Opinions of Counsel and Rulings

Chattel Mortgages Ineligible

Federal Reserve banks are directed to consider as ineligible bills drawn against the security of chattel mortgages on cattle and the like, whether accepted by member or non-member banks.

Bills Payable Outside The United States

Any bill which is payable elsewhere than in the United States would not be eligible for purchase as a banker's acceptance even though eligible in all other respects. The acceptance, however, might properly be purchased as a bill of exchange payable in a foreign country.

Evidence Of Eligibility Of Bank Acceptances Regulations Of The Federal Reserve Board

Evidence To Be Furnished Federal Reserve Bank

A Federal Reserve bank must be satisfied, either by reference to the acceptance iself or otherwise, that it is eligible for rediscount. Satisfactory evidence of eligibility may consist of a stamp or certificate affixed by the acceptor in form satisfactory to the Federal Reserve bank.

Opinions Of Counsel And Rulings

Relating to Evidence of Eligibility oF Bank AcceptanceS

Requirement Of Evidence

The Federal Reserve bank reserves the right to ask State member banks for evidence underlying the certifica tion given to it, and the bank examiner may require evidence from the national banks to this effect. Member banks would, therefore, best protect themselves by stipulating for themselves the right at times to ask for substantiation of assurances given by their customers.

Maturity Relating To Bank Acceptances

General Statutory Provisions

Period Of Maturity

Any Federal Reserve bank may discount acceptances which have a maturity at the time of discount of not more than three months' sight, exclusive of days of grace.

Regulations Of The Federal Reserve Board

Relating to Maturity

Requirement As To Maturity Of Bankers' Acceptances Discountable

Federal Reserve banks may discount for their member banks "bankers' acceptances" which have a maturity at the time of discount of not more than three months' sight, exclusive of days of grace.

Opinions Of Counsel And Rulings

Relating to Maturity of Bank Acceptances

Renewals

Acceptance business of Federal Reserve banks is not restricted to the original transaction only, if the transaction has not been liquidated. Member banks may renew the acceptance when the first acceptance matures, and there is no reason why a Federal Reserve bank may not discount such renewal acceptances, although a Federal Reserve bank must not engage in advance to make such discount of a renewal.

Indorsement General Statutory Provisions

Acceptances Indorsed By Member Banks Discountable

Any Federal Reserve bank may discount acceptances which are indorsed by at least one member bank.

Blank Indorsement

An acceptance which is indorsed in blank can change ownership from one holder to another without being indorsed by each subsequent holder, and the title would pass. It might be interesting in this connection to note the expression by the Federal Reserve Board to the effect that it looks forward to the time when only bankers' acceptances bearing three responsible signatures, being those of the acceptor, the drawer, and the indorser, will be bought.