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FEDERAL RESERVE BANK OF NEW YO R K Circular [ No. February 14, 7344~1 197 4 I PROPOSED AMENDMENT TO REGULATION L Interlocking Service With Banks in Low Income or Economically Depressed Areas To A ll Banking Institutions, and Others Concerned, in the Second Federal R eserve D istrict: Following is the text of a statement issued February 11 by the Board of Governors of the Federal Reserve System: T h e B oard of G overn ors o f the Federal R eserve System today invited comm ent on a proposed regulatory amendment designed to assist the development of banks in low incom e or other econom ically depressed areas. Comment will be received by the Board through M arch 15, 1974. T h e proposal w ould amend the B oard ’ s R egulation L to permit interlocking service, under certain circum stances, by a director, officer or em ployee o f a mem ber bank with a bank in a low incom e or econom ically depressed area. Printed below is the text of the proposed amendment. Comments thereon should be submitted by March 15 and may be sent to our Regulations and Bank Analysis Department. A lfred H ayes, President. (Reg. L) INTERLOCKING RELATIONSHIPS UNDER THE CLAYTON ACT Notice of Proposed Amendment T h e Board o f G overnors is inviting comm ent on a proposed amendment to Federal R eserve Regulation L (1 2 C F R 2 1 2 ) that would, under certain circumstances, permit interlocking service by a director, officer or em ployee of a mem ber bank with another bank, banking association, savings bank or trust com pany located in a low incom e or other econom ically depressed area. Interlocking relationships between m em ber banks and other banking institutions are generally subject to the prohibitions o f section 8 o f the Clayton A ct (15 U .S .C . 1 9 ). In addition to the exceptions expressly provided in the statute, the B oard is em pow ered to permit by regulation interlocking relationships between a member bank and not m ore than one other institution. M inorityow ned and other banks in low incom e or other eco nom ically depressed areas are often in need of mana gerial assistance; such assistance may sometimes be provided by banks and other institutions but for the prohibitions o f section 8. A ccordin gly, the Board be lieves that public benefits may result from the amend ment under consideration and that such amendment, in the form proposed, would not be inconsistent with the purposes of section 8 o f the Clayton A ct or other statutes administered by the Board. T o implement the proposal, § 212.3 of Regulation L would be amended by adding a new subparagraph ( g ) to read as fo llo w s: S E C T I O N 212.3— R E L A T I O N S H I P S P E R M IT T E D B Y B O A R D In addition to any relationships covered by the fore goin g exception, not m ore than one of the follow ing relationships is hereby permitted by the Board of G o v ernors o f the Federal R eserve System in the case of any one in d ividual: * * * ( g ) B anks in low in com e areas. A n y director, offi cer or em ployee of a mem ber bank o f the Federal R eserve System may be at the same time a director, officer or em ployee of not m ore than one other bank located, or to be located, in a low incom e or other eco nomically depressed area, subject to the follow in g con ditions : ( 1 ) the other bank’s federal supervisory agency determines that such relationship is necessary to p ro vide management or operating expertise to such other ban k; ( 2 ) not m ore than three interlocking relation ships between any tw o banks shall be permitted by this paragraph, except that persons serving in interlocking relationships pursuant to this paragraph shall in no in stance constitute a m ajority o f the board o f directors of the other bank; ( 3 ) no interlocking relationship per mitted by this paragraph shall continue for m ore than a five-year p e r io d ; or ( 4 ) upon such other terms and con ditions in addition to or in lieu of the foregoing, as may be determined by the Board in any specific case. T o aid in consideration of this matter by the Board, interested persons are invited to submit relevant views, data and argument. A n y such material should be sub mitted to the Secretary o f the Board o f G overnors of the Federal R eserve System, W ashington, D. C. 20551, to be received not later than M arch 15, 1974. Such ma terial will be made available for inspection and copying upon request, except as provided in § 2 6 1 .6 (a ) of the B oard’s R ules R egarding A vailability of Inform a tion.
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