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FIL-45-97 Attachment

[Federal Register: March 20, 1997 (Volume 62, Number 54)]

[Rules and Regulations]

[Page 13294-13298]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr20mr97-4]


 

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FEDERAL RESERVE SYSTEM


 

12 CFR Part 215


 

[Regulation O; Docket No. R-0940]



 

Loans to Executive Officers, Directors, and Principal

Shareholders of Member Banks; Loans to Holding Companies and Affiliates


 

AGENCY: Board of Governors of the Federal Reserve System.


 

ACTION: Final rule.


 

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SUMMARY: The Board is amending its Regulation O, which implements

section 22(h) of the Federal Reserve Act and limits how much and on

what terms a bank may lend to its own insiders and insiders of its

affiliates. Under the final rule, Regulation O will not apply to

extensions of credit by a bank to an executive officer or director of

an affiliate, provided that the executive officer or director is not

engaged in major policymaking functions of the bank and the affiliate

does not account for more than 10 percent of the consolidated assets of

the bank's parent holding company. Extensions of credit to executive

officers of an affiliate that accounts for more than 10 percent of the

consolidated assets of the bank's parent holding company are covered by

Regulation O as a result of the Economic Growth and Regulatory

Paperwork Reduction Act of 1996.


 

EFFECTIVE DATE: April 1, 1997.


 

FOR FURTHER INFORMATION CONTACT: Gregory Baer, Managing Senior Counsel

(202/452-3236), or Gordon Miller, Attorney (202/452-2534), Legal

Division, Board of Governors of the Federal Reserve System. For the

hearing impaired only, Telecommunications Device for the Deaf (TDD),

Dorothea Thompson (202/452-3544).


 

SUPPLEMENTARY INFORMATION:


 

Introduction


 

Section 22(h) of the Federal Reserve Act restricts insider lending

by banks, and Regulation O implements section 22(h). 12 U.S.C. 375b; 12

CFR Part 215. Regulation O limits total loans to any one insider and

aggregate loans to all insiders to a percentage of the bank's capital

and requires that such loans be on non-preferential terms--that is, on

the same terms a person not affiliated with the bank would

receive.1 12 CFR 215.4(a), (c), and (d). For this purpose, an

``insider'' means an executive officer,


 

[[Page 13295]]


 

director, or principal shareholder, and loans to an insider include

loans to any ``related interest'' of the insider, including any company

controlled by the insider. 12 CFR 215.2(h). Regulation O requires banks

to maintain records to document compliance with all its restrictions.

12 CFR 215.8.

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\1\ Regulation O also requires prior approval of the bank's

board of directors for certain loans to insiders and prohibits

certain overdrafts by executive officers and directors. 12 CFR

215.4(b) and (e).

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The Board in 1980 generally exempted executive officers of

affiliates from the restrictions of Regulation O so long as they did

not participate in major policymaking functions of a bank. The Board

did not exempt directors of affiliates because it lacked authority to

do so. On May 3, 1996, the Board proposed amendments to Regulation O to

conform its exemptions for executive officers and directors of

affiliates of banks to the requirements of section 22(h), as amended by

the Riegle Community Development and Regulatory Improvement Act of 1994

(Riegle Act), which had modified the authority of the Board to maintain

such exemptions.2 61 FR 19683. On September 30, 1996, in the

Economic Growth and Regulatory Paperwork Reduction Act of 1996

(EGRPRA),3 Congress amended section 22(h) to modify further the

Board's exemptive authority over affiliate insiders. In view of the

changes in the Board's authority and the comments received from the

public concerning the Board's original proposal, the Board on November

8, 1996, sought comment on a new proposal to exempt certain insiders of

affiliates from Regulation O. 61 FR 57797.

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\2\ Pub. L. 103-325, section 334 (1994).

\3\ Pub. L. 104-208, section 2211 (1996).

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After considering the comments received on the notice, the Board

has decided not to apply Regulation O to extensions of credit by a bank

to an executive officer or director of a bank affiliate, provided that:

(1) the executive officer or director is not engaged in major

policymaking functions of the bank; and (2) the affiliate does not

account for more than 10 percent of the consolidated assets of the

bank's parent holding company. All commenters supported the Board's new

proposal, except one commenter who complained that executive officers

of certain larger affiliates of a bank who previously could be exempted

from Regulation O no longer would be eligible to be exempted.


