The sale or purchase of Federal funds or Reserve funds by a Wisconsin state bank is not a loan or borrowing within the meaning of Wis. Stat. s. 221.29 and 221.33, respectively, and is not subject to the limitations of the aforementioned sections.

Although these transactions are hereby removed from the statutory limitations referred to above, the sale of such "Federal" or Reserve funds remain basically an extension of credit to the purchaser; therefore, the seller must continue to exercise diligence in appraising the creditworthiness of the purchaser.

The above interpretation is not intended to change the present record keeping and reporting requirements with respect to these transactions. They will continue to be carried as segregated items on the bank's books and will be reported separately in the space provided on reports of condition.

Effective this date it will be a requirement of the Office of Commissioner of Banking that state banks which engage in the sale of federal or reserve funds must have on file a directors' resolution designating the bank or banks to whom such funds may be sold; also included in the resolution must be a dollar limitation for each purchasing bank. Future sales of funds are to take place only within the scope of such resolutions, which must be adopted at least annually.

This requirement is intended to fully inform the Boards of Directors of such fund sales, which are in essence extensions of credit to another bank. This rule will not alter the present record keeping and reporting requirements relative to federal or reserve fund transactions.