Bank Debenture Programs DO EXIST
You may have be told by some government officials that Bank Debenture Programs DO NOT EXIST.
Well they are lying for their own benefit
Bank Debenture Programs DO EXIST
Also Read the Page about the Brenton Woods Agreement & Money Creation
Below I have copied 4 pages from the official Federal Reserve web site in the US regarding these programs and how they work. The government doesn't want you to know about such things. I have made it a point not to believe anything the government tell me, because most of it is lies made up to suit their own ends.
From the Federal Reserve Web Site
Section 4(c)(8)-(Private-Placement and Riskless-Principal Activities) Section 3230.4
This section discusses and provides a historical reference of previous Board orders that initially authorized, by order, a bank holding company's acting as agent in the private placement of securities and engaging in riskless-principal nonbanking activities. With the Board's incorporation of private-placement and riskless-principal activities into its adoption of changes to Regulation Y, effective April 21, 1997, the majority of the previous private-placement and risklessprincipal commitments are not effective. Only those current requirements listed for privateplacement and riskless-principal activities in
section 225.28(b)(7) of Regulation Y (the laundry list of permissible nonbanking activities)
should be used by the examiner in conducting the supervision and inspection of bank holding companies and their subsidiaries.
3230.4.1 ENGAGING IN COMMERCIAL-PAPER PLACEMENT ACTIVITIES TO A LIMITED EXTENT
A bank holding company (the applicant) applied pursuant to section 4(c)(8) of the Bank Holding CompanyAct and section 225.23(a) of the Board's Regulation Y to act as an agent and adviser to issuers of commercial paper in connection with the placement of commercial paper with institutional purchasers. The commercial-paperplacement activity, as proposed, is to be conducted from a wholly owned commercial finance subsidiary (the company) of the applicant's direct subsidiary.
The Board concluded that the proposed commercial-paper-placement activity was so functionally and operationally similar to the role of a bank that arranges a loan participation or syndication as to be a proper incident thereto and that banking organizations are particularly well suited to perform the commercial-paperplacement function. The Board found that the proposal, as limited by the applicant, was consistent with section 20 of the Glass-Steagall Act, and could reasonably be expected to result in public benefits that would outweigh possible adverse effects. The Board found, further, that the applicant could conduct the proposed activities to the extent and in the manner described in the order. The Board's approval (1987 FRB 138) extended only to the activities conducted within the limitations proposed by the applicant for company and the BHC's subsidiary banks and other subsidiaries. The placement of commercial paper in any manner other than as described within the limitations and conditions of the order would not be within the scope of the Board's approval. The Board also required that no lending affiliate of the company would disclose to the company any nonpublic customer information concerning an evaluation of the financial condition of an issuer whose paper is placed by the company or of any other customer of the company, except as expressly required by securities law or regulation. On May 25, 1988, the Board approved an order (1988 FRB 500) for a bank holding company to engage de novo, through a subsidiary, in acting as an agent and adviser to issuers of commercial paper in connection with the placement of commercial paper with institutional customers, as well as to engage in certain other securities and financial advisory activities. The applicant proposed to place commercial paper in accordance with all the terms and conditions of the above order (1987 FRB 138), except one. The applicant did not propose any quantitative limitations on its placement activity. The Board concluded that the proposed commercial-paper placement did not constitute underwriting or distributing under the Glass-Steagall Act and that the quantitative limitations on the activity were not necessary to ensure compliance with that act. (See section 3230.4.2, in which a subsidiary of a bank holding company was authorized to privately place all types of debt and equity securities.)
3230.4.2 ACTING AS AGENT IN THE PRIVATE PLACEMENT OF ALL TYPES OF SECURITIES AND ACTING AS RISKLESS PRINCIPAL
A bank holding company (the applicant) applied for the Board's approval to transfer the privateplacement business of its commercial bank subsidiary to its designated nonbanking subsidiary for securities underwriting and dealing. The subsidiary would act as agent in the private placement of all types of securities, including the providing of related advisory services, and buy and sell all types of securities on the order of investors as a riskless principal.
Because the section 20 subsidiary would be affiliated through common ownership with a member bank, it may not be ``principally BHC Supervision Manual December 2000 Page 1 engaged'' in the ``issue, flotation, underwriting, public sale, or distribution'' of securities within the meaning of the former section 20 of the Glass-Steagall Act. In an earlier decision (1989 FRB 751), the Board determined that a subsidiary is not engaged principally in section 20 activities if revenues from underwriting and dealing in securities that banks are not authorized to underwrite and deal in directly (bankineligible securities) do not exceed 10 percent of the subsidiary's gross revenues (25 percent, effective March 6, 1997). The applicant contended that the proposed private-placement and riskless-principal activities are not the kind of securities activities described in section 20 and, thus, should not be subject to the revenue limit on bank-ineligible securities activities.
