The Honorable Alan Greenspan
Chairman
Board of Governors of the Federal Reserve System
20th and Constitution Avenue, N.W.
Washington, D.C. 20551

Dear Chairman Greenspan:

I am writing with respect to a pending request by certain banks for the House-Senate conference committee on resolving the differences between pending securities reform bills (H.R. 3005 and S. 1815) to include in the conference agreement a provision repealing section 11(m) of the Federal Reserve Act (enclosure).

In the U.S. House of Representatives, both the Federal Reserve Act and the subject matter of section 11(m) (loans by member banks on stock or bond collateral) fall under the Rule X jurisdiction of the Committee on Banking. Accordingly, the proponents are vetting this request with the Republican and Democratic Leadership of the Banking Committee to enlist their support. Separately, however, while this Committee held hearings on the margin provisions of the Securities Exchange Act of 1934 at which you testified, we have no record on the proposed repeal of section 11(m) and its impact on matters within the Board's jurisdiction, including the undue use of bank loans for the speculative carrying of securities, the solvency of member banks, the safety and soundness of the banking system, and the public interest in general.

Therefore, I respectfully request your written views on this matter at your earliest convenience. I also request your views on an alternative proposal that has been suggested, namely, retaining section 11(m), while striking the ten-percent limitation and giving the Board discretion to adjust the ceiling on the use of securities as collateral.

Thank you for your cooperation and attention to this request.

Sincerely,

JOHN D. DINGELL
RANKING MEMBER

Enclosure [not online]

cc:
The Honorable Thomas J. Bliley, Jr.
The Honorable Jack Fields
The Honorable James A. Leach
The Honorable Henry B. Gonzalez

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