Securities Activities of State Member Banks Under the Gramm-Leach-Bliley Act
June 5, 2001
Circular No. 11351

To the Chief Executive Officers of All State Member Banks in the Second Federal Reserve District:

Effective March 13, 2000, the Gramm-Leach-Bliley Act authorized well-capitalized state member banks to underwrite, deal in, and invest in municipal revenue bonds, without limitation as to the level of these activities that may be conducted relative to the bank's capital. Prior to this amendment, banks could underwrite, deal in, and invest in, without capital limitation, only general obligation municipal bonds backed by the full faith and credit of an issuer with general powers of taxation.

On May 14, 2001, the Board of Governors of the Federal Reserve System issued a supervisory letter (SR 01-13) that addresses issues and questions that have been raised by examiners and other supervisory personnel regarding this change to the permissible securities activities of state member banks.

Questions regarding this supervisory letter may be directed to your relationship specialist at this Bank.