Circular
Sections 23A and 23B of the Federal Reserve Act
August 28, 1997
Circular No. 10977

Comment Period on Proposed Interpretation Extended to October 3

To All Member Banks and Others Concerned in the Second Federal Reserve District:

Our Circular No. 10967, dated July 24, 1997, contained a proposal by the Board of Governors of the Federal Reserve System 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.)

In response to requests, the Board has extended the comment period on the proposal from September 3 to October 3, 1997. Questions on this matter may be directed, at this Bank, to Jim Keogh, Supervising Examiner, Advisory and Technical Services Department.