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X-7677 i 41 IHTERPEETA.TION Or BANKING ACT OF 1933. (Copies t o "be Sent to a l l Federal Reserve Banks) November 10 , 1933. Mr. . .. . President, National Bank, Dear S i r : Further consideration has "been given to the inquiry contained i n your l e t t e r of September 9, 1933, addressed to Mr. , as to whether S e c t i o n 8A of the Clayton Antitrust A c t , as amended "by Section 33 of the Banking Act of 1933, w i l l make i t unlawful, a f t e r January 1, 1934, for certain d i r e c t o r s of the National Bank to serve at the same time as d i r e c t o r s , o f f i c e r s , or employees of l o c a l manufacturing corporations which o c c a s i o n a l l y make loans to t h e i r own employees secured by the c a p i t a l stock of the corporation. Section 8A applies to any corporation (other than a mutual savings bank), "which s h a l l make loans secured by stock or bond c o l l a t e r a l t o any i n d i v i d u a l , a s s o c i a t i o n , partnership, or corporat i o n other than i t s own s u b s i d i a r i e s . " The wording of the p r o v i s i o n would seem to leave no room f o r a construction which would make i t i n a p p l i c a b l e to a corporation making loans to i t s own employees, secured by i t s own stock, e i t h e r for the purpose of enabling such employees t o become stockholders of the corporation or for any other purpose. : 417 X-7677 —— 2 Under the provisions of Section 8 of the Clayton Antitrust Act, the Federal Reserve Board i s authorized, under certain circumstances, to i s s u e permits covering services of the kinds referred to i n Sections 8 and 8A. However, the provision of Section 8 which authorizes the Board to issue permits refers only to "banking i n s t i t u tions of certain c l a s s e s and the Board i s , accordingly, without authority to i s s u e permits involving relationships between national hanks and non-hanking organizations which come within the provisions of Section 8A. You refer i n your l e t t e r to the d i f f i c u l t i e s a r i s i n g out of a s t a t u t e forbidding the gentlemen in question to serve as directors of your hank, but as you are of course aware, the Federal Reserve Board i s not at l i b e r t y to construe a statute i n a way which would c o n f l i c t with the plain meaning of the words used by Congress. I t should be noted, however, that Section 8A r e f e r s to any corporation which "shall make" loans of the kind described. There i s inclosed a mimeographed copy of the Board's regulation dealing with interlocking directorates and other relationships under the Clayton Antitrust Act, and your particular attention i s directed to paragraph (3) of Section IV(b). Since the statute does not r e f e r to the busi- ness which may have been transacted by a corporation i n the p a s t , but r e f e r s only to the business currently and presently transacted, the prohibitions of Section 8A are inapplicable to the service of a direc- 418 X-7S77 — 3 tor of a national bank as a director of a manufacturing corporation which i n the past has made loans secured by stock or bond c o l l a t e r a l , i f such corporation shall make no further loans of that character1 a f t e r January 1, 1934, the e f f e c t i v e date of Section 8A. Very truly yours, (Signed) Chester Morrill, Chester Morrill, Secretary. Inclosure.
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