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4000 - Advisory Opinions

Expansion of Bank's Money Order Operation Not in Violation of Part 332 of FDIC's Regulations


June 23, 1982

Robert E. Feldman, Attorney

This is in response to your letter of June 16, 1982. You state that *** currently sells money orders at all bank locations, and that your plans "consist of having the bank place money orders in approved locations (subject to suitable credit and audit controls) such as supermarket chains".

FDIC has no formal role in approving such an operation. However, you are concerned that the expansion of the bank's money order operation not violate Part 332 of the FDIC's regulations. To that end, you state that the bank's earnings "would be derived from fee income plus earnings on funds remitted to us and kept with us prior to payment as items are presented to us."

The pertinent provision of Part 332 forbids state nonmember insured banks from exercising, taking, or assuming the power "to guarantee or become surety upon the obligations of others . . ." (12 C.F.R. 332.1(c)). As I discussed with you in our telephone conversations of June 16, 1982, the planned expansion of the bank's money order operation would not appear to violate the proscription of the language of section 332.1(c), and the FDIC would interpose no objection at this point.

This letter, however, is merely an opinion based on the facts given us by you in your letter. If an actual violation of Part 332 subsequently occurred, FDIC would not be barred from taking appropriate action.

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