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FEDERAL RESERVE BANK OF DALLAS Dallas, Texas, July 2, 1934 BORROWINGS OF EXECUTIVE OFFICERS OF MEMBER BANKS To the Member Bank Addressed: During the past year, it has been necessary fo r us to report to the Federal Reserve Board at W ashington a large number o f apparent violations o f the provisions o f Section 2 2 (g ) o f the Federal Reserve A ct relating to the borrow ings o f executive officers o f m em ber banks. In many o f these cases, we were advised by the offending officers that they were not aware o f the provisions o f this law, or thought they were not to take effect until January 1, 1934. Y ou r attention is, therefore, invited to the provisions o f the above-mentioned sec tion (w hich I am quoting b e lo w ), and to the fa ct that this law became operative on the date o f its enactment, June 16, 1933: “ N o executive officer o f any member bank shall borrow from or otherwise becom e indebted to any m em ber bank o f which he is an executive officer, and no m em ber bank shall make any loan or extend credit in any other manner to any o f its own executive officers: Provided, That loans heretofore made to any such officer m ay be renewed or extended not more than two years from the date this paragraph takes effect, i f in accord with sound banking practice. I f any execu tive officer o f any m em ber bank borrow from or i f he be or becom e indebted to any bank other than a m em ber bank o f which he is an executive officer, he shall make a w ritten report to the chairman o f the board o f directors o f the member bank o f which he is an executive officer, stating the date and amount o f such loan or indebtedness, the security therefor, and the purpose fo r which the pro ceeds have been or are to be used. A n y executive officer o f any m em ber bank violating the provisions o f this paragraph shall be deemed guilty o f a misde meanor and shall be im prisoned not exceeding one year, or fined not m ore than $5,000, or b o th ; and any m em ber bank violating the provisions o f this paragraph shall be fined not m ore than $10,000, and may be fined a fu rth er sum equal to the amount so loaned or credit so extended.” Yours very truly, Federal Reserve Agent This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)
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