PART 1-INVESTMENT SECURITIES as provided in paragraphs (b) and (c) of
this section there must be present one or
both of the following characteristics:
1.1 Scope and application.
(1) A public distribution of the se-
1.2 Definition of the term "investment
curities must have been provided for or
1.3 Limitations and restrictions on pur-
made in a manner to protect or insure
the marketability of the issue; or,
chase of investment securities for
bank's own account.
(2) Other existing securities of the
1.4 Exception to limitations and restric- obligor must have such a public distri-
bution as to protect or insure the mar-
ELIGIBILITY OF SPECIFIC BOND ISSUES FOR
ketability of the issue under con-
PURCHASE BY NATIONAL BANKS
(b) In the case of investment secu-
1.5 Miscellaneous rulings.
rities for which a public distribution as
1.6 Texas Turnpike Authority.
set forth in paragraph (a) (1) or (2) of
1.9 Commonwealth of Kentucky, Depart-
this section cannot be so provided, or so
ment of Parks.
1.10 City of Kansas City, Missouri.
made, and which are issued by estab-
1.11 Georgia State authorities.
lished commercial or industrial busi-
1.12 New Jersey Highway Authority.
nesses or enterprises, that can demon-
1.13 The Music Center Lease Company, Los strate the ability to service such
securities, the debt evidenced thereby
1.14 Federal National Mortgage Association. must mature not later than ten years
1.15 Dormitory authority of the State of
after the date of issuance of the security
and must be of such sound value or so
1.16 Massachusetts Turnpike Authorities.
1.17 City of London, Kentucky.
secured as reasonably to assure its pay-
1.18 Inter-American Development Bank.
ment; and such securities must, by their
1.19 Savings Banks Trust Company, New terms, provide for the amortization of
York, New York.
the debt evidenced thereby so that at
1.21 City of Opelika, Alabama.
least 75 percent of the principal will be
extinguished by the maturity date by
AUTHORITY: $ $ 1.1 to 1.21 issued under R.S.
5186 as amended; 12 U.S.C. 24. Additional substantial periodic payments: Provided,
authority is cited in parentheses following That no amortization need be required
for the period of the first year after the
date of issuance of such securities.
§ 1.1 Scope and application.
(c) Special revenue obligations of
States or local governments or of duly
(a) This part is issued by the Comp-
troller of the Currency under authority
constituted public authorities thereof
which possess a high degree of credit
of paragraph Seventh of section 5136 of
soundness, so as to assure sale under or-
the Revised Statutes, as amended (12
dinary circumstances with reasonable
(b) This part applies to the purchase
promptness at a fair value, but which do
for its own account of investment se-
not meet the distribution standards of
curities by a national bank or a State
paragraph (a) (1) or (2) of this section,
member bank of the Federal Reserve
may be considered to constitute “invest-
(d) Where the security is issued under
[22 F.R. 5627, July 17, 1957)
a trust agreement, the agreement must
§ 1.2 Definition of the term “investment provide for a trustee independent of the
obligor, and such trustee must be a bank
(a) An obligation of indebtedness
or trust company.
which may be purchased for its own ac-
(e) All purchases of investment secu-
count by a national bank or State mem-
rities by national and State member
ber bank of the Federal Reserve System
banks for their own account must be se-
in order to constitute an “investment
curities “in the form of bonds, notes,
security" within the meaning of para-
and/or debentures, commonly known as
graph Seventh of section 5136 of the Re-
investment securities"; and every trans-
vised Statutes, must be a marketable
action which is in fact such a purchase
obligation, i. e., it must be salable under
must, regardless of its form, comply with
ordinary circumstances with reasonable
promptness at a fair value; and except
(22 F.R. 5627, July 17, 1957)