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X-9516
INTERPl,UtTAT!QN
BANKING ACT OF 1955
(Copies to be sent to all Federal Reserve banks)
March 5, 1936.
Mr.
The
, Vice President,
National Bank of - - - - - -
Dear Sir:
This refers to your letter to Mr. Ransom of February 6,
1956, with regard to reports of executive officers of member banks
of their indebtedness to other banks under the provisions of sec,_
tion 22(g) of the Federal Reserve Act and section 5 of the Board's
Regulation 0.
You indicated that you had construed the Board's
regulation as not contemplating that such reports would be made
available to the board of directors of the member bank involved.
Under the provisions of section 22(g), an executive officer of a member bank who becomes indebted to another bank is
specifically required to make a written report to the board of
directors of the member bank of which he is an executive officer.
It is clear from the
legi~:;lative
history of section 22(g) that, in
making such specific requirement, Congress contemplated that the
board of directors of a member bank should have available the information contained in any such report, since qy the Banking Act
of 1935 it amended section 22(g) so as to make the specific requirement that any such report of an
oxocuti~e
officer of a member bank
be made to the board of directors rather than to the chairman of
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the boc..rd of directors as h.::td previously been provided in section
22(g).
The Board ha;:; noted your comments regarding t11o abuses
which section 22(g) w::.s designed to correct u.nd is in agreement
vli th you that tho board of directors of a member bank should be
fully n.dviscd of the indebtedness of its executive officors to
other b<:mks.
Accordingly, in promulgating its Regulation 0, the
Board, in section 5 of such regulo.tion, has
ag~in
stated tho re-
quirement of tho law that each report of the kind refcrrod to above
sh~~ll
be made to tho board of directors of the member bank involved.
As a mnttor of maintaining appropriatu rucords, the Board did not
wish to impose what might o.ppoar to be an unnecessary hardship upon
a mcmbur bank
U.f
roquiring it to transcribe the full details of a
report of indebtedness of an executive officer in tho minute book
of the bank, but has merely required that tho receipt of the report
be recorded in the minutes and that each such report be retained by
the member bank und be made available upon request for inspection by
duly authorized examiners,
It is contemplated, however, by tho law
u.nd also by the Board 1 s regulation thr., t the full report of an executive officer will be received by the board of diractors of the member
bank of which he is an executive officer.
Accordingly, the purposes
of the law and the requirements of the regulation will not be met if
the secretary e>f the boord of direct·Jrs of a member bank, or any Jther
person wh·J may receive such a report, oorely records the receipt
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X-9516
thereof in the minute book of the bank and does not take appropriate
steps to seA that the board of' direct:Jrs h&s an opportunity to be
fully informed as t0 the contents of such report.
Very truly yours,
{Signed)
L. P. Bethea
L. P. Bethea,
Assistant Secretary.
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