The private-placement market involves the placement of new issues of securities with a limited number of sophisticated purchasers in a nonpublic offering. In private-placement transactions, a financial intermediary acts solely as agent of the issuer in finding purchasers. The intermediary does not purchase the securities and then try to resell them.
Privately placed securities are not subject to the registration requirements of the Securities Act of 1933. Such securities are only offered to financially sophisticated institutions and individuals, 1 not to the public. The applicant stated that all of the individuals with whom the securities would be placed will qualify as ``accredited investors'' under SEC rules. The Board concluded that the subsidiary's private placement of debt and equity securities within the limits proposed did not involve the underwriting or public sale of securities and that the revenues from the proposed activities should not be subject to the 10 percent revenue limitation (25 percent, effective March 6, 1997) on bank ineligible securities activities.
The Board noted that other limitations on the activity should ensure that securities would not be offered to the public. First, the applicant agreed that the subsidiary would not make any general solicitation or advertisement to the public regarding the placement of particular securities. Second, the minimum denomination of securities to be placed would be $100,000. Third, the applicant agreed that the subsidiary would not privately place securities that are registered under the Securities Act of 1933 and that the subsidiary would be compelled to honor all provisions of that act, particularly those that limit the scope of private placements to nonpublic transactions. Fourth, the subsidiary agreed not to privately place as agent the securities of investment companies which are sponsored or advised by the applicant or its subsidiaries. Fifth, the subsidiary will not purchase or repurchase for its own account the securities being placed or will not inventory unsold portions of such securities. Sixth, the applicant further agreedto consult with its Federal Reserve Bank staff before transferring its private-placement activities from the subsidiary to any other nonbank subsidiary of the applicant to ensure that the transfer did not evade any of the firewall provisions committed to.
3230.4.3 INCORPORATION OF PRIVATE-PLACEMENT NONBANKING ACTIVITIES INTO REGULATION Y
The Board has added the activity of acting as agent in the private placement of securities to the laundry list of nonbanking activities (see 12 C.F.R. 225.28(b)(7)(ii)). Regulation Y adopts the definition of private-placement activities that is used by the SEC and the federal securities laws. In taking this action, the Board removed all but one restriction on private placement. The remaining restriction prohibits a bank holding company from purchasing for its own account the securities being placed or holding in inventory unsold portions of issues of these securities. This restriction prevents a bank holding company from classifying its securities underwriting activities as private-placement activities.
3230.4.4 RISKLESS PRINCIPAL
``Riskless principal'' is a broker-dealer that, after receiving an order to buy (or sell) a security from a customer, purchases (or sells) the security for its own account to offset a simultaneous sale to (or purchase from) the customer.
1. The subsidiary would not only place securities with institutional customers but with individuals whose net worth (or joint net worth with a spouse) exceeds $1 million. Such placement activities with individuals would not, in the Board's opinion, result in a public offering.
Section 4(c)(8)-(Private-Placement and Riskless-Principal Activities) 3230.4 BHC Supervision Manual December 2000
3220.127.116.11 Description of Riskless-Principal Transactions
When acting as a dealer, the securities firm maintains an inventory of securities for its own account and buys and sells securities as principal. Riskless-principal transactions are usually undertaken as an alternative method of executing orders by customers to buy or sell securities on an agency basis. In this situation, when a customer places an order to purchase securities that the broker-dealer does not maintain in its inventory, the firm must purchase the securities from a third party. At this point, the brokerdealer has the option of acting either as the agent for the customer or a riskless principal in making the purchase. If the decision is made to act as a riskless principal, the broker-dealer will purchase the securities from a third-party dealer at the dealer's ``inside price'' (confirming the transaction for its customer) and then, acting as principal, resell them to the customer, adding a
markup over cost. If the broker-dealer does not complete the purchase of the securities ordered by the customer, it is not obligated to provide the securities.
318.104.22.168 Underwriting and Riskless Principal
In riskless-principal transactions, the subsidiary would execute orders by an investor and would not act on behalf of an issuer of new securities.
