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BEGIN PART 2c
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00:53:27

If you are not the issuer of the note or mortgage, then you have no obligation.

Again, the bank is prohibited from issuing any note.

For the same reasons, the bank may not be an underwriter, i.e. it may not purchase the note, unless it uses its own money (not its capital, depositors’ money, nor notes).

The bank may say it extended credit, so that it can avoid answering that it broke the law, or that it was a servicer for another entity such as Fannie Mae, in which case the bank has no proprietary interest in the debt.

Again, there must be a meeting of minds and assent on each element of the transaction.

00:56:11

[updated 05-04-2009]
http://edocket.access.gpo.gov/cfr_2009/janqtr/12cfr1.2.htm
12 CFR 1.2 definitions
    (e) Investment security means a marketable debt obligation that is 
not predominantly speculative in nature. A security is not predominantly 
speculative in nature if it is rated investment grade. When a security 
is not rated, the security must be the credit equivalent of a security 
rated investment grade.
    (f) Marketable means that the security:
    (1) Is registered under the Securities Act of 1933, 15 U.S.C. 77a et 
seq.;
    (2) Is a municipal revenue bond exempt from registration under the 
Securities Act of 1933, 15 U.S.C. 77c(a)(2);
    (3) Is offered and sold pursuant to Securities and Exchange 
Commission Rule 144A, 17 CFR 230.144A, and rated investment grade or is 
the credit equivalent of investment grade; or
    (4) Can be sold with reasonable promptness at a price that 
corresponds reasonably to its fair value.

00:57:00

The note is a security, because 12 USC chapter 8 defines it as such.

Is the note an asset or a security?

00:57:28

The question is who has what interest in the debt.
The bank will grossly misrepresent its interest.  It will claim an interest in the note.  But, as shown before, the note does not qualify as the debt.  It is merely an accessory to the debt.  No applicable presumption can be made based upon the note itself.

The fulfillment of the above criteria matches exactly with the information in the FRB Board of Governors’ book Purposes and Functions:  Every asset is an obligation, and vice versa; and all securities are assets and financial obligations.

Notes held in a security account are assets.

01:00:30

12 USC 92a

12 USC 92 Acting as insurance agent or broker
http://frwebgate.access.gpo.gov/cgi-bin/usc.cgi?ACTION=RETRIEVE&FILE=$$xa$$busc12.wais&start=306110&SIZE=4283&TYPE=TEXT

12 USC 92a Trust Powers
http://frwebgate.access.gpo.gov/cgi-bin/usc.cgi?ACTION=RETRIEVE&FILE=$$xa$$busc12.wais&start=310399&SIZE=11872&TYPE=TEXT

Glass-Stiegel Act repealed in part by Gramm-Leach-Bliley Act
Since deregulation which allowed banks and insurance companies to be under one ownership there is a reasonable question as to which type of entity you are dealing with:  insurance, what kind of a bank, broker, dealer, trust?  

[updated 05-04-2009]
http://frwebgate.access.gpo.gov/cgi-bin/usc.cgi?ACTION=RETRIEVE&FILE=$$xa$$busc12.wais&start=1224283&SIZE=1358&TYPE=TEXT
12 USC Sec. 582. Receipt of United States or bank notes as collateral
    No national banking association shall hereafter offer or receive 
United States notes or national-bank notes as security or as collateral 
security for any loan of money, or for a consideration agree to withhold 
the same from use, or offer or receive the custody or promise of custody 
of such notes as security, or as collateral security, or consideration 
for any loan of money. Any association offending against the provisions 
of this section shall be deemed guilty of a misdemeanor and shall be 
fined not more than $1,000 and a further sum equal to one-third of the 
money so loaned. The officer or officers of any association who shall 
make any such loan shall be liable for a further sum equal to one-
quarter of the money loaned; and any fine or penalty incurred by a 
violation of this section shall be recoverable for the benefit of the 
party bringing such suit.

The questions now becomes, Who am I dealing with?  Insurance? Trust?  Broker?  Dealer?  Bank?  What kind of bank?  

