FED APPROVES CHASE MANHATTAN COMMERCIAL DEALING
The Federal Reserve Board has
approved the application of Chase Manhattan Corp to engage in
underwriting and dealing in commercial paper of Chase
Commercial Corp, the lending subsidiary of the parent bank
holding company.
    The Fed order said Chase Manhattan's application was
consistent with sound banking practices and existing laws. But
it added a bill adopted by the Senate Banking Committee last
week could affect Chase Manhattan if it becomes law and might
force it eventually to cease commercial paper underwriting
activities.
     The Fed said the application was similar to that of
Bankers Trust to engage in commercial paper placement that was
approved last December.
    Chase Manhattan Corp, with consolidated assets of 90
billion dlrs, is the second largest banking organization in New
York and operates in the United States and abroad.
    The Fed noted the Securities Industry Association, a trade
association of the investment banking industry, had opposed
Chase Manhattan's application for more powers.
    Chase Manhattan now will be able to underwrite commercial
paper, buying it for resale to institutions like banks.
     In addition, Chase Manhattan will be able to place
commercial paper as agents for issuers and advise them on rates
and maturities of proposed issues just as Bankers Trust was
given authority to do.
    The minimum denomination of commercial paper offered and
purchased would be 250,000 dlrs.
    The Fed said it felt there would be no violation of banking
laws provided that Chase Manhattan restricted its commercial
paper activities to five pct of its income and five pct of
total market share.
    The Fed said dealing in commercial paper was related to
Chase Manhattan's regular banking activities because "this kind
of instrument has many of the characteristics of a traditional
commercial loan."
    "Because of its short term nature, commercial paper is
customarily held to maturity -- like a commercial loan," the Fed
order said.
    Among the benefits for the public will be increased
competition in the commercial paper market and more convenient
service for borrowers and investors, the Fed said.
 Reuter
