is proposing to purchase assets from the Funds to enable them

to meet redemption requests without having to sell assets into the currently fragile and 

illiquid money markets. These purchases would be limited to an aggregate amount of

[ ] of Bank’s capital stock and surplus, as of September 30, 2008, or 

approximately [ ].

Section 23A and Regulation W limit the aggregate amount of “covered 

transactions” between a bank and any single affiliate to 10 percent of the bank's capital 

stock and surplus, and limit the aggregate amount of covered transactions between a bank 

and all its affiliates to 20 percent of the bank's capital stock and surplus.1

 “Covered 

transactions” include the purchase of assets by a bank from an affiliate, the extension of 

credit by a bank to an affiliate, the issuance of a guarantee by a bank on behalf of an 

affiliate, and certain other transactions.2

 The statute and regulation also require a bank to 

secure its extensions of credit to, and guarantees on behalf of, affiliates with prescribed 

amounts of collateral.3

 1

 12 U.S.C. § 371c(a)(1) and 12 CFR 223.11 and 223.12.

2

 12 U.S.C. § 371c(b)(7) and 12 CFR 223.3(h).

3

 12 U.S.C. § 371c(c) and 12 CFR 223.14.
- 2 -

The proposed purchases of assets by Bank from the Funds would be

covered transactions under section 23A and Regulation W. The Funds are affiliates of 

the Bank for purposes of section 23A and Regulation W because they are advised by a 

subsidiary of [ ], Bank’s parent holding company.4

[ ] – exceeds Bank's quantitative limits under the statute and rule.

The aggregate amount of the covered transactions – approximately

5

 

Accordingly, Bank is requesting an exemption from the quantitative limits of section 23A 

and Regulation W in connection with its purchases of assets from the Funds. 

Section 23A and Regulation W specifically authorize the Board to exempt transactions or 

relationships from the requirements of the statute and rule if the Board finds such an 

exemption to be in the public interest and consistent with the purposes of section 23A.6

Bank believes that granting the requested exemption would provide 

substantial benefits to Bank and the public, as the purchases of assets would result in 

increased liquidity for the Funds and their investors and would have a stabilizing effect

on money market mutual funds and short-term bank and corporate funding markets.

The exemption is subject to the following limits and conditions:

• Bank may only purchase assets from the Funds that are SEC-registered open-end 

investment companies that operate pursuant to SEC Rule 2a-7 under the 

Investment Company Act of 1940 (17 CFR 270.2a-7).

• Bank’s purchases of assets from the Funds would be limited to the amount 

necessary to cover net redemptions in the Funds, up to an aggregate maximum of 

[ ] of Bank’s capital stock and surplus, as of September 30, 2008, or 

[ ].

• The assets purchased by Bank from the Funds must be externally rated by an 

NRSRO at A-1/P-1 or the credit equivalent thereof.

• Bank must purchase the assets at fair market value as determined by an 

unaffiliated third-party pricing service.

 4

 12 CFR 223.2(a)(6).

5

 As of September 30, 2008, Bank’s capital stock and surplus was [ ]. 

Accordingly, for purposes of section 23A and Regulation W, the 10 percent limit for 

covered transactions with a single affiliate would be [ ], and the 20 percent 

limit on covered transactions with all affiliates in the aggregate would be approximately 

[ ]. 

6

 12 U.S.C. § 371c(f)(2) and 12 CFR 223.43.
- 3 -

• [ ] must reimburse Bank on a monthly basis for any losses sustained by 

Bank in connection with the purchased assets. [ ] must make the 

reimbursement payments within 5 days after the end of each month.

• Bank and [ ] must remain “well capitalized” as defined in the Board’s 

[ ], respectively,

7

• The exemption will expire on March 31, 2009. No additional asset purchase may 

be made pursuant to this exemption after that date.

so long as the exemption is in effect.

In light of these considerations, the exemption for the proposed covered

transactions between Bank and the Funds appears to be consistent with the purposes of 

section 23A and in the public interest. Accordingly, the Board hereby grants the 

requested exemption, subject to the conditions and limits discussed above.

This determination is specifically conditioned on compliance by [ ] 

and Bank with all the commitments and representations they made to the Board in 

connection with this exemption request. These commitments and representations are 

deemed to be conditions imposed in writing by the Board in connection with granting the 

request and, as such, may be enforced in proceedings under applicable law. This 

determination is based on the specific facts and circumstances described in your 

correspondence and this letter. Any material change in those facts and circumstances or 

any failure by [ ] or Bank to observe any commitments or representations may result 

in a different conclusion or in a revocation of the exemption.

Very truly yours,

(signed)

Robert deV. Frierson

Deputy Secretary of the Board

cc: [ ]

Federal Deposit Insurance Corporation

 7

 [ ]