01:02:39

[updated 05-04-2009]
http://frwebgate.access.gpo.gov/cgi-bin/usc.cgi?ACTION=RETRIEVE&FILE=$$xa$$busc12.wais&start=254687&SIZE=1794&TYPE=TEXT
12 USC Sec. 83. Loans by bank on its own stock
(a) General prohibition
    No national bank shall make any loan or discount on the security of 
the shares of its own capital stock.
(b) Exclusion
    For purposes of this section, a national bank shall not be deemed to 
be making a loan or discount on the security of the shares of its own 
capital stock if it acquires the stock to prevent loss upon a debt 
previously contracted for in good faith.

12 USC 83 also found at 13 Stat 99, Title 62, Sec. 35

12 USC 581 was transferred to 18 USC 334

18 USC Sec. 334. Issuance of Federal Reserve or national bank notes
    Whoever, being a Federal Reserve Agent, or an agent or employee of 
such Federal Reserve Agent, or of the Board of Governors of the Federal 
Reserve System, issues or puts in circulation any Federal Reserve notes, 
without complying with or in violation of the provisions of law 
regulating the issuance and circulation of such Federal Reserve notes; 
or
    Whoever, being an officer acting under the provisions of chapter 2 
of Title 12, countersigns or delivers to any national banking 
association, or to any other company or person, any circulating notes 
contemplated by that chapter except in strict accordance with its 
provisions--
    Shall be fined under this title or imprisoned not more than five 
years, or both.

01:04:08

[updated 05-04-2009]
http://edocket.access.gpo.gov/cfr_2009/janqtr/12cfr37.1.htm
12 CFR Sec. 37.1  Authority, purpose, and scope.
    (a) Authority. A national bank is authorized to enter into debt 
cancellation contracts and debt suspension agreements and charge a fee 
therefor, in connection with extensions of credit that it makes, 
pursuant to 12 U.S.C. 24(Seventh).
    (b) Purpose. This part sets forth the standards that apply to debt 
cancellation contracts and debt suspension agreements entered into by 
national banks. The purpose of these standards is to ensure that 
national banks offer and implement such contracts and agreements 
consistent with safe and sound banking practices, and subject to 
appropriate consumer protections.
    (c) Scope. This part applies to debt cancellation contracts and debt 
suspension agreements entered into by national banks in connection with 
extensions of credit they make. National banks' debt cancellation 
contracts and debt suspension agreements are governed by this part and 
applicable Federal law and regulations, and not by part 14 of this 
chapter or by State law.

