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1.163 State of Kansas Board of Regents Revenue Bonds.

1.193

1.164 Federal National Mortgage Association Participation Certificates.

1.194

1.165 Illinois Building Authority Bonds. 1.166 New York State Housing Finance Agency, General Housing Loan Bonds.

1.167 The Port of New York Authority, Consolidated Bonds.

1.168 Commodity Credit Corporation certificates of interest in pools of price support loans.

1.169 San Diego Stadium Authority Bonds. 1.170 City of Santa Monica Parking Authority Bonds.

1.171 State of Israel Bonds, Development Investment Issue.

1.172 Federal National Mortgage Associa tion Participation Certificates. 1.173 Alaska State Housing Authority Revenue Bonds.

1.174 Louisiana Capital Construction and Improvement Commission Public Improvement Bonds.

1.175 Florida State Board of Education Higher Education Bonds.

1.176 Export-Import Bank Portfolio Fund Participation Certificates.

1.177 State of Ohio Highway Improvement Bonds.

1.178 Memphis TVA Lease Rental Revenue Bonds.

1.179 General State Authority of the Commonwealth of Pennsylvania; State Highway and Bridge Authority of the Commonwealth of Pennsylvania. 1.180 Orange County Juvenile Hall Lease Corporation Leasehold Mortgage Bonds.

1.181 New York State Housing Finance Agency.

1.182 Orange County-Westminster

Civic

Center Authority City Building Facilities Revenue Bonds.

1.183 Indiana School Building Corporations. 1.184 Tennessee State School Bond Authority Higher Educational Facilities Bonds. 1.185 Salamanca Hospital District Authority (New York) Hospital Construction Bonds.

1.186 Desert Hospital Authority Revenue Bonds.

1.187 Santa Clara County Building Authority 1967 Revenue Bonds, Series A. 1.188 Alaska State Housing Authority State Lease Revenue Bonds.

1.189 Los Angeles County-West Covina Civic Center Authority, West Covina Administrative and Police Buildings Revenue Bonds.

1.190 Redevelopment Agency of the City of Vallejo Marina Vista Project Area Parking Lease Revenue Bonds. 1.191 Thomaston-Upson County Office Building Revenue Bonds.

1.192 San Carlos Civic Center Authority Lease Revenue Bonds.

1.195

Los Angeles County-West Covina Civic
Center Authority, Citrus District
Courthouse Revenue Bonds.
City of Downey Community Hospital
Authority.

Cudahy Civic Center Authority Rev-
enue Bonds.

1.196 Campbell County Utilities and Service Authority.

1.197 Urban Redevelopment Authority of Pittsburgh, Residential Land Reserve Fund Bonds.

1.198 Visalia Area Hospital Authority Revenue Bonds (California).

1.199 Upland Civic Center Building Authority Revenue Bonds (California). 1.200 Parking Authority of the City of Upland (California) Parking Revenue Bonds.

1.201 Bergen County Sewer Authority (New Jersey).

1.202 Carlsbad Building Authority Revenue Bonds (California).

1.203 Water and Sewer Improvement Bonds, Series 1967, of the Northwest Houston Water Supply Corp.

1.204 Wisconsin University Building Corporation and the Wisconsin State Agencies Building Corporation. 1.205 Los Angeles Convention and Exhibition Center Authority.

1.206 Louisiana State Bond and Building Commission.

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1.214 1.215

Virginia Public School Authority. San Diego City-County Camp Authority.

1.216 Hillsborough County Aviation Authority, Florida (Post Office Facility).

1.217 Fountain Valley Improvement Authority Revenue Bonds.

1.218 San Bernardino Public Safety Authority Revenue Bonds.

1.219 Merced County-Atwater Civic Center Authority, City Building Facilities 1968, Revenue Bonds.

1.220 Santa Barbara County Public Safety Authority Revenue Bonds. 1.221 Redevelopment Agency of the City of Vallejo Library Lease Revenue Bonds.

1.222 Los Angeles County-Lawndale Building Authority.

1.223 Southeastern Pennsylvania Transportation Authority, Rental Revenue Bonds (Philadelphia lease). Export-Import Bank debentures.

