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Circular Letters

Circular Letter 5540

April 18, 2001

Subject: Prohibition Against Use of Interstate Branches Primarily for Deposit Production

Summary:

The Federal Reserve Board is requesting public comment on a proposal that would amend Regulation H (Membership of State Banking Institutions in the Federal Reserve System) to expand the prohibition against deposit production offices to include any branch of a bank controlled by an out-of-state bank holding company.

Section 109 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (Interstate Act) prohibits banks from engaging in interstate branching primarily for the purpose of deposit production. Section 106 of the Gramm-Leach-Bliley Act of 1999 expanded the coverage of Section 109 of the Interstate Act to include any branch of a bank controlled by an out-of-state bank holding company. The Board's proposal amends the regulatory prohibition against branches being used as deposit production offices to include any bank or branch of a bank controlled by an out-of-state bank holding company, including a bank consisting only of a main office.

Comment Requested: Comments on this proposal should refer to Docket No. R-1099 and be received on or before June 8, 2001, by Ms. Jennifer J. Johnson, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, NW, Washington, DC 20551 or mailed electronically to: regs.comments@federalreserve.gov.

Additional Information: A copy of this circular letter and its supplementary information can be obtained by calling the Regulations Assistance Unit at this Reserve Bank at (215) 574-6568.

Press Release: http://www.federalreserve.gov/boarddocs/press/boardacts/2001/20010411/ External Link