Question about Repurchase Agreement Confirmations

May 19, 1997

Ken Papaj
Department of Treasury
Bureau of the Public Debt
Government Securities Regulations Staff
Washington, DC 20239

RE: Question about Repurchase Agreement Confirmations

I am writing to you on behalf of Bremer Financial's 14 First American Bank National Association financial institutions located in Minnesota, North Dakota, and Wisconsin (a $3Billion total holding company), to request information on the allowable nature of the actual confirmation sent to hold-in-custody overnight repurchase agreement customers.

Question: May we use electronic mail to deliver daily confirmations.

Assumptions:

• Customers will approve one of three methods for receiving confirmations - Mail, Fax, or this Electronic Mail option (“E-Mail”). They will not have the ability to waive the right to receive a confirm. If they choose E-Mail as the mechanism, we will require that the E-Mail account be owned by the company or individual, and checked as part of the regular business day.
• Confirmations will contain all information as required by regulation, concerning collateral, identifications, etc. as specified by 17 CFR 403.5(d)(2)(i). (SUBCHAPTER A -- REGULATIONS UNDER SECTION 15C OF THE SECURITIES EXCHANGE ACT OF 1934 a.k.a. Government Securities Act.)
• Confirmations will be sent out automatically before the start of the business day following the transaction.
• We would have alternative means to send out confirmations in the event the Electronic Mail is unsuccessfully delivered. We can determine unsuccessful delivery by a rejected message from the Internet - confirms to non-existing E-Mail addresses are returned within minutes. Our alternatives are Fax and regular mail.
• We will keep history for every day, every customer for at least the required 3 years.
• If a person revokes their E-Mail option, they will be automatically converted to a Fax or regular mail delivery mechanism.

Comments:

• We are doing this as a way to reduce cost, for us and our customer. We spend up to $1.00 per day per confirmation when by regular mail or fax.
• The Securities Act of 1933 Section 2(9) specifies a written confirmation, including “printed, lithographed, or any means of graphic communication.” It is my initial interpretation that an E-Mail message is a form of “graphic communication”. It also states that it must be a record which the customer can retain. Storage on electronic or magnetic medium is very common, more so than actual pieces of paper. Customers are welcome to print confirmations from their electronic mail accounts if needed.
• The Broker industry is moving toward this medium for confirmations.
• This form of confirmation is being requested by customers for two reasons: One, it is easier to deal with, requiring less cumbersome paper and processing. Two, and more importantly, they can “download” these confirms into other electronic systems within their company, and avoid having to re-enter the information.

Bremer Financial respectfully requests your guidance on this matter. If you have any questions about the factual context of this request or about the specific means proposed for using electronic mail, please contact me at (612) 282-9758.

Thank you in advance for your help.

Sincerely,
Gren Blackall

cc:	Kurt Raney, OCC
	Stan Dardis, COO Bremer Financial
	Brent Gray, CFO Bremer Financial
	Don Espersen, Audit
	Dave Kane, Compliance

SVP, CIO Bremer Financial Services, Inc.
445 Minnesota Street
St. Paul, Minnesota 55101-2107

EXAMPLE CONFIRMATION

Message:
To:Yoshi@singles.com at -FABRIK/Internet
From:GBLACKAL at BREMER_HQ
Subject: Daily Collateral Confirmation for 5/15/97
Contents:
First American Bank of North Dakota, NA
Repurchase Agreement Confirmation for 5/15/97.
For Yoshi Inc, Account #202

TO Yoshi Banader 323 Regular Lane Organize, M class="table"

FROM Gren Blackall Phone 612-282-9758 Internet Address gblackal@bfsi.co class="table"

SUMMARY
Balance	987,779.34
Rate	4.500%
Interest	121.78

COLLATERAL DETAILS
DESCRIPTION	CUSIP	COUPON	MATURITY	PAR VALUE	MKT VALUE
FNMA REMIC 1993	31359BD53	6.50	8/25/08	270,000.00	265,343.26
OCONTO WI REFUN	675685DS7	5.20	12/1/06	20,000.00	18,890.91
FNMA POOL #2071	31369DBC4	6.00	12/1/08	730,000.00	708,346.19
			TOTAL	1,020,000.00	992,580.36