The subsidiary would
not be involved in making any public offering of
securities as agent for the issuer. Thus, these
activities would not constitute underwriting for
322.214.171.124 Summary of Board Action on Acting as Agent in Private Placement and as Riskless Principal in Buying and Selling Securities
The Board concluded that the securities underwriting and dealing of the subsidiary's risklessprincipal activity did not constitute an underwriting
of securities. The riskless-principal activity would not be a public sale or underwriting of securities and would not be viewed as a bank-ineligible securities activity for purposes of the current 25 percent revenue test. As a condition for the approval of the risklessprincipal activity, the Board required the subsidiary to maintain specific records that would clearly identify such transactions so that examiners will be able to trace the resulting revenue.
The riskless-principal activity was found to be closely related to banking. The Board further concluded that the placement activity differed only slightly in scope from those approved previously and that the operational limitations agreed to by the applicant would ensure that the subsidiary would not become involved in the public offering of any securities. The Board approved the application on October 30, 1989 (1989 FRB 829). (See also 1997 FRB 146; 1996 FRB 350, 748; 1995 FRB 49, 880, 1133; 1994 FRB 554, 1014; 1993 FRB 1166; 1992 FRB 294, 335, 552, 868; 1991 FRB 61; and 1990 FRB 26, 79, 545, 567, 568 (footnote 7), 653, 659, 663, 667, 672, 674, 766, 857, 864.)
Changes to the Underwriting Conditions for Riskless-Principal Activities
In connection with a bank holding company proposal considered by the Board on June 10, 1996, the Board reviewed the continued appropriateness of applying the underwriting conditions to the conduct of riskless-principal activities. In that case, the Board determined, based on its experience in monitoring and examining the conduct of riskless-principal activities by bank holding companies, that the underwriting conditions were not necessary to address identifiable adverse effects. Accordingly, the Board permitted the bank holding company to engage in riskless-principal transactions through a nonbank subsidiary without conducting this activity in accordance with the underwriting conditions (See 1996 FRB 748). The Board noted that riskless-principal transactions are essentially equivalent to securities brokerage transactions and, therefore, must be conducted in compliance with federal securities laws. The Board concluded that the definitional limitations
(see section 225.28(b)(7)(ii) of Regulation Y) would be all that is needed to purchase (or sell) securities as a riskless principal. The conditions are designed to ensure that bank holding companies do not avoid the Glass-Steagall Act by
classifying underwriting and dealing activities as riskless-principal activities. In the June 10 order, the bank holding company agreed that, if riskless-principal services were provided in combination with its advisory services, it would provide its customers with the disclosures established by the Board for full-service brokerage activities of bank holding companies.Withrespect Section 4(c)(8)-(Private-Placement and Riskless-Principal Activities) 3230.4
BHC Supervision Manual June 1997
to its decision, the Board decided to grant identical relief to other bank holding companies that had been previously approved to conduct riskless-principal nonbanking activities.
3126.96.36.199 Incorporation of Riskless-Principal Transactions into Regulation Y
As part of the Board's February 19, 1997, adoption of the final amendments to Regulation Y, it retained the requirement that riskless-principal transactions be conducted in the secondary market. It further determined to eliminate all but two restrictions with respect to riskless-principal transactions. A bank holding company may thus buy and sell in the secondary market all types of securities on the order of customers as a riskless principal, to the extent of engaging in a transaction in which the company, after receiving an order to buy (or sell) a security from a customer, purchases (or sells) the security for its own account to offset a contemporaneous sale to (or purchase from) the customer. This does not include-
1. selling bank-ineligible securities at the order of a customer that is the issuer of the securities, or selling in any transaction in which the bank holding company has a contractual agreement to place the securities as agent of the issuer; or
2. acting as riskless principal in any transaction involving a bank-ineligible security for which the bank holding company or any of its affiliates acts as an underwriter (during the period of the underwriting or for 30 days thereafter) or dealer. A bank holding company or its affiliates may not enter quotes for specific bankineligible securities in any dealer quotation system in connection with the bank holding company's riskless-principal transactions, except that the company or its affiliate may enter bid or ask quotations, or publish ``offering wanted'' or ``bid wanted'' notices on trading systems other than NASDAQ or an exchange, if the company or its affiliate does not enter price quotations on different sides of the market for a particular security for any two-day period. (See 12 C.F.R.225.28(b)(7)(ii).)
Section 4(c)(8)-(Private-Placement and Riskless-Principal Activities) 3230.4
BHC Supervision Manual June 1997