Section 20 Subsidiaries of Bank Holding Companies
February 5, 1997
Circular No. 10921

Comments Invited, by March 10, on Proposal to Modify Firewalls

To All Bank Holding Companies, and Others Concerned, in the Second Federal Reserve District:

The following is from a statement issued by the Board of Governors of the Federal Reserve System:

    The Federal Reserve Board has requested comment on removing a majority of the prudential limitations or firewalls that currently apply to bank holding companies engaged in securities underwriting and dealing activities through section 20 subsidiaries. The Board is proposing to retain as operating standards for section 20 subsidiaries a limited number of restrictions adapted from the current firewalls.

    Comment is requested by March 10, 1997.

    The Board also announced that it is eliminating immediately a firewall requiring bank holding companies to seek approval prior to providing funds to their section 20 companies.

The Board's proposal on this matter, as published in the Federal Register of January 17, 1997 is available as a (pdf) file. Comments thereon should be submitted by March 10, 1997 and may be sent to the Board, as specified in the notice, or to Jim Keogh, Supervising Examiner of this Bank's Advisory and Technical Services Department.