90-1

February 20, 1990

Dear Mr. ________:

This is in reply to your letter of August 1, 1989.

In our view, corporations organized pursuant to Section 25 (a) of the Federal Reserve Act (12 U.S.C. Sections 611 et seq.) (“Edge Corporations’) are not subject to the provisions of Sections 3533 through 3541 of the Financial Code which are applicable to “foreign corporations.”

For the reasons we discussed in our conversations, we are not prepared to issue a blanket edict that Edge Corporations are not subject to any provisions of the Banking Law (Division 1 (commencing with Section 99) of the Financial Code) which are applicable to “banks.” However, we recognize that Edge Corporations are regulated for purposes of safety and soundness by the Board of Governors of the Federal Reserve System, not by the State Banking Department. Our preliminary view, therefore, is that Edge Corporations are not subject to the provisions of the Banking Law applicable to banks which are intended to ensure safety and soundness. Some examples of such provisions would be approval and licensing requirements for offices (Chapter 4 (commencing with Section 500) of the Banking Law), restrictions on loans, investments, and certain other activities, (Chapter 10 (commencing with Section 1200)), and regulatory requirements for sales and mergers (Chapter 16 (commencing with Section 2050)).

We trust that this information will be helpful. If you wish to discuss the matter in further detail, please feel free to contact us.

Once again, we apologize for the delay in responding to your letter. Your patience has been appreciated.

Very truly yours,

JAMES E. GILLERAN
Superintendent of Banks

By

JAMES F. CARRIG
Chief Counsel

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