Ga. Comp. R. & Regs. R. 80-1-5-.05 - Discounted Dealer Paper

(1) Purchases of dealer paper, with or without recourse, may generally be made without limitation; however, where the aggregate amount of such paper outstanding exceeds twenty-five (25) percent of the bank's statutory capital base and the paper has been taken with recourse or pursuant to an agreement to repurchase between the bank and the dealer, the following conditions must be met:

(a) The dealer must maintain a dealer's reserve in an amount equal to at least five (5) percent of the total outstanding balance on notes discounted with recourse or pursuant to the repurchase agreement and such reserve must be under the control of the lending bank.

(b) The bank must maintain a balance sheet and profit and loss statement on the dealer covering the most recent fiscal period for which such information is available, but in no event shall the statements be more than eighteen months old.

(c) The obligors on all such notes shall have been notified that the bank is owner of the note and payments are to be made directly to the bank.

(d) The dealers shall not be permitted to make payments on the discount notes but shall be required to take over, in full, any note which is past due four months or more.

(e) There must be a written agreement, signed by both the bank and the dealer, which clearly outlines the requirements of the bank and the duties and responsibilities of the dealer.

(2) Whenever the aggregate outstanding balance of discount notes on a single dealer exceeds fifteen (15) percent of the bank's statutory capital base and the notes are taken with recourse or pursuant to a repurchase agreement, the Board of Directors at least annually shall approve the maximum amount to which such aggregate outstanding balance may extend. When in excess of twenty-five (25) percent of the statutory capital base, the line must be reviewed quarterly by the Board of Directors or Loan Committee.

Notes

Ga. Comp. R. & Regs. R. 80-1-5-.05

Ga. L. 1974, pp. 733, 793-795; Ga. L. 1983, Act No . 255, effective March 16, 1983.

Original Rule entitled "Discounted Dealer Paper" was filed on August 28, 1975; effective September 17, 1975. Amended: Filed August 17, 1983; effective September 6, 1983.