 

Background


 

Section 22(h) restricts lending not only to insiders of the bank

that is making the loan but also to insiders of the bank's parent bank

holding company and any other subsidiary of that bank holding

company.4 Prior to FDICIA, the Board's rules exempted from all the

provisions of Regulation O a bank's loans to an executive officer of

any of its affiliates (other than the parent bank holding company),

provided that the executive officer did not participate in major

policymaking functions at the bank.5 12 CFR 215.2(d) (1992). The

Board considered this treatment appropriate for two reasons. First,

such persons generally were not considered to be in a position to exert

sufficient leverage on the lending bank to obtain a loan on anything

but arms-length terms, in contrast to executive officers of the lending

bank itself or its parent. Thus, the Board considered the benefits of

restricting loans to these affiliate insiders, in terms of protecting

the safety and soundness of bank, to be small. Second, applying these

restrictions to executive officers of affiliates would have required

each bank to maintain an updated list of all its affiliates' executive

officers and all related interests of those executive officers, and to

check all loans against the list. Particularly for a bank in a multi-

subsidiary bank holding company, this effort would have constituted a

significant burden not outweighed by any substantial benefit.

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\4\ As amended by the Federal Deposit Insurance Corporation

Improvement Act of 1991 (FDICIA), section 22(h)(8) provides that

``any executive officer, director, or principal shareholder (as the

case may be) of any company of which the member bank is a

subsidiary, or of any other subsidiary of that company, shall be

deemed to be an executive officer, director, or principal

shareholder (as the case may be) of the member bank.'' 12 U.S.C.

375b(8)(A).

\5\ Subsection (h) of section 22 was added in 1978. Financial

Institutions Regulatory and Interest Rate Control Act of 1978, Pub.

L. 95-630, section 104. At that time, subsection (h) was ambiguous

about whether an executive officer of a bank's affiliate was

required to be treated like an executive officer of the bank itself.

The statute provided that an ``officer'' of a bank included officers

of affiliates, but did not similarly address ``executive officers.''

The statute's restrictions on lending by a bank to ``executive

officers'' of the bank therefore did not clearly apply to

``executive officers'' of affiliates. No such ambiguity existed with

respect to directors and principal shareholders of affiliates, who

were explicitly treated like their counterparts at the lending bank.

In 1980, the Board amended Regulation O to cover insiders of

affiliates, but included a regulatory exception for executive

officers of affiliates who did not participate in major policymaking

functions at the bank.

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However, after the FDICIA amendment, the language of the statute no

longer appeared to allow such an exception for executive officers of

affiliates. Under the amendment, executive officers of affiliates were

explicitly treated like executive officers of the bank itself. Still,

nothing in the legislative history of FDICIA indicated that Congress

intended to invalidate the Board's regulatory exception and extend

coverage to all executive officers of affiliates.

In the Riegle Act, Congress addressed this issue by amending

section 22(h)(8) again. The Riegle Act authorized the Board to make

exceptions for executive officers and directors of affiliates, provided

that the executive officer or director did not have the authority to

participate, and did not participate, in major policymaking functions

of the lending bank. The Act, however, did not authorize the Board to

include any exception from section 22(h)(2), which prohibits lending on

preferential terms.6 Although the legislative history of the

provision indicates that it was intended to allow the Board to maintain

its existing exception for executive officers, its language did not

allow the Board to do so. 7

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\6\ The provision extending the statute to executive officers

and directors of affiliates was moved to a new paragraph (8)(A), and

the authority of the Board to make exceptions was placed in a new

paragraph (8)(B), which reads as follows:

The Board may, by regulation, make exceptions to subparagraph

(A), except as that subparagraph makes applicable paragraph (2), for

an executive officer or director of a subsidiary of a company that

controls the member bank, if that executive officer or director does

not have authority to participate, and does not participate, in

major policymaking functions of the member bank. 12 U.S.C.

375b(8)(B). ``Paragraph (2)'' is the prohibition against lending on

preferential terms.

\7\ The Conference Report stated, ``It is not the intent of the

Conferees to affect the exemptions that the Federal Reserve Board

has already extended to executive officers, but rather to allow the

Board the authority to provide appropriate treatment for

directors.'' House Report 103-652, 103d Cong., 2d Sess. at 180

(1994).