The above comes from the following:
Note:  “personal security” = bank’s capital

http://frwebgate.access.gpo.gov/cgi-bin/usc.cgi?ACTION=RETRIEVE&FILE=$$xa$$busc12.wais&start=45273&SIZE=51275&TYPE=TEXT
12 USC 24 (Seventh)
Seventh. To exercise by its board of directors or duly authorized 
officers or agents, subject to law, all such incidental powers as shall 
be necessary to carry on the business of banking; by discounting and 
negotiating promissory notes, drafts, bills of exchange, and other 
evidences of debt; by receiving deposits; by buying and selling 
exchange, coin, and bullion; by loaning money on personal security; and 
by obtaining, issuing, and circulating notes according to the provisions 
of title 62 of the Revised Statutes. The business of dealing in 
securities and stock by the association shall be limited to purchasing 
and selling such securities and stock without recourse, solely upon the 
order, and for the account of, customers, and in no case for its own 
account, and the association shall not underwrite any issue of 
securities or stock; Provided, That the association may purchase for its 
own account investment securities under such limitations and 
restrictions as the Comptroller of the Currency may by regulation 
prescribe. In no event shall the total amount of the investment 
securities of any one obligor or maker, held by the association for its 
own account, exceed at any time 10 per centum of its capital stock 
actually paid in and unimpaired and 10 per centum of its unimpaired 
surplus fund, except that this limitation shall not require any 
association to dispose of any securities lawfully held by it on August 
23, 1935. As used in this section the term ``investment securities'' 
shall mean marketable obligations, evidencing indebtedness of any 
person, copartnership, association, or corporation in the form of bonds, 
notes and/or debentures commonly known as investment securities under 
such further definition of the term ``investment securities'' as may by 
regulation be prescribed by the Comptroller of the Currency. Except as 
hereinafter provided or otherwise permitted by law, nothing herein 
contained shall authorize the purchase by the association for its own 
account of any shares of stock of any corporation. The limitations and 
restrictions herein contained as to dealing in, underwriting and 
purchasing for its own account, investment securities shall not apply to 
obligations of the United States, or general obligations of any State or 
of any political subdivision thereof, or obligations of the Washington 
Metropolitan Area Transit Authority which are guaranteed by the 
Secretary of Transportation under section 9 of the National Capital 
Transportation Act of 1969, or obligations issued under authority of the 
Federal Farm Loan Act, as amended, or issued by the thirteen banks for 
cooperatives or any of them or the Federal Home Loan Banks, or 
obligations which are insured by the Secretary of Housing and Urban 
Development under title XI of the National Housing Act [12 U.S.C. 
1749aaa et seq.] or obligations which are insured by the Secretary of 
Housing and Urban Development (hereinafter in this sentence referred to 
as the ``Secretary'') pursuant to section 207 of the National Housing 
Act [12 U.S.C. 1713], if the debentures to be issued in payment of such 
insured obligations are guaranteed as to principal and interest by the 
United States, or obligations, participations, or other instruments of 
or issued by the Federal National Mortgage Association, or the 
Government National Mortgage Association, or mortgages, obligations or 
other securities which are or ever have been sold by the Federal Home 
Loan Mortgage Corporation pursuant to section 305 or section 306 of the 
Federal Home Loan Mortgage Corporation Act [12 U.S.C. 1454 or 1455], or 
obligations of the Federal Financing Bank or obligations of the 
Environmental Financing Authority, or obligations or other instruments 
or securities of the Student Loan Marketing Association, or such 
obligations of any local public agency (as defined in section 110(h) of 
the Housing Act of 1949 [42 U.S.C. 1460(h)]) as are secured by an 
agreement between the local public agency and the Secretary in which the 
local public agency agrees to borrow from said Secretary, and said 
Secretary agrees to lend to said local public agency, monies in an 
aggregate amount which (together with any other monies irrevocably 
committed to the payment of interest on such obligations) will suffice 
to pay, when due, the interest on and all installments (including the 
final installment) of the principal of such obligations, which monies 
under the terms of said agreement are required to be used for such 
payments, or such obligations of a public housing agency (as defined in 
the United States Housing Act of 1937, as amended [42 U.S.C. 1437 et 
seq.]) as are secured (1) by an agreement between the public housing 
agency and the Secretary in which the public housing agency agrees to 
borrow from the Secretary, and the Secretary agrees to lend to the 
public housing agency, prior to the maturity of such obligations, monies 
in an amount which (together with any other monies irrevocably committed 
to the payment of interest on such obligations) will suffice to pay the 
principal of such obligations with interest to maturity thereon, which 
monies under the terms of said agreement are required to be used for the 
purpose of paying the principal of and the interest on such obligations 
at their maturity, (2) by a pledge of annual contributions under an 
annual contributions contract between such public housing agency and the 
Secretary if such contract shall contain the covenant by the Secretary 
which is authorized by subsection (g) of section 6 of the United States 
Housing Act of 1937, as amended [42 U.S.C. 1437d(g)], and if the maximum 
sum and the maximum period specified in such contract pursuant to said 
subsection 6(g) [42 U.S.C. 1437d(g)] shall not be less than the annual 
amount and the period for payment which are requisite to provide for the 
payment when due of all installments of principal and interest on such 
obligations, or (3) by a pledge of both annual contributions under an 
annual contributions contract containing the covenant by the Secretary 
which is authorized by section 6(g) of the United States Housing Act of 
1937 [42 U.S.C. 1437d(g)], and a loan under an agreement between the 
local public housing agency and the Secretary in which the public 
housing agency agrees to borrow from the Secretary, and the Secretary 
agrees to lend to the public housing agency, prior to the maturity of 
the obligations involved, moneys in an amount which (together with any 
other moneys irrevocably committed under the annual contributions 
contract to the payment of principal and interest on such obligations) 
will suffice to provide for the payment when due of all installments of 
principal and interest on such obligations, which moneys under the terms 
of the agreement are required to be used for the purpose of paying the 
principal and interest on such obligations at their maturity: Provided, 
That in carrying on the business commonly known as the safe-deposit 
business the association shall not invest in the capital stock of a 
