Non-Registered Government Securities

C

The Government Securities Act (GSA) of 1986 regulates the sale and trading of securities issued by the federal government, its agencies, and certain other entities. The act requires that all banks and other financial institutions that deal in government securities register with the Securities and Exchange Commission (SEC) and comply with its reporting requirements.

However, there are some exemptions to the registration requirements under the GSA. Transactions with certain types of government securities are exempt from registration, and banks that deal solely in exempt securities are not required to register with the SEC.

To answer the question, we need to identify the government securities that are exempt from registration under the GSA.

A. Obligations of the Farm Credit System: The Farm Credit System (FCS) is a government-sponsored enterprise that provides financing to agricultural and rural communities. Obligations of the FCS are exempt from registration under the GSA, as specified in Section 3(a)(2) of the act.

B. GNMA securities: Government National Mortgage Association (GNMA) securities are issued by the Department of Housing and Urban Development (HUD) to provide mortgage-backed securities (MBS) for residential mortgages. GNMA securities are exempt from registration under the GSA, as specified in Section 3(a)(5) of the act.

C. U.S. Savings Bonds: U.S. Savings Bonds are issued by the Department of the Treasury to provide a low-risk savings option for individual investors. Savings Bonds are exempt from registration under the GSA, as specified in Section 3(a)(1) of the act.

D. FNMA obligations: Federal National Mortgage Association (FNMA) obligations are issued by a government-sponsored enterprise to provide liquidity to the secondary mortgage market. FNMA obligations are not exempt from registration under the GSA.

Therefore, the correct answer to the question is D. FNMA obligations would subject a bank to the registration requirements of the Government Securities Act, while transactions with the other three types of government securities (obligations of the Farm Credit System, GNMA securities, and U.S. Savings Bonds) would not subject a bank to registration.