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The Board suggested and supported an amendment to section 22(h) to

make its language consistent with its apparent intent, and EGRPRA

resolved the situation by dropping the requirement in section 22(h)(8)

that the Board's exceptions not include the preferential lending

provision. EGRPRA therefore restored the ability of the Board prior to

FDICIA to exempt executive officers of a bank's affiliates from all the

provisions of section 22(h), and granted the Board the authority to

make the same exception for directors of a bank's affiliates as well.

Congress further revised section 22(h)(8) in EGRPRA, however, to

introduce an additional restriction on the Board's exemptive authority.

Under section 22(h), as amended, the Board may not grant an exception

to an executive officer or director of an affiliate that constitutes

more than 10 percent of the consolidated assets of the highest-tier

holding company controlling the affiliate and the bank making the loan.


 

[[Page 13296]]


 

Accordingly, the Board proposed an amendment to Regulation O that

would eliminate its restrictions on a bank's lending to executive

officers and directors of an affiliate who are not involved in major

policymaking functions of the lending bank, if the assets of the

affiliate did not exceed 10 percent of the consolidated assets of a

company that controlled the member bank and such subsidiary and was not

controlled by any other company.8 As the Board stated in its

proposal, the Board believes, for the same reasons that it originally

exempted executive officers of affiliates, that retaining the executive

officer exemption and expanding it to cover directors would relieve

regulatory burden on bank holding companies without increasing the risk

of excessive or preferential lending or resultant safety and soundness

problems.

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\8\ The proposed amendment also would retain the current

provision in Regulation O that excludes extensions of credit to

exempt insiders of affiliates from the recordkeeping requirements of

Sec. 215.8 of Regulation O. The Board in its original proposal

retained the recordkeeping requirement because the lending bank was

required to identify loans to exempted insiders of affiliates and

their related interests in order to ensure that such loans were not

made on preferential terms. Under the proposed amendment, however,

the Board's exemption would encompass all prohibitions under section

22(h), including the prohibition on preferential terms, and

therefore make recordkeeping for loans to exempt borrowers

unnecessary.

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The proposal also reflected a simplified procedure for excluding

executive officers of affiliates that was adopted by the Board in a

final rule effective the same date as the supplemental notice, and

extended the procedure to directors. 61 FR 57769. The procedure allows

the board of directors of a bank to exclude affiliate insiders without

requiring any action by the affiliate board of directors. The Board

adopted the simplified procedures because the lending bank and its

board of directors have full and formal control over who participates

in the bank's policymaking. For the same reasons, the Board stated in

the proposal that it believed that simplifying the requirements to

exempt a director of an affiliate would relieve regulatory burden

without increasing the risk of evasion of Regulation O.

The Board received 44 comments on its original rulemaking proposal.

Forty-one commenters supported the Board's proposed amendments,

including 17 commenters who supported the Board's amendments without

qualification.9 Several commenters asked the Board to expand its

proposed amendments to provide additional relief from Regulation O.

These proposals included extending the exception to include

Secs. 215.8, 215.10, and 215.11 of Regulation O, which impose various

recordkeeping and disclosure requirements, and making the amendments

effective retroactively to the effective date of the Riegle Act.10

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\9\ Eleven commenters generally supported the amendments as

originally proposed but complained that banks would continue to bear

a significant recordkeeping burden to ensure that loans to affiliate

insiders were not made on preferential terms. The three commenters

who opposed the original proposal also objected on the basis of the

recordkeeping burden. As discussed above, the recordkeeping

requirement for loans to exempted insiders of affiliates has been

eliminated.

\10\ One commenter also suggested that the requirement for a

board of directors resolution to exempt insiders of a bank's

affiliates be dropped entirely. This comment was addressed in the

Board's notice of final rulemaking dated November 8, 1996. 61 FR

57770.

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The Board received 21 comments on its supplemental rulemaking,

including comments from three banks, nine bank holding companies, six

Federal Reserve Banks, and three trade associations. Twenty commenters

supported the Board's revised amendments, including 14 commenters who

supported the revised amendments without qualification. The other

commenters in favor sought clarification concerning the measurement of

consolidated assets, suggested further changes to Regulation O

concerning persons to be treated as executive officers subject to its

lending restrictions and the manner of exempting them, proposed

technical changes in the text of the amendment, or requested the Board

to seek further amendments of section 22(h) by Congress. One commenter

opposed the revised amendments because executive officers of certain

larger affiliates of a lending bank who previously could be exempted

from section 22(h) and Regulation O no longer can be exempted under

EGRPRA.

The Board has carefully considered the comments received, and has

decided to adopt the amendment substantially as proposed.

