January 12, 1990
TO: BOARD OF GOVERNORS NO. 5-90
SEC RULES COMMITTEE NO. 3-90
RE: INSTITUTE AMICUS BRIEF IN BANK UNDERWRITING OF
MORTGAGE-BACKED SECURITIES CASE
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The Institute has submitted an amicus curiae brief in
support of the SIA's petition for certiorari to the U.S. Supreme
Court in SIA v. Clarke. The SIA is appealing the decision of the
U.S. Court of Appeals for the Second Circuit that the sale of
mortgage pass-through certificates by a national bank was a
permitted "incidental power" and not barred by the Glass-Steagall
Act.
Attached is a copy of the Institute's brief. In the brief,
the Institute argues that the Court of Appeals erred in holding
that any activity that is "convenient and useful" to a national
bank cannot violate the prohibitions on underwriting contained in
the Glass-Steagall Act. The Institute states that this decision,
if upheld, would have the effect of sanctioning "wholesale
administrative dismantlement of the Glass-Steagall Act
prohibitions".
We will keep you informed of developments.
Craig S. Tyle
Associate General Counsel
Attachment