FedLetting Crestar Set Up Muni Bond Unit

The Federal Reserve Board on Monday gave Crestar Financial Corp. permission to establish a section 20 subsidiary to underwrite municipal revenue and general obligation bonds.

The Richmond, Va.-based unit also may engage in private placement activities, which means it may sell new corporate securities to sophisticated investors. It also may find buyers and sellers for securities owned by its customers.

The Section 20 company may not earn more than 25% of its revenue from these activities. It also is barred from underwriting corporate securities.

The Fed said Crestar's entry into the securities market would benefit the public by increasing competition.

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