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Federal R eserve Bank
OF DALLAS
ROBERT
D. M C T E E R , J R .
P R E S ID E N T
A N D C H IE F E X E C U T I V E O F F I C E R
December 7, 1992
DALLAS, TEXAS 75222
Notice 92-119
TO:
The Chief Executive Officer of each
member bank and others concerned in
the Eleventh Federal Reserve District
SUBJECT
Clarification of Filing Requirements
Under the Depository Institution Management
Interlocks Act
DETAILS
The Board of Governors of the Federal Reserve System, the Federal
Deposit Insurance Corporation, the Office of the Comptroller of the Currency,
and the Office of Thrift Supervision have issued an interpretation to clarify
certain filing requirements under the regulations implementing the Depository
Institution Management Interlocks Act (Interlocks Act).
The agencies are issuing the statement to remind institutions
seeking a regulatory exception from the prohibitions of the Interlocks Act
that they need only obtain the approval of the primary regulator of the
institution seeking management or operating expertise. The B o a r d ’s regulation
issued under the Interlocks Act is Regulation L.
ATTACHMENT
A copy of the agencies’ notice is attached.
MORE INFORMATION
For more information, please contact Michael Johnson at (214)
For additional copies of this B a n k ’s notice, please contact the
Public Affairs Department at (214) 922-5254.
922-6081.
Sincerely yours,
For additional copies, bankers and others are encouraged to use one of the following toll-free numbers in contacting the Federal Reserve Bank of Dallas:
Dallas Office (800) 333-4460; El Paso Branch Intrastate (800) 592-1631, Interstate (800) 351-1012; Houston Branch Intrastate (800) 392-4162,
Interstate (800) 221-0363; San Antonio Branch Intrastate (800) 292-5810.
This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)
The Board of Governors of the Federal Reserve System,
the Federal Deposit Insurance Corporation, the Office of the
Comptroller of the Currency, and the Office of Thrift Supervision
(collectively "the agencies”) are issuing this interpretation to
clarify certain filing requirements under the agencies'
regulations implementing the Depository Institution Management
Interlocks Act ("Interlocks Act" or "Act").
The Interlocks Act
prohibits management interlocks between unaffiliated depository
organizations when the organizations have offices located in the
same community or metropolitan statistical area, or when one of
the organizations has assets in excess of $500 million and the
other organization has assets in excess of $1 billion.
The Act authorizes the agencies to adopt regulations
making available exceptions from these restrictions for certain
categories of depository institutions.
Under this authority, the
agencies have, by regulation, established exceptions from the
Act's prohibitions where the benefits that would result from the
increased availability of managerial expertise to certain
institutions are expected to outweigh any adverse effects on
competition.
In other words, management interlocks are excepted
where the interlock is expected to strengthen a depository
organization or perhaps even avoid the failure of a depository
organization, thus enabling a viable institution to continue to
provide services to its community.
The regulatory exceptions include:
1) an exception of
up to five years for depository organizations located in lowincome areas, and for minority and women-owned organizations,
2) an exception of up to two years for newly-chartered
institutions, 3) an exception for depository institutions which
face conditions that endanger safety and soundness, and 4) an
exception of up to thirty months for institutions facing the loss
of 30 percent or more of their total number of directors or of
their total number of management officials due to changes in
circumstances that cause the directors' or management officials'
interlocking service to become prohibited.
Each exception
requires only the prior approval of the primary supervisory
agency for the institution which is eligible for the exception.
The regulatory exceptions will generally be granted if
it is determined: 1) that the institution requesting the
exception falls within one of the above categories, and 2) that
the interlocking relationship is necessary to provide management
or operating expertise to the institution requesting the
exception.
To date, institutions in need of management or
operating expertise who have requested regulatory exceptions from
the management interlocks prohibitions have on occasion sought
approval for these exceptions not only from their primary
regulator, but from the primary regulator of the institution at
which the management official for whom the exception is sought
currently serves.
The added review is not required, and such
review does not enhance to a significant extent the agencies'
ability to enforce provisions of the Interlocks Act.
It instead
3
only imposes an additional burden on institutions seeking
exceptions from the Act's prohibitions.
Accordingly, the agencies are issuing this statement to
remind institutions seeking a regulatory exception from the
prohibitions of the Interlocks Act that they need only obtain the
approval of the primary regulator of the institution in need of
management or operating expertise.
For example, in the case of a
management interlock between a newly-chartered institution and an
existing bank in the same community, approval would be required
only from the primary regulator for the newly-chartered bank.
After obtaining this approval, the institution should retain
copies of the approval letter in its files.
This statement does not affect the procedures that an
institution must follow when seeking an Interlocks Act exception
that is specifically provided for in the Act.
Board of Governors of the
Federal Reserve System
Dated:
November 12, 1992
Federal Deposit Insurance
Corporation
@FedFRASER