Bank Permitted To Purchase Its Own Acceptances

A member bank may legally purchase its own acceptances, but such a transaction is equivalent to a loan or advance to the customer for which the acceptance is made and the liability of such customer becomes subject to the limitations of Section 5200 of the Revised Statutes.

Exemptions From Limitations Of Section 13

When a bank purchases its own acceptances before maturity, such acceptance need not be included in the aggregate of acceptances authorized by Section 13.

Reissue Of Acceptances

When a bank buys its own acceptances, they are to be recorded as loans subject to the limitations of Section 5200 and the right of the bank to resell or reissue such acceptances, is, in the opinion of counsel, fully recognized by the authorities and where this is done, they may be treated as acceptances outstanding and not as loans.

Rediscount Of Such Acceptances

An acceptance which has been purchased by the accepting bank and subsequently rediscounted with its Federal Reserve bank is not subject to the limitations of Section 5200 of the Revised Statutes.