With respect to the comments received on the original rulemaking,

the Board believes that no action is required to make the exceptions

effective with respect to Sec. 215.10, concerning the reporting of

loans to executive officers of member banks in a bank's quarterly

report of condition pursuant to 12 U.S.C. 1817(a)(3), and Sec. 215.11,

concerning public disclosure of extensions of credit to executive

officers and principal shareholders of member banks pursuant to 12

U.S.C. 1817(k). Sections 215.10 and 215.11 do not apply to executive

officers of affiliates in any case. Accordingly, no action is necessary

to exclude executive officers of affiliates who are covered by the

exceptions. The Board also has determined that a retroactive effective

date for this amendment is not appropriate.11

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\11\Executive officers of affiliates of a lending bank that

account for more than 10 percent of the consolidated assets of the

lending bank's top-tier bank holding company previously could be

exempted from section 22(h) and Regulation O, but they no longer can

be exempted under EGRPRA, effective September 30, 1996. The statute

makes no provision for the grandfathering of nonconforming loans

that were outstanding when the law became effective. The Board's

practice concerning loans that are outstanding at the time a

borrower becomes an insider has been not to require that such loans

be brought into conformity until such loans are renewed, revised, or

extended, which events are deemed to be a new extension of credit

subsequent to the date the borrower became an insider. The dollar

amount of nonconforming loans, however, is counted toward the

individual insider and aggregate insider lending limits whenever any

additional extensions of credit subject to these limits are

considered. See 12 CFR 215.4(c) and (d).

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With respect to the comments received on the supplemental

rulemaking, one commenter noted that EGRPRA did not address when or how

often the assets of affiliates and the consolidated assets of the top-

tier bank holding company should be measured in order to determine

whether insiders of certain larger affiliates are ineligible to be

exempted from the lending restrictions of Regulation O. The Board has

decided that assets should be measured once per year, based on the

average assets reported by the top-tier holding company and its banking

and nonbanking subsidiaries during the four preceding calendar quarters

or as determined in the examination process. This method of measurement

should minimize fluctuations in asset size (as may occur, for example,

as a result of seasonal loan demand) and simplify the collection of

relevant data.12

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\12\When calculating the assets of any affiliate, all inter-

affiliate liabilities should be excluded, in the same manner as such

liabilities are excluded when calculating the consolidated assets of

the top-tier bank holding company.

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Two commenters sought further simplification of the procedure to

exclude insiders of an affiliate of a bank from the insider lending

restrictions. The Board has amended the definitions of ``director'' and

``executive officer'' in Regulation O to clarify that insiders of an

affiliate may be excluded by any form of resolution of the board of

directors or bylaw of a bank that identifies the persons who are

excluded.13 Even under the amended


 

[[Page 13297]]


 

procedures, however, a bank may not rely solely on its resolution or

bylaw to identify all individuals subject to Regulation O, as some

affiliate officers and directors who are excluded from policymaking at

the bank by a bylaw or resolution may nevertheless remain subject to

Regulation O because their employer controls the bank or controls more

than 10 percent of the consolidated assets of the top-tier bank holding

company. 12 CFR 215.2(d)(2)(ii) and (iii) and 215.2(e)(2)(ii) and

(iii).14

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\13\ See 12 CFR 215.2(d) and (e). A bank may exclude an insider

of an affiliate by using an affirmative resolution or bylaw that

lists, by name or by title, persons authorized to participate in

major policymaking functions of the bank and does not include the

affiliate insider. A resolution or bylaw that stated, ``A, B, and C

are the only persons authorized to participate as executive officers

in major policymaking functions of the bank'' would be sufficient to

exclude all other persons. A bank also may exclude an insider of an

affiliate by using a negative resolution or bylaw that lists, by

name or by title, persons not authorized to participate in such

functions, and includes the affiliate insider. A resolution or bylaw

that stated, ``No executive officer of X Bank or Y Company is

authorized to participate in major policymaking functions of this

bank unless that individual is directly employed by this bank as an

executive officer,'' would be sufficient to exclude all executive

officers of the identified affiliates. The identical procedures also

may be used to exclude officers of a company or bank from being

classified as executive officers of the company or bank. See 12 CFR

215.2(e)(1) and (3).

