July 16, 1974

Dear Mr. ____________ :

This is in reply to your letter of June 25, 1974.

Your letter has asked our opinion as to the legality of using silver as collateral for a secured loan within the terms of the Financial Code. The relevant section of the Financial Code appears to be Section 1223. The relevant portion Section 1223 reads as follows: “An obligation shall not be deemed secured by personal property or collateral unless the personal property or collateral held as security is of a kind which has not been declared ineligible by the Superintendent and unless it has a market value at least 15% greater than the amount of the obligation secured therby. The Superintendent may by general regulation declare any particular kinds of classes of personal property ineligible as security. …”

Please be advised that the Superintendent has, under the power granted to him by Section 1223, never declared silver as being an ineligible collateral.

Naturally, it is up to the individual bank whether or not to take the given collateral. That is, while a bank may take silver as collateral, it is not required to do so.

If you have any further questions in regard to this matter, please do not hesitate to contact us.

Very truly yours,

Superintendent of Banks


bcc: Opinion File

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