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s-96 424 Reg. 0-32 INTERPRETATION OF LAW OR REGULATION (Copies to bo sent to all Federal reserve banks) May 21, 1938. Mr. G. J. Oppegard, Deputy Comptroller of the Currency, Washington, D. C. Lear Mr. Oppegard: This refers to your letter of May 5, 1938, with regard to the applicability of section 22(g) of the Federal Reserve Act to a transaction involving an executive officer of a national bank. Your letter states that the wife of the president of the national bank, who is reputed to be highly responsible in her own right, gave her note in 1932 to such bank in the amount of 4'105,000; that the proceeds of such note were credited to the account of her husband; and that he has paid interest since the date of the note at the rate of 1 per cent per annum. Since the previous examination, however, it appears that this note has been removed from the assets of the bank and the personal note of the president of the bank, in an identical amount, has been substituted therefor. While not specifically so stated in your letter, it is understood that the executive officer in question was not liable upon the note of his wife as maker, drawer, endorser, guarantor or surety, or otherwise obligated to the bank for the payment of the amount advanced on his wife's note. However, when the note of the executive officer was given to the bank in lieu of his wife's note, he became legally liable to the bank upon the indebtedness. This transaction, by which the bank acquired the note of the executive officer, constitutes a loan or extension of credit by the bank as defined in Regulation 0. Inasmuch as it is stated that his wife is reputed to be highly responsible in her own right, it aces not appear that the substitution of the executive officer's note was for the protection of the bank, nor does the transaction appear to be within any other exception to the provisions of the regulation. It must, therefore, be regarded as falling within the prohibitions of section 22(g) of the Federal Reserve Act and Regulation 0. Very truly yours, * (Signed) L. P. Bethea L. P. Bethea, Assistant Secretary.
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