May 13, 1981

Re: Obligations of ________

Dear Mr. ________:

This is in reply to your letter of May 11, 1981, enclosing an opinion letter from your legal counsel regarding the applicability of the legal lending limits of the Financial Code to obligations of the ________, commonly known as the ________.

While we recognize the validity of most of your legal counsel’s argument as to the risk-free nature of these obligations, we cannot agree with his conclusion that these obligations are exempted from the loan limits under the provisions of Financial Code Section 1226(c).

The relevant part of this section exempts “loans to the extent that they are covered by guarantees made by any establishment of the United States including any corporation wholly owned directly or indirectly by the United States.” Since the ________ is not wholly owned by the United States we conclude that its obligations do not fall within this exemption. We do not find any other statute which gives the Superintendent power to declare ________ obligations exempt from the lending limits.

Recognizing the essentially risk-free nature of these obligations, the Department would not interpose any objection to legislation which would provide a loan limit exemption for these obligations.

Very truly yours,

Superintendent of Banks

Deputy Superintendent of Banks

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Last updated: Jun 28, 2019 @ 12:05 pm