corporation organized under the law of any State to conduct a safe-
deposit business in an amount in excess of 15 per centum of the capital 
stock of the association actually paid in and unimpaired and 15 per 
centum of its unimpaired surplus. The limitations and restrictions 
herein contained as to dealing in and underwriting investment securities 
shall not apply to obligations issued by the International Bank for 
Reconstruction and Development, the European Bank for Reconstruction and 
Development, the Inter-American Development Bank \1\ Bank for Economic 
Cooperation and Development in the Middle East and North Africa,,\2\ the 
North American Development Bank, the Asian Development Bank, the African 
Development Bank, the Inter-American Investment Corporation, or the 
International Finance Corporation,,\2\ or obligations issued by any 
State or political subdivision or any agency of a State or political 
subdivision for housing, university, or dormitory purposes, which are at 
the time eligible for purchase by a national bank for its own account, 
nor to bonds, notes and other obligations issued by the Tennessee Valley 
Authority or by the United States Postal Service: Provided, That no 
association shall hold obligations issued by any of said organizations 
as a result of underwriting, dealing, or purchasing for its own account 
(and for this purpose obligations as to which it is under commitment 
shall be deemed to be held by it) in a total amount exceeding at any one 
time 10 per centum of its capital stock actually paid in and unimpaired 
and 10 per centum of its unimpaired surplus fund. Notwithstanding any 
other provision in this paragraph, the association may purchase for its 
own account shares of stock issued by a corporation authorized to be 
created pursuant to title IX of the Housing and Urban Development Act of 
1968 [42 U.S.C. 3931 et seq.], and may make investments in a 
partnership, limited partnership, or joint venture formed pursuant to 
section 907(a) or 907(c) of that Act [42 U.S.C. 3937(a) or 3937(c)]. 
Notwithstanding any other provision of this paragraph, the association 
may purchase for its own account shares of stock issued by any State 
housing corporation incorporated in the State in which the association 
is located and may make investments in loans and commitments for loans 
to any such corporation: Provided, That in no event shall the total 
amount of such stock held for its own account and such investments in 
loans and commitments made by the association exceed at any time 5 per 
centum of its capital stock actually paid in and unimpaired plus 5 per 
centum of its unimpaired surplus fund. Notwithstanding any other 
provision in this paragraph, the association may purchase for its own 
account shares of stock issued by a corporation organized solely for the 
purpose of making loans to farmers and ranchers for agricultural 
purposes, including the breeding, raising, fattening, or marketing of 
livestock. However, unless the association owns at least 80 per centum 
of the stock of such agricultural credit corporation the amount invested 
by the association at any one time in the stock of such corporation 
shall not exceed 20 per centum of the unimpaired capital and surplus of 
the association: Provided further, That notwithstanding any other 
provision of this paragraph, the association may purchase for its own 
account shares of stock of a bank insured by the Federal Deposit 
Insurance Corporation or a holding company which owns or controls such 
an insured bank if the stock of such bank or company is owned 
exclusively (except to the extent directors' qualifying shares are 
required by law) by depository institutions or depository institution 
holding companies (as defined in section 1813 of this title) and such 
bank or company and all subsidiaries thereof are engaged exclusively in 
providing services to or for other depository institutions, their 
holding companies, and the officers, directors, and employees of such 
institutions and companies, and in providing correspondent banking 
services at the request of other depository institutions or their 
holding companies (also referred to as a ``banker's bank''), but in no 
event shall the total amount of such stock held by the association in 
any bank or holding company exceed at any time 10 per centum of the 
association's capital stock and paid in and unimpaired surplus and in no 
event shall the purchase of such stock result in an association's 
acquiring more than 5 per centum of any class of voting securities of 
such bank or company. The limitations and restrictions contained in this 
paragraph as to an association purchasing for its own account investment 
securities shall not apply to securities that (A) are offered and sold 
pursuant to section 4(5) of the Securities Act of 1933 (15 U.S.C. 
77d(5)); (B) are small business related securities (as defined in 
section 3(a)(53) of the Securities Exchange Act of 1934 [15 U.S.C. 
78c(a)(53)]); or (C) are mortgage related securities (as that term is 
defined in section 3(a)(41) of the Securities Exchange Act of 1934 (15 
U.S.C. 78c(a)(41)).\3\ The exception provided for the securities 
described in subparagraphs (A), (B), and (C) shall be subject to such 
regulations as the Comptroller of the Currency may prescribe, including 
regulations prescribing minimum size of the issue (at the time of 
initial distribution) or minimum aggregate sales prices, or both.
---------------------------------------------------------------------------
    \1\ So in original. Probably should be followed by a comma.
    \2\ So in original.
    \3\ So in original. The period probably should be preceded by an 
additional closing parenthesis.
---------------------------------------------------------------------------
    A national banking association may deal in, underwrite, and purchase 
for such association's own account qualified Canadian government 
obligations to the same extent that such association may deal in, 
underwrite, and purchase for such association's own account obligations 
of the United States or general obligations of any State or of any 
political subdivision thereof. For purposes of this paragraph--
        (1) the term ``qualified Canadian government obligations'' means 
    any debt obligation which is backed by Canada, any Province of 
    Canada, or any political subdivision of any such Province to a 
    degree which is comparable to the liability of the United States, 
    any State, or any political subdivision thereof for any obligation 
    which is backed by the full faith and credit of the United States, 
    such State, or such political subdivision, and such term includes 
    any debt obligation of any agent of Canada or any such Province or 
    any political subdivision of such Province if--
            (A) the obligation of the agent is assumed in such agent's 
        capacity as agent for Canada or such Province or such political 
        subdivision; and
            (B) Canada, such Province, or such political subdivision on 
        whose behalf such agent is acting with respect to such 
        obligation is ultimately and unconditionally liable for such 
        obligation; and

