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July 11, 1996

Shane B. Hansen, Esq.
Warner Norcross & Judd LLP
900 Old Kent Building
111 Lyon Street, N.W.
Grand Rapids, Michigan 49503-2500

Dear Mr. Hansen:

This is in response to your letter of March 15 concerning two investments proposed by Old Kent Bank, Grand Rapids, Michigan ("Bank").

In its first proposal, Bank proposes to join a limited partnership formed by a group of financial institutions, including bank holding companies, national banks, and thrift institutions, that are credit card issuers and credit card merchant service providers in order to develop targeted "statement stuffers" for inclusion in statements to credit card customers. An operating subsidiary of each participating institution is a limited partner in the partnership, and each participating institution also has one share in a Delaware corporation that acts as the general partner for the limited partnership.

We understand that the limited partnership agreement restricts the partnership to activities that are permissible for a national bank, and that the activities in which the partnership is engaged are permissible for a Michigan state-chartered bank. We also understand that each limited partner has the right to withdraw from the partnership, and would be able to do so if the partnership were to engage in activities that were not permissible for a Michigan state-chartered bank. Further, Bank's interest in the limited partnership and in the general partner in the limited partnership are structured so as to limit Bank's exposure to liability as a result of the activities of the limited partnership.

In the second proposal, Bank's parent, Old Kent Financial Corporation, proposes to restructure its mortgage banking activities by transferring a mortgage banking subsidiary, Republic Mortgage Company ("Republic"), from the holding company to Bank. While Republic would be a wholly owned subsidiary of Bank, Republic has interests in two joint ventures, a general partnership and a limited liability company ("LLC"), that engage in originating residential mortgages. Republic has a 45 percent interest in the general partnership, World Mortgage, the activities of which are limited to activities permissible for Bank and from which Republic has the ability to withdraw and terminate the partnership at any time. We understand that because Republic does not have a controlling interest in the partnership, its interest will be accounted for on an equity basis and will not be consolidated on Republic's or Bank's books.

Republic also has a 51 percent interest in an LLC, Republic Mortgage II L.C. The activities of the LLC are limited to the origination of residential mortgages, and Republic's controlling interest enables it to prevent any impermissible activities by the LLC. Although Republic's controlling interest in the LLC would result in its consolidation on Bank's books, Republic's control and the structure of the LLC limit Bank's exposure to liability from the acts of other members of the LLC.

Bank, through Republic, also proposes to form other joint ventures in limited liability form to engage in mortgage lending in the future. Staff assumes that any future ventures also would be structured in a manner that will limit Bank's exposure, as a legal and accounting matter, to liability resulting from the actions of co-venturers. Where Bank, through its subsidiary, does not have control of the entity, the charter or agreement under which the entity is established would limit the entity to activities that are permissible for Bank. The charter or agreement also would enable Bank with to withdraw from the entity or to prevent the entity from engaging in impermissible activities in the future.

Based on the above considerations, staff would not recommend that the Board find that the proposed investments are barred by section 16 of the Glass-Steagall Act. This letter is limited to the facts as we understand them and differing facts could lead to a differing result.


(signed) J. Virgil Mattingly

J. Virgil Mattingly

General Counsel

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