For immediate release

The Federal Reserve Board today announced its approval of the notice of Norwest Corporation, Minneapolis, Minnesota, to engage de novo in underwriting and dealing, to a limited extent, in all types of debt securities. Attached is the Board's Order relating to this action.

Norwest Corporation Minneapolis, Minnesota Norwest Investment Services, Inc. Minneapolis, Minnesota Order Approving Notice to Engage in Underwriting and Dealing in All Types of Debt Securities on a Limited Basis

Norwest Corporation ("Norwest"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), and its wholly owned subsidiary, Norwest Investment Services, Inc. ("Company"), have requested the Board's approval under section 4(c)(8) of the BHC Act (12 U.S.C. � 1843(c)(8)) and section 225.24 of the Board's Regulation Y (12 C.F.R. 225.24) to engage de novo in underwriting and dealing, to a limited extent, in all types of debt securities. Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (63 Federal Register 17,874 (1998)). The time for filing comments has expired, and the Board has considered the notice and all comments received in light of the factors set forth in section 4(c)(8) of the BHC Act. Norwest, with total consolidated assets of $88.5 billion, is the 11th largest commercial banking organization in the United States.1 Norwest operates subsidiary banks in 16 states and engages through its subsidiaries in a broad range of permissible nonbanking activities. Company currently engages in limited underwriting and dealing in bank-ineligible securities,2 as permitted under section 20 of the Glass-Steagall Act (12 U.S.C. � 377).3 Company is, and will continue to be, a broker-dealer registered with the Securities and Exchange Commission ("SEC") and a member of the National Association of Securities Dealers, Inc. ("NASD"). Accordingly, Company is subject to the recordkeeping and reporting obligations, fiduciary standards, and other requirements of the Securities Exchange Act of 1934 (15 U.S.C. � 78a et seq.), the SEC, and the NASD. The Board has determined that -- subject to the prudential framework of limitations established in previous decisions to address the potential for conflicts of interests, unsound banking practices, or other adverse effects -- the proposed activities of underwriting and dealing in bank-ineligible securities are so closely related to banking as to be proper incidents thereto within the meaning of section 4(c)(8) of the BHC Act.4 The Board also has determined that conduct of the proposed activities is consistent with section 20 of the Glass-Steagall Act, provided that the company engaged in the underwriting and dealing activities derives no more than 25 percent of its gross revenues from underwriting and dealing in bank-ineligible securities.5 Norwest has committed that Company will conduct the proposed underwriting and dealing activities using the same methods and procedures, and subject to the same prudential limitations, as established by the Board in the Section 20 Orders. Norwest also has committed that Company will conduct its bank-ineligible underwriting and dealing activities subject to the Board's revenue restriction. As a condition of this order, Norwest is required to conduct its bank-ineligible securities underwriting and dealing activities subject to the revenue restrictions and the Operating Standards established for section 20 subsidiaries ("Operating Standards").6 In order to approve this notice, the Board also must consider whether performance of the proposed activities is a proper incident to banking, that is, whether the activities proposed "can reasonably be expected to produce benefits to the public . . . that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices."7 As part of its evaluation of these factors, the Board considers the financial condition and managerial resources of the notificant and its subsidiaries and the effect the transaction would have on such resources.8 The Board has reviewed the capitalization of Norwest and Company in accordance with the standards set forth in the Section 20 Orders and finds the capitalization of each to be consistent with approval of the proposal. With respect to Company, this determination is based on all the facts of record, including Norwest's projections of the volume of Company's underwriting and dealing activities in bank-ineligible securities. The Board also has reviewed the managerial resources of Norwest and its subsidiaries in light of examination reports and other supervisory information. Based on all other facts of record, including the commitments provided in this case and the proposed managerial and risk systems of Company, the Board has concluded that financial and managerial considerations are consistent with approval of the notice. In addition, the Board has carefully considered the competitive effects of the proposal. The Board expects that the de novo entry of Company into the market for the proposed services would provide added convenience to Norwest's customers, lead to improved methods of meeting customer financing needs, and increase the level of competition among existing providers of these services. For the reasons set forth, and based on all the facts of record, the Board has determined that performance of the proposed activities by Company can reasonably be expected to produce public benefits that outweigh possible adverse effects under the proper incident to banking standard of section 4(c)(8) of the BHC Act. On the basis of all the facts of record, the Board has determined that the notice should be, and hereby is, approved, subject to all the terms and conditions in this order. The Board's approval of this proposal extends only to activities conducted within the limitations of this order, including the Board's reservation of authority to establish additional limitations to ensure that Company's activities are consistent with safety and soundness, avoidance of conflicts of interests, and other relevant considerations under the BHC Act. Underwriting and dealing in any manner other than as approved in this order and the Section 20 Orders (as modified by the Modification Orders) is not within the scope of the Board's approval and is not authorized for Company. Included among the conditions set forth in the Section 20 Orders is a condition that Company not commence the proposed underwriting and dealing activities until the Board has determined that Norwest and Company have established policies and procedures to ensure compliance with this order and the Section 20 Orders, including computer, audit, and accounting systems, internal risk management procedures and controls, and the necessary operational and managerial infrastructure for underwriting and dealing in all types of debt securities. On the basis of a recent review by the Federal Reserve Bank of Minneapolis ("Reserve Bank"), and based on all the facts of record, the Board has determined that Norwest and Company have established the managerial and operational infrastructure and other policies and procedures necessary to comply with the requirements of this order and the Section 20 Orders for underwriting and dealing in debt securities. Accordingly, Company may commence underwriting and dealing in all types of debt securities as permitted by, and subject to the other conditions of, this order and the Section 20 Orders. The Board's determination also is subject to all the terms and conditions set forth in Regulation Y, including those in sections 225.7 and 225.25(c) of Regulation Y (12 C.F.R. 225.7 and 225.25(c)), and to the Board's authority to require such modification or termination of the activities of a bank holding company or any of its subsidiaries as the Board finds necessary to ensure compliance with, and to prevent evasion of, the provisions of the BHC Act and the Board's regulations and orders issued thereunder. The Board's decision is specifically conditioned on compliance with all the commitments made in connection with this notice and the conditions set forth in this order and the above-noted Board regulations and orders. These commitments and conditions are deemed to be conditions imposed in writing by the Board in connection with its findings and decision and, as such, may be enforced in proceedings under applicable law. The proposal shall not be commenced later than three months after the effective date of this order, unless such period is extended for good cause by the Board or by the Reserve Bank, acting pursuant to delegated authority.

