[Federal Register Volume 66, Number 122 (Monday, June 25, 2001)]
[Proposed Rules]
[Page 33649]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-15869]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 66, No. 122 / Monday, June 25, 2001 / 
Proposed Rules

[[Page 33649]]



FEDERAL RESERVE SYSTEM

12 CFR Part 223

[Regulation W; Docket No. R-1103]


Transactions Between Banks and Their Affiliates; Correction

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Notice of proposed rulemaking; correction.

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SUMMARY: This document supplements the preamble to a proposed 
Regulation W published in the Federal Register of May 11, 2001, 
regarding sections 23A and 23B of the Federal Reserve Act (66 FR 
24186). This supplement seeks comment on whether the Board should 
exempt extensions of credit by a bank to any person that are secured by 
shares of a mutual fund for which the bank or an affiliate of the bank 
acts as investment adviser.

DATES: Comments on this supplement, along with any other comments on 
the proposed Regulation W, must be submitted on or before August 15, 
2001.

FOR FURTHER INFORMATION CONTACT: Pamela G. Nardolilli, Senior Counsel 
(202/452-3289), or Mark E. Van Der Weide, Counsel (202/452-2263), Legal 
Division, Board of Governors of the Federal Reserve System, 20th Street 
and Constitution Avenue, NW., Washington, DC 20551.

SUPPLEMENTARY INFORMATION: On May 2, 2001, the Board approved, in 
connection with its approval of the proposed Regulation W, seeking 
public comment on whether to grant an exemption from section 23A of the 
Federal Reserve Act for transactions in which a bank takes proprietary 
mutual fund shares as collateral for a loan. The preamble to the 
proposed Regulation W inadvertently did not contain a request for 
comment on this issue. The following supplement to the Regulation W 
preamble presents this comment request.

Correction

    In proposed rule FR Doc. 01-11610, beginning on page 24186 in the 
Federal Register issue of May 11, 2001, make the following correction 
in the Supplementary Information section. On page 24201 in the first 
column, add at the end of the first full paragraph the following:

``L. Additional Exemptions

    Section 23A(b)(7)(D) includes as a covered transaction a bank's 
acceptance of securities issued by an affiliate as collateral for an 
extension of credit to any person. Section 23A(b)(1)(D)(ii) defines as 
an affiliate of a bank any mutual fund for which a bank or an affiliate 
of the bank acts as an investment adviser (``proprietary mutual 
fund''). Several commenters have requested that the Board exempt from 
section 23A transactions in which a bank accepts proprietary mutual 
fund shares as collateral for an extension of credit. The Board asks 
for comment on whether granting such an exemption would be consistent 
with the purposes of section 23A. The Board also specifically seeks 
comment on whether to condition the availability of the exemption, if 
granted, on any of the following requirements: (i) The borrower does 
not use the proceeds of the loan to purchase shares of proprietary 
mutual funds; (ii) the borrower is not an executive officer of the bank 
or its affiliates; (iii) the price of the mutual fund shares is quoted 
routinely in a widely disseminated news source; (iv) the shares of the 
mutual fund are widely held by the public; or (v) the bank and its 
affiliates do not own in the aggregate more than 5 percent of the 
shares of the mutual fund.
    The Board also invites comment on whether additional exemptions 
from section 23A are in the public interest and consistent with the 
purposes of the statute.''

    By order of the Board of Governors of the Federal Reserve 
System, June 20, 2001.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 01-15869 Filed 6-22-01; 8:45 am]
BILLING CODE 6210-01-P