        (2) the term ``Province of Canada'' means a Province of Canada 
    and includes the Yukon Territory and the Northwest Territories and 
    their successors.

In addition to the provisions in this paragraph for dealing in, 
underwriting, or purchasing securities, the limitations and restrictions 
contained in this paragraph as to dealing in, underwriting, and 
purchasing investment securities for the national bank's own account 
shall not apply to obligations (including limited obligation bonds, 
revenue bonds, and obligations that satisfy the requirements of section 
142(b)(1) of title 26) issued by or on behalf of any State or political 
subdivision of a State, including any municipal corporate 
instrumentality of 1 or more States, or any public agency or authority 
of any State or political subdivision of a State, if the national bank 
is well capitalized (as defined in section 1831o of this title).

01:07:20

[updated 05-04-2009]
http://edocket.access.gpo.gov/cfr_2009/janqtr/12cfr1.1.htm
12 CFR Sec. 1.1  Authority, purpose, scope, and reservation of authority.

    (a) Authority. This part is issued pursuant to 12 U.S.C. 1 et seq., 
12 U.S.C. 24 (Seventh), and 12 U.S.C. 93a.
    (b) Purpose This part prescribes standards under which national 
banks may purchase, sell, deal in, underwrite, and hold securities, 
consistent with the authority contained in 12 U.S.C. 24 (Seventh) and 
safe and sound banking practices.
    (c) Scope. The standards set forth in this part apply to national 
banks and Federal branches of foreign banks. Further, pursuant to 12 
U.S.C. 335, State banks that are members of the Federal Reserve System 
are subject to the same limitations and conditions that apply to 
national banks in connection with purchasing, selling, dealing in, and 
underwriting securities and stock. In addition to activities authorized 
under this part, foreign branches of national banks are authorized to 
conduct international activities and invest in securities pursuant to 12 
CFR part 211.
    (d) Reservation of authority. The OCC may determine, on a case-by-
case basis, that a national bank may acquire an investment security 
other than an investment security of a type set forth in this part, 
provided the OCC determines that the bank's investment is consistent 
with 12 U.S.C. section 24 (Seventh) and with safe and sound banking 
practices. The OCC will consider all relevant factors, including the 
risk characteristics of the particular investment in comparison with the 
risk characteristics of investments that the OCC has previously 
authorized, and the bank's ability effectively to manage such risks. The 
OCC may impose limits or conditions in connection with approval of an 
investment security under this subsection. Investment securities that 
the OCC determines are permissible in accordance with this paragraph 
constitute eligible investments for purposes of 12 U.S.C. 24.