1.224

Sec.

1.225 Merced County-Los Banos Public Safety Authority.

1.226 Seal Beach Administration Building Authority.

SECURITIES ELIGIBLE FOR UNDERWRITING AND UNLIMITED HOLDING

Sec.

1.255 Redevelopment Agency of the City of Corona (California) Library Lease Revenue Bonds.

1.256 State Board of Directors for Junior Colleges of Arizona, Maricopa

1.227 Orange County-La Palma Civic Center Authority (California).

1.257

1.228 Parking Authority, Huntington Beach, Calif.

1.258

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1.259

1.230 Los Angeles Convention and Exhibition Center Authority.

1.260

1.231 Kansas State Board of Regents, Stadium Addition Revenue Bonds, Wichita State University.

1.232 San Bernardino Public Safety Authority.

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County Junior College District
Revenue Bonds.

County of Wayne, State of Michigan,
Airport Revenue Bonds.

Mountain View Shoreline Regional
Park Community (California).
Santa Maria Airport Authority (Cal-
ifornia).

Water and Sewer Improvement Bonds,
Series 1970, of the Northwest Hous-
ton Water Supply Corp.

1.261 Los Angeles County-Pico Rivera Public Facilities Authority.

1.262 Los Angeles County-Norwalk Sheriff's Station Authority.

1.263 San Bernardino Public Safety Authority.

1.264 Parking Authority of the City of Redondo Beach.

1.265 San Bernardino Civic Center Authority.

1.266 Michigan Sate Housing Development Authority.

1.267 Los Angeles County Metro East Social Services Corporation.

1.268 Los Angeles County South Central Social Services Corporation.

1.269

Parking Authority of the County of Los Angeles.

1.270

1.242 Riverside County Law Library (Callfornia).

Parking Authority of the City of Los Angeles.

1.271 Los Angeles

County-Puddingstone

1.243 Commonwealth of Pennsylvania Tax

Regional Park Authority.

1.272

Upper Darby Township School Authority (Pennsylvania).

1.273

Alaska State Housing Authority, State Lease Revenue Bonds.

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1.274 Orange County Civic Center Authority (California).

1.275 Marin County-Corte Madera Public Library Authority (California). 1.276 Glendora Library Authority (Callfornia).

1.277 Parking Authority of the City of San Fernando.

1.278 San Bernardino County-Victorville Public Facilties Authority, Library Revenue Bonds.

1.279

San Bernardino County-Victorville
Public Facilities Authority, City Hall
Revenue Bonds.

1.280 Jackson County Sports Complex Authority (Missouri).

1.281 City of Inglewood-Los Angeles County Civic Center Authority. 1.282 State Board of Higher Education, North Dakota.

1.283 Visalia Public Building Authority (California).

1.284 New York State Urban Development

Corporation.

1.285 City of Santa Fe Springs Public Improvements Corporation Leasehold Mortgage Bonds (California).

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San Dimas-La Verne Recreational
Facilities Authority.

1.302 Water and Sewer Improvement Bonds, Series 1971, Northwest Houston Water Supply Corp.

1.303 San Diego Planetarium Authority. 1.304 Santa Clara County Building Authority.

1.306 1.307

1.305 Los Angeles County Southeast General Hospital Authority Revenue Bonds, Additional Issue. American Fletcher Corp. Small Business Investment Company Debentures offered and guaranteed by the Small Business Administration.

1.308 West Chester Area Joint School Authority (Pennsylvania).

1.309 State of Florida Expressway Bonds. 1.310 Kent County, Michigan, Airport Improvement Bonds.

1.311 City of Roseville Community Hospital Addition Corporation Leasehold Mortgage Bonds.

1.312 City of Walnut Creek Aquatic Facilities, Inc.

1.313 Placer County-Roseville Civic Center

Improvement Authority.

1.314 Contra Costa County Juvenile Facilities Corporation Leasehold Mortgage Bonds.

1.315 Fox Chapel Area School Authority (Pennsylvania).

1.316 Contra Costa

Authority.

