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F ederal Reserve Bank
DALLAS, TEXAS

of

Dallas

75222

Circular No. 7 + * 8
*-+
February 19, 197*+

PROPOSED AMENDMENT TO REGULATION L
(To Assist Development of Banks in Depressed Areas)

To All Member Banks and Others Concerned
in the Eleventh Federal Reserve District:
The Board of Governors of the Federal Reserve System
announced February 11, 197*+, a proposed amendment to its Regu­
lation L, "Interlocking Bank Relationships Under the Clayton
Act." The proposal would permit certain interlocking relation­
ships by a director, officer or employee of a member bank with
a bank located in a low income or economically depressed area,
to assist in the development of such bank.
A copy of the proposal is attached. Interested persons
are invited to submit their views to the Secretary of the Board
of Governors of the Federal Reserve System, Washington, D. C.
20551, to be received not later than March 15, 197*+*
Yours very truly,
P. E. Coldwell
President
Enclosure (l)

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

FEDERAL RESERVE SYSTEM
[Reg. L)
INTERLOCKING RELATIONSHIPS UNDER
THE CLAYTON ACT
Notice of Proposed Amendment

The Board of Governors is inviting comment on a proposed
amendment to Federal Reserve Regulation L (12 CFR 212) that would,
under certain circumstances, permit interlocking service by a
director, officer or employee of a member bank with another bank,
banking association, savings bank or trust company located in a low
income or other economically depressed area.
Interlocking relationships between member banks and other
banking institutions are generally subject to the prohibitions of
section 8 of the Clayton Act (15 U.S.C. 19)*

In addition to the

exceptions expressly provided in the statute, the Board is empowered
to permit by regulation interlocking relationships between a member
bank and not more than one other institution.

Minority-owned and

other banks in low income or other economically depressed areas are
often in need of managerial assistance; such assistance may sometimes
be provided by banks and other institutions but for the prohibitions
of section 8.

Accordingly, the Board believes that public benefits

may result from the amendment under consideration and that such
amendment, in the form proposed, would not be inconsistent with the
purposes of section 8 of the Clayton Act or other statutes administered
by the Board.

-2 -

To implement the proposal, § 212.3 of Regulation L would
be amended by adding a new subparagraph (g) to read as follows:
§ 212.3

Relationships permitted by Board.
In addition to any relationships covered by the foregoing

exception, not more than one of the following relationships is
hereby permitted by the Board of Governors of the Federal Reserve
System in the case of any one individual.

*

*

(g)

*

*

Bank in low income area.

*
Any director, officer or

employee of a member bank of the Federal Reserve System may be at the
same time a director, officer or employee of not more than one other
bank located, or to be located, in a low income or other economically
depressed area, subject to the following conditions:

(1) the other

bankfs federal supervisory agency determines that such relationship
is necessary to provide management or operating expertise to such
other bank; (2) not more than three interlocking relationships between
any two banks shall be permitted by this paragraph, except that
persons serving in interlocking relationships pursuant to this para­
graph shall in no instance constitute a majority of the board of
directors of the other bank; (3) no interlocking relationship per­
mitted by this paragraph shall continue for more than a five-year
period, or (4) upon such other terms and conditions in addition to
or in lieu

of the foregoing, as may be determined by the Board in any

specific case.

-3 -

To aid in consideration of this matter by the Board,
interested persons are invited to submit relevant views, data and
argument.

Any such material should be submitted to the Secretary of

the Board of Governors of the Federal Reserve System, Washington, D, C.
20551 to be received not later than March 15, 1974,

Such material will

be made available for inspection and copying upon request, except as
provided in § 261.6(a) of the Board's Rules Regarding Availability of
Information.

(Signed) Chester B. Feldberg
Chester B. Feldberg
Secretary of the Board

[SEAL]


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102