97-10

April 3, 1997

Dear Mr. __________:

This is in response to your letter of March 24, 1997, and follows our telephone conversation of April 3, 1997.

As we discussed, the California State Banking Department administers no laws and has promulgated no regulations that expressly or exclusively deal with the leasing of personal property by banks. However, to the extent that such arrangements are a means of extending credit, we view lease financing as a lending activity, which is governed by the lending limit provisions of Article 2 (commencing with Section 1220), Chapter 10, Division 1 of the California Financial Code. I have enclosed a copy of Article 2 for your information.

If you have any further questions, please feel free to contact me at (415) 263-8512.

Very truly yours,

CONRAD W. HEWITT
Superintendent of Banks

By

THOMAS M. LOUGHRAN
Senior Counsel

TML:arc

Enclosures