Education Center

1.317 Sacramento Community Center Authority.

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1.337 Fullerton Library Building Authority. 1.338 Santa Clara County Public Facilities Corporation Lease Rental Bonds. 1.339 New York State Housing Finance Agency Health Facilities Bonds. 1.340 Los Angeles County-Alhambra Courthouse Building Corporation Leasehold Mortgage Bonds.

1.341 Wayne County Stadium Authority Bonds.

1.342 Los Angeles County-Wayside Honor Rancho Building Corporation Leasehold Mortgage Bonds.

1.343 1.344

Battery Park City Authority Bonds.
Small Business Investment Company
Debentures represented by guaranty
agreements of the Small Business
Administration.

1.345 Reedy Creek Improvement District Ad Valorem Tax Bonds.

1.346 Omaha-Douglas Public Building Commission Bonds.

1.347 New York City Housing Development Corporation general housing bonds. 1.348 California Department of Water Resources, Central Valley project revenue bonds.

1.349 Parking Authority of the City of Napa. AUTHORITY: The provisions of this Part 1 issued under R.S. 324 et seq., as amended, Paragraph Seventh of R.S. 5136 as amended; 12 U.S.C. 1 et seq., 24, unless otherwise noted.

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This part is issued by the Comptroller of the Currency under the general authority of the national banking laws, 12 U.S.C. 1 et seq., and under specific authority contained in paragraph Seventh of 12 U.S.C. 24. The Comptroller of the Currency is charged by the national banking laws with the execution of all laws of the United States relating to the organization, operation, regulation and supervision of national banks and in particular with the execution of 12 U.S.C. 24 which sets forth the corporate powers of national banks. This part interprets and applies paragraph Seventh of 12 U.S.C. 24 to provide for its due execution and for the proper regulation and supervision of the operations of national banks. Paragraph Seventh of 12 U.S.C. 24 also specifically provides for the Comptroller of the Currency to prescribe by regulation (a) limitations and restrictions on the purchase of investment securities by a national bank for its own account and (b) further definition of the term "investment securities."

[28 F.R. 9916, Sept. 12, 1963]

§ 1.2 Scope and application.

This part applies to the purchase, sale, dealing in, underwriting, and holding of investment securities by national banks, banks located in the District of Columbia, and by state banks which are members of the Federal Reserve System. It may also apply to a limited extent to others engaged in the banking business. The Comptroller of the Currency is charged by various provisions contained in Chapter 1 of Title 26 of the District of Columbia Code with the supervision of banks located in the District of Columbia. State banks which are members of the Federal Reserve System are, under 12 U.S.C. 335, subject to the same limitations and conditions with respect to the purchasing, selling, underwriting, and holding of investment securities and stock as are applicable in the case of national banks under paragraph Seventh of 12 U.S.C. 24. Dealers in securities are prohibited by 12 U.S.C. 378 from engaging in banking business. Section 378 specifically provides, however, that it does not prohibit national banks or state banks or trust companies (whether or not members of the Federal Reserve System) or other financial institutions or private bankers from dealing in, underwriting, purchasing and selling invest

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(a) The term "bank" includes national banks, banks located in the District of Columbia, and State banks which are members of the Federal Reserve System.

(b) The term "investment security" means a marketable obligation in the form of a bond, note, or debenture which is commonly regarded as an investment security. It does not include investments which are predominantly speculative in nature.

(c) The term "Type I security" means a security which a bank may deal in, underwrite, purchase and sell for its own account without limitation. These include obligations of the United States, general obligations of any State of the United States or any political subdivision thereof and other obligations listed in paragraph Seventh of 12 U.S.C. 24.

(d) The term "Type II security" means a security which a bank may deal in, underwrite, purchase, and sell for its own account, subject to a 10 percent limitation. These include obligations of the International Bank for Reconstruction and Development, the Inter-American Development Bank, the Asian Development Bank and the Tennessee Valley Authority, and obligations issued by any State or political subdivision or any agency of a State or a political subdivision for housing, university or dormitory purposes.