\14\ Another commenter proposed that the Board permit a bank or

company to identify its executive officers solely by reference to

all members of a particular senior management committee of the bank

or company, in order to avoid all presumptions that may arise from a

person's title. The comment did not indicate, however, and the Board

is not aware that such a procedure for identifying persons with

major policymaking functions is so widespread or standardized that

it would serve as a reliable substitute in general, at this time,

for the traditional identification of persons with major

policymaking functions by title. Accordingly, the Board has

determined not to adopt this proposal at this time. This procedure

may be suitable, however, in the particular circumstances of a given

bank or company, and would be permissible under the terms of

Sec. 215.2(e)(2) as amended.

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Technical changes to the text of the amendment have been made to

conform the amendment to other provisions of Regulation O and clarify

the application of the percentage of assets test. A technical change

also has been made to Sec. 215.4(a)(2) to clarify the scope of the

exception contained therein to the provisions of Sec. 215.4(a)(1). This

exception was added as part of the final rule effective November 8,

1996, implementing certain provisions of EGRPRA. 61 FR 52769.


 

Determination of Effective Date


 

Because the final rule adjusts a requirement on insured depository

institutions, the final rule will become effective April 1, 1997, the

first day of the calendar quarter after the date of the final rule's

publication. See 12 U.S.C. 4802(b).


 

Final Regulatory Flexibility Analysis


 

The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires an

agency to publish a final regulatory flexibility analysis when the

agency publishes a final rule. Two of the requirements of a final

regulatory flexibility analysis (5 U.S.C. 604(b))--a succinct statement

of the need for, and the objectives of, the rule, and a summary of the

issues raised by the public comments received, the agency assessment

thereof, and any changes made in response thereto--are contained in the

supplementary information above. No significant alternatives to the

final rule were considered by the agency.

Pursuant to section 605(b) of the Regulatory Flexibility Act (5

U.S.C. 605(b)), the Board certifies that the amendment to Regulation O

will not have a significant adverse economic impact on a substantial

number of small entities. The amendment will reduce the regulatory

burden for most banks by increasing the number of insiders of

affiliates who may be excepted from the insider lending restrictions of

Regulation O.

One aspect of the amendment may increase the regulatory burden on

multi-subsidiary bank holding companies. Because EGRPRA no longer

authorizes the Board to exempt extensions of credit to executive

officers of affiliates holding more than 10 percent of the consolidated

assets of the bank holding company, the Board's existing exemption,

which covers such persons, is being amended to do so no longer.

Although this action will increase the recordkeeping burden on some

multi-subsidiary bank holding companies, the increase in burden is

required by statute and outside the Board's discretion, will generally

not be significant, and will not be focused on small entities, which

are less likely to have multiple subsidiaries.


 

Paperwork Reduction Act


 

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.

3506; 5 CFR 1320 Appendix A.1), the Board reviewed the final rule under

the authority delegated to the Board by the Office of Management and

Budget. The Board may not conduct or sponsor, and an organization is

not required to respond to, the information collection required in the

final rule unless the Board displays a currently valid OMB control

number. The Board's OMB control number is 7100-0036.

This collection of information is authorized by section 22(h)(10)

of the Federal Reserve Act (12 U.S.C. 375b(10)), and is mandatory under

Regulation O. This information is used to evidence compliance with the

requirements of section 22(h) of the Federal Reserve Act.

The respondents and recordkeepers are for-profit financial

institutions, including small businesses. These parties must retain

records concerning their insider lending for two years, and certain

information in these records must be disclosed to the public upon

request. Because these records are maintained at state member banks, no

issue of confidentiality under the Freedom of Information Act arises

concerning this disclosure to the public.

The amendment is estimated to result in a 10 percent reduction in

the annual hour burden of recordkeeping and disclosure associated with

Regulation O for state member banks. The revisions affecting this

burden are detailed in Section 215.2 of the final rule. The amendment

will reduce the burden for most banks by increasing the number of

insiders of affiliates who may be excepted from the insider lending

restrictions of Regulation O. The burden may increase, however, for

some multi-subsidiary bank holding companies. Comments on the burden

are discussed in the Background section of this notice. The Board

estimates there will be no cost burden in addition to the annual hour

burden.

Some of the information collected by banks on extensions of credit

to insiders of the bank and its affiliates is reported in the

Consolidated Reports of Condition and Income (Call Report; FFIEC 031-

034; OMB No. 7100-0036). Regulation O information is reported in the

Call Report on Schedule RC-M, Memoranda, and Special Report on Loans to

Executive Officers, and is available to the public upon request.

