1.150 Dormitory Bonds of 1962 of the Wisconsin University Building Corporation.

1.151 Wisconsin State Agencies Building Corporation.

1.152 Chicago Transit Authority Equipment Trust Certificates.

1.153 Hospital Authority of Cobb County, Georgia.

1.154 New York State Housing Finance Agency.

1.155 Federal National Mortgage Association Participation Certificates.

1.156 Water Revenue Bonds of the City of Wheeling, Missouri.

1.157 Elkhart High School Building Corporation.

1.158 Mobile County, Alabama, Board of School Commissioners Capital Outlay School Warrants. 1.159 Bonds of the Dormitory Authority of the State of New York. 1.160 Export-Import Bank Portfolio Fund Participation Certificates.

1.161 City of Anaheim (California) Stadium, Inc. Lease-Rental Bonds. 1.162 Massachusetts Port Authority Revenue Refunding and Improvement Bonds.

1.163 State of Kansas Board of Regents Revenue Bonds.

1.164 Federal National Mortgage Association Participation Certificates.

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

1.167 The Port of New York Authority, Consolidation 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.

1.189

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.

1.193 Los Angeles County-West Covina Civic Center Authority Citrus District Courthouse Revenue Bonds. 1.194 City of Downey Community Hospital Authority.

1.195 Cudahy Civic Center Authority Revenue 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 Au

thority 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.

1.207 Duval County Hospital Authority, Fla.

1.208 Parking Authority, Beverly Hills, Calif.

1.209 Port Authority of Allegheny County, Pa.

1.210 Export-Import Bank Promissory

Notes.

1.211 County of Palm Beach, Fla., Courthouse and Jail Certificates of Indebtedness.

1.212 Los Angeles County Southeast General Hospital Authority.

1.213 Los Angeles County-San Dimas Civic Center Authority.

1.214 Virginia Public School Authority. 1.215 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).

1.224 Export-Import Bank Debentures. 1.225 Merced County-Los Banos Public Safety Authority.

1.226 Seal Beach Administration Building Authority.

AUTHORITY: §§ 1.1 to 1.204 issued under R.S. 324 et seq., as amended, paragraph Seventh of R.S. 5136, as amended; 12 U.S.C. 1 et seq., 12 U.S.C. 24(7).

§ 1.1 Authority.

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."

§ 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 investment securities to the extent permitted to

(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 "public security" means an obligation described in 12 U.S.C. 24 as not subject to the limitations and restrictions contained therein "as to dealing in, underwriting and purchasing for its own account, invesment securities". Public securities include:

(1) Obligations of the United States;

(2) General obligations of any State of the United States or of any political subdivision thereof;

(3) Other obligations listed in paragraph Seventh of 12 U.S.C. 24.

(d) 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.

(e) The phrase "general obligation of any State or of any political subdivision thereof" means an obligation supported by the full faith and credit of the obligor. It includes an obligation payable from a special fund when the full faith and credit of a State or any political subdivision thereof is obligated for payments into the fund of amounts which will be sufficient to provide for all required payments in connection with the obligation. It implies an obligor possessing resources sufficient to justify faith and credit.

§ 1.4 Limitations and restrictions on purchase and sale of a public security.

A bank may deal in, underwrite, purchase and sell for its own account a public security 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 obligation.

§ 1.5 Limitations and restrictions on purchase of an investment

security.

(a) Evidence of obligor's ability to perform. A bank may purchase an investment security 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 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 § 1.6 (b), purchase an investment security 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 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 an investment 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 an investment 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 circum

stances on which the ruling was based may have changed since the time of the ruling.

§ 1.6 Limitations and restrictions on

holding investment securities.

(a) Obligations of any one obligor. A bank may not hold at any time investment 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 an investment security is to be determined on the basis of the par or face value of the security.

(b) Obligations purchased predominantly on the basis of reliable estimates. A bank may not hold at any time investment securities which would not be eligible for purchase pursuant to paragraph (a) of § 1.5 in a total amount in excess of 5 percent of the bank's capital and surplus.

(c) Limitations prescribed in eligibility rulings. When a ruling published by the Comptroller of the Currency provides that an investment security is eligible for purchase subject to a specified limitation, a bank may not at any time thereafter purchase such security, if, after such purchase, the bank's holdings of such security would be in excess of the specified limitation.

(d) Public securities. Public securities are not subject to the limitations contained in this section.

§ 1.7 Limitations and restrictions on purchase, sale and holding of specified obligations.

A bank may deal in and underwrite the obligations of the International Bank for Reconstruction and Development and the InterAmerican Development Bank and all bonds, notes and other obligations of the Tennessee Valley Authority, but it may not hold at any one time the obligations of any one of such obligors in a total amount in excess of 10 percent of the bank's capital and surplus.

§ 1.8 Prudent banking judgment;

credit information required.

Every bank shall maintain in its files credit information adequate to demonstrate that it has exercised prudence in making the determinations and carrying out the transactions described in §§ 1.4 and 1.5.