FROM THE OFFICE OF PUBLIC AFFAIRS

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The Treasury would allow a subsidiary or affiliate to conduct any financial activity. The Banking Committee bill would do the same, except that it would not permit subsidiaries to engage in merchant banking and most insurance underwriting. As currently drafted, H.R. 10 -- reflecting the position of the Federal Reserve -- would prohibit subsidiaries from conducting any financial activity as principal (except those that could also be done in the bank). The LaFalce-Vento amendment would restore to the operating subsidiary all financial activities except insurance
underwriting.

In a May 4, 1998 letter to Representative Dingell, Chairman Greenspan transmitted a Federal Reserve paper on the operating subsidiary and other issues. Set forth below is a response to the portion of the Fed paper concerning the op-sub issue.

Report(s):

• Treasury White Paper on Bank Subsidiaries and Affiliates (HR-10)