THE BANKING AND SECURITIES BUSINESSES AND THE RECONDITE LINE BETWEEN THEM

The efforts of the courts to define when a note is or is not a securit y are analyzed. The development of bank loan participations and the SE C's argument that certain of them are securities is discussed with par ticular attention given to the Supreme Court's decision in Reves v. Er nst & Young and the recent Second Circuit opinion in Banco Espanol de Credito v. Security Pacific. The authors propose a different approach to loan sales by commercial banks than that proposed by the SEC or aff orded by the Banco Espanol opinion and suggest a legislative proposal that would facilitate financial innovation.