UCC Article 8 also talks about investment securities.

01:09:00

[updated 05-04-2009]
15 USC 18
http://frwebgate.access.gpo.gov/cgi-bin/usc.cgi?ACTION=RETRIEVE&FILE=$$xa$$busc15.wais&start=127943&SIZE=9629&TYPE=TEXT
Sec. 18. Acquisition by one corporation of stock of another
    No person engaged in commerce or in any activity affecting commerce 
shall acquire, directly or indirectly, the whole or any part of the 
stock or other share capital and no person subject to the jurisdiction 
of the Federal Trade Commission shall acquire the whole or any part of 
the assets of another person engaged also in commerce or in any activity 
affecting commerce, where in any line of commerce or in any activity 
affecting commerce in any section of the country, the effect of such 
acquisition may be substantially to lessen competition, or to tend to 
create a monopoly.
    No person shall acquire, directly or indirectly, the whole or any 
part of the stock or other share capital and no person subject to the 
jurisdiction of the Federal Trade Commission shall acquire the whole or 
any part of the assets of one or more persons engaged in commerce or in 
any activity affecting commerce, where in any line of commerce or in any 
activity affecting commerce in any section of the country, the effect of 
such acquisition, of such stocks or assets, or of the use of such stock 
by the voting or granting of proxies or otherwise, may be substantially 
to lessen competition, or to tend to create a monopoly.
    This section shall not apply to persons purchasing such stock solely 
for investment and not using the same by voting or otherwise to bring 
about, or in attempting to bring about, the substantial lessening of 
competition. Nor shall anything contained in this section prevent a 
corporation engaged in commerce or in any activity affecting commerce 
from causing the formation of subsidiary corporations for the actual 
carrying on of their immediate lawful business, or the natural and 
legitimate branches or extensions thereof, or from owning and holding 
all or a part of the stock of such subsidiary corporations, when the 
effect of such formation is not to substantially lessen competition.
    Nor shall anything herein contained be construed to prohibit any 
common carrier subject to the laws to regulate commerce from aiding in 
the construction of branches or short lines so located as to become 
feeders to the main line of the company so aiding in such construction 
or from acquiring or owning all or any part of the stock of such branch 
lines, nor to prevent any such common carrier from acquiring and owning 
all or any part of the stock of a branch or short line constructed by an 
independent company where there is no substantial competition between 
the company owning the branch line so constructed and the company owning 
the main line acquiring the property or an interest therein, nor to 
prevent such common carrier from extending any of its lines through the 
medium of the acquisition of stock or otherwise of any other common 
carrier where there is no substantial competition between the company 
extending its lines and the company whose stock, property, or an 
interest therein is so acquired.
    Nothing contained in this section shall be held to affect or impair 
any right heretofore legally acquired: Provided, That nothing in this 
section shall be held or construed to authorize or make lawful anything 
heretofore prohibited or made illegal by the antitrust laws, nor to 
exempt any person from the penal provisions thereof or the civil 
remedies therein provided.
    Nothing contained in this section shall apply to transactions duly 
consummated pursuant to authority given by the Secretary of 
Transportation, Federal Power Commission, Surface Transportation Board, 
the Securities and Exchange Commission in the exercise of its 
jurisdiction under section 79j of this title,\1\ the United States 
Maritime Commission, or the Secretary of Agriculture under any statutory 
provision vesting such power in such Commission, Board, or Secretary.

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END PART 2
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