For the first time since the present regulations were imposed on nationa: bunks, the banks will be able under the new code to invest in small and sound enterprises without fear of being "black listed" by Federal bank examiners. The new regulations specify that banks may invest in "obligations of fair value," while the present regulations require that investments be made in readily marketable securities registered on at least one stock exchange.
Mr. Ecoles had contended that this regulation ruled out investments in many small firms which could not afford the expenses of being listed on stock exchanges.
The new regulations also permit investment in securities maturing in less than ten years providing repayment of 75 per cent. of the principal is made at the date of maturity. The present regulations require full payment.
The compromise between the Federal Reserve System and the Treasury Department gave Mr. Ecoles his demands for more liberal invest ment policies, while Mr. Morgenthau won guarantees for bank depositors.
The Treasury Department admitted that although the new regulations will require securities in the form of bonds or note debentures, in effect they will permit loans to small business for issued security described in the re gulations as "realistic."
The Treasury Department said the new regulations eliminated much from the old system which was merely [traditional and established the procedure on a "more practical has United Press.
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