By order of the Board of Governors,9 effective May 26, 1998. (signed) Jennifer J. Johnson Jennifer J. Johnson Deputy Secretary of the Board

Footnotes 1 Asset and ranking data are as of December 31, 1997. 2 As used in this order, the term "bank-ineligible securities" refers to securities that a member bank may not underwrite or deal in directly under section 16 of the Glass-Steagall Act (12 U.S.C. � 24(Seventh)). 3 Company has authority to underwrite and deal in, to a limited extent, certain municipal revenue bonds, 1-4 family mortgage-related securities, commercial paper, and consumer receivable related securities. Company also is authorized to engage in a variety of other nonbanking activities. See Norwest Corporation, 76 Federal Reserve Bulletin 79 (1990); see also Letter Interpreting Section 20 Orders, 81 Federal Reserve Bulletin 198 (1995). 4 See Canadian Imperial Bank of Commerce, et al., 76 Federal Reserve Bulletin 158 (1990); J.P. Morgan & Co. Incorporated, et al., 75 Federal Reserve Bulletin 192 (1989), aff'd sub nom. Securities Industries Ass'n v. Board of Governors of the Federal Reserve System, 900 F.2d 360 (D.C. Cir. 1990); Citicorp, et al., 73 Federal Reserve Bulletin 473 (1987), aff'd sub nom. Securities Industry Ass'n v. Board of Governors of the Federal Reserve System, 839 F.2d 47 (2d Cir.), cert. den., 486 U.S. 1059 (1988); as modified by Review of Restrictions on Director, Officer and Employee Interlocks, Cross-Marketing Activities, and the Purchase and Sale of Financial Assets Between a Section 20 Subsidiary and an Affiliated Bank or Thrift, 61 Federal Register 57,679 (1996), and Amendments to Restrictions in the Board's Section 20 Orders, 62 Federal Register 45,295 (1997) (collectively, "Section 20 Orders"). 5 See Section 20 Orders. Compliance with the revenue limitation shall be calculated in accordance with the method stated in the Section 20 Orders, as modified by Order Approving Modifications to the Section 20 Orders, 75 Federal Reserve Bulletin 751 (1989), 10 Percent Revenue Limit on Bank-Ineligible Activities of Subsidiaries of Bank Holding Companies Engaged in Underwriting and Dealing in Securities, 61 Federal Register 48,953 (1996), and Revenue Limit on Bank-Ineligible Activities of Subsidiaries of Bank Holding Companies Engaged in Underwriting and Dealing in Securities, 61 Federal Register 68,750 (1996) (collectively, "Modification Orders"). 6 12 C.F.R. 225.200. Company may provide services that are necessary incidents to the proposed underwriting and dealing activities. Unless Company receives specific approval under section 4(c)(8) of the BHC Act to conduct the activities independently, any revenues from the incidental activities must be treated as ineligible revenues subject to the Board's revenue limitations. 7 12 U.S.C. � 1843(c)(8). 8 See 12 C.F.R. 225.24. 9 Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Ferguson and Gramlich. Absent and not voting: Governors Kelley, Phillips, and Meyer.

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1998 Orders on banking applications