(e) The term "Type III security" means a security which a bank may purchase and sell for its own account, subject to a 10-percent limitation, but may neither deal in nor underwrite.

(f) The term "political subdivision of any State" includes a county, city, town, or other municipal corporation, a public authority, and generally any publicly owned entity which is an instrumentality of the State or of a municipal corporation.

(g) The phrase "general obligation of any State or any political subdivision thereof" means an obligation supported by the full faith and credit of an obligor possessing general powers of taxation, including property taxation. It includes an obligation payable from a special fund or by an obligor not possessing general powers of taxation when an obligor pos

sessing general powers of taxation, including property taxation, has unconditionally promised to make payments into the fund or otherwise available for the payment of the obligation of amounts which (together with any other funds available for the purpose) will be sufficient to provide for all required payments in connection with the obligation. [36 F.R. 6737, Apr. 8, 1971]

§ 1.4 Type I securities; standards for authorized transactions.

Type I securities are not subject to the limitations and restrictions contained in 12 U.S.C. 24 or in this Part other than §§ 1.3(c), 1.3(g), 1.4, 1.8, 1.9, and 1.11. Consequently, a bank may deal in, underwrite, purchase, and sell for its own account a security of Type I subject only to the exercise of prudent banking judgment. Prudence will require such determinations as are appropriate for the type of transaction involved. For the purpose of underwriting or investment, prudence will also require a consideration of the resources and obligations of the obligor and a determination that the obligor possesses resources sufficient to provide for all required payments in connection with the obligations.

[36 F.R. 6737, Apr. 8, 1971]

§ 1.5 Types II and III securities; purchase standards.

(a) Evidence of obligor's ability to perform and of marketability. A bank may purchase a security of Type II or III for its own account when in its prudent banking judgment (which may be based in part upon estimates which it believes to be reliable), it determines that there is adequate evidence that the obligor will be able to perform all that it undertakes to perform in connection with the security, including all debt service requirements, and that the security is marketable, that is, that it may be sold with reasonable promptness at a price which corresponds reasonably to its fair value.

(b) Judgment based predominantly upon reliable estimates. A bank may, subject to limitations set forth in § 1.7(b), purchase a security of Type II or III for its own account although its judgment with respect to the obligor's ability to perform is based predominantly upon estimates which it believes to be reliable. Although the appraisal of the prospects of any obligor will usually be based in part upon estimates, it is the

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purpose of this paragraph to permit a bank to exercise a somewhat broader range of judgment with respect to a more restricted portion of its investment portfolio. It is expected that this authority may be exercised not only in the absence of a record of performance but also when there are prospects for improved performance. It is also expected that a security purchased pursuant to this paragraph may, by the establishment of a satisfactory financial record, become eligible for purchase under paragraph (a) of this section.

(c) Securities ruled eligible by the Comptroller of the Currency. A bank may consider as a factor in reaching its prudent banking judgment with respect to a security a ruling published by the Comptroller of the Currency on the eligibility of such security for purchase. Consideration must also be given, however, to the possibility that circumstances on which the ruling was based may have changed since the time of the ruling.

[36 F.R. 6737, Apr. 8, 1971]

§ 1.6 Type II securities; authority to deal in and underwrite.

A bank may deal in and underwrite the obligations of the International Bank for Reconstruction and Development, the Inter-American Development Bank, the Asian Development Bank, and the Tennessee Valley Authority, or obligations issued by any State or political subdivision or any agency of a State or a political subdivision for housing, university, or dormitory purposes.

[36 F.R. 6737, Apr. 8, 1971]

§ 1.7

Types II and III securities; limitations on holdings.

(a) Obligations of any one obligor. A bank may not hold at any time Types II and III securities of any one obligor in a total amount in excess of 10 percent of the bank's capital and surplus. For this purpose, the amount of a security is to be determined on the basis of the par or face value of the security. In the case of Type II securities, obligations for the purpose of this limitation include obligations held as a result of underwriting, dealing in, or purchasing for its own account including obligations as to which the bank is under commitment.

(b) Obligations purchased predominantly on the basis of reliable estimates.

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