The Board has a continuing interest in the public's opinion of its

information collection activities. At any time, comments regarding the

burden estimate, or any other aspect of this information collection

requirement, including suggestions for reducing the burden, may be sent

to: Secretary, Board of Governors of the Federal Reserve System, 20th

and C Streets, N.W., Washington, DC 20551; and to the Office of

Management and Budget, Paperwork Reduction Project (7100-0036),

Washington, DC 20503.


 

List of Subjects in 12 CFR Part 215


 

Credit, Federal Reserve System, Penalties, Reporting and

recordkeeping requirements.


 

For the reasons set forth in the preamble, and pursuant to the

Board's authority under section 22(h) of the Federal Reserve Act (12

U.S.C. 375b), the Board amends 12 CFR part 215, subpart A, as follows:


 

[[Page 13298]]


 

PART 215--LOANS TO EXECUTIVE OFFICERS, DIRECTORS, AND PRINCIPAL

SHAREHOLDERS OF MEMBER BANKS (REGULATION O)


 

1. The authority citation for part 215 continues to read as

follows:


 

Authority: 12 U.S.C. 248(i), 375a(10), 375b (9) and (10),

1817(k)(3) and 1972(2)(G)(ii); Pub. L. 102-242, 105 Stat. 2236.


 

2. Section 215.2 is amended as follows:

a. Paragraph (d) introductory text and paragraphs (d)(1) through

(d)(3) are redesignated as paragraph (d)(1) introductory text and

paragraphs (d)(1)(i) through (d)(1)(iii), respectively;

b. New paragraphs (d)(2) and (d)(3) are added;

c. Paragraph (e)(2) is revised; and

d. A new paragraph (e)(3) is added.

The additions and revisions read as follows:


 

Sec. 215.2 Definitions.


 

* * * * *

(d)(1) * * *

(2) Extensions of credit to a director of an affiliate of a bank

are not subject to Secs. 215.4, 215.6, and 215.8 if--

(i) The director of the affiliate is excluded, by resolution of the

board of directors or by the bylaws of the bank, from participation in

major policymaking functions of the bank, and the director does not

actually participate in such functions;

(ii) The affiliate does not control the bank;

(iii) As determined annually, the assets of the affiliate do not

constitute more than 10 percent of the consolidated assets of the

company that--

(A) Controls the bank; and

(B) Is not controlled by any other company; and

(iv) The director of the affiliate is not otherwise subject to

Secs. 215.4, 215.6, and 215.8.

(3) For purposes of paragraph (d)(2)(i) of this section, a

resolution of the board of directors or a corporate bylaw may--

(i) Include the director (by name or by title) in a list of persons

excluded from participation in such functions; or

(ii) Not include the director in a list of persons authorized (by

name or by title) to participate in such functions.

(e)(1) * * *

(2) Extensions of credit to an executive officer of an affiliate of

a bank are not subject to Secs. 215.4, 215.6, and 215.8 if--

(i) The executive officer is excluded, by resolution of the board

of directors or by the bylaws of the bank, from participation in major

policymaking functions of the bank, and the executive officer does not

actually participate in such functions;

(ii) The affiliate does not control the bank;

(iii) As determined annually, the assets of the affiliate do not

constitute more than 10 percent of the consolidated assets of the

company that--

(A) Controls the bank; and

(B) Is not controlled by any other company; and

(iv) The executive officer of the affiliate is not otherwise

subject to Secs. 215.4, 215.6, and 215.8.

(3) For purposes of paragraphs (e)(1) and (e)(2)(i) of this

section, a resolution of the board of directors or a corporate bylaw

may--

(i) Include the executive officer (by name or by title) in a list

of persons excluded from participation in such functions; or

(ii) Not include the executive officer in a list of persons

authorized (by name or by title) to participate in such functions.

* * * * *

3. Section 215.4 is amended by revising paragraph (a)(2)

introductory text to read as follows:


 

Sec. 215.4 General prohibitions.


 

(a) * * *

(2) Exception. Nothing in this paragraph (a) or paragraph

(e)(2)(ii) of this section shall prohibit any extension of credit made

pursuant to a benefit or compensation program--

* * * * *

By order of the Board of Governors of the Federal Reserve

System, March 14, 1997.

William W. Wiles,

Secretary of the Board.

[FR Doc. 97-7011 Filed 3-19-97; 8:45 am]

BILLING CODE 6210-01-P

Last Updated: March 24, 2024