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Federal Reserve Bank
OF DALLAS
ROBERT
D. M C T E E R , J R .
DALLAS, TE XAS
P R E S ID E N T
AND
C H IE F E X E C U T IV E
O F F IC E R
August 26, 1996
75265-5906
Notice 96-83
TO:
The Chief Executive Officer of each
m em ber bank and bank holding company
in the Eleventh Federal Reserve District
SUBJECT
Joint Final Rule on
Regulation L (Management Official Interlocks)
DETAILS
The Board of Governors of the Federal Reserve System, the Office of the
Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Office
of Thrift Supervision have issued a joint final rule regarding management interlocks.
The final rule conforms the interlocks rules to recent statutory changes, modernizes and
clarifies the rules, and reduces unnecessary regulatory burdens where feasible.
ATTACHMENT
A copy of the Board’s notice as it appears on pages 40293-311, Vol. 61, No.
150, of the Federal Register dated August 2, 1996, is attached.
MORE INFORMATION
For more information, please contact Dianne Wetsel at (214) 922-6085. For
additional copies of this Bank’s notice, please contact the Public Affairs D epartm ent at
(214) 922-5254.
Sincerely yours,
For additional copies, bankers and others are encouraged to use one of the following toll-free num bers in contacting the Federal
Reserve B ank of Dallas: Dallas Office (800) 333 -4460; El Paso Branch Intrastate (800) 592-1631, Interstate (800) 351-1012; H ouston
Branch Intrastate (800) 392-4162, Interstate (800) 221-0363; San A ntonio 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)
Federal Register / Vol. 61, No. 150 / Friday, August 2, 1996' / Rules and Regulations
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
12 CFR Part 26
[Docket No. 96-15]
RIN 1557-AB39
FEDERAL RESERVE BOARD
12 CFR Part 212
[Docket No. R-0907]
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 348
RIN 3064-AB71
DEPARTMENT OF THE TREASURY
Office of Thrift Supervision
12 CFR Part 563f
[Docket No. 96-62]
RIN 1150-AA95
Management Official Interlocks
AGENCIES: Office of the C om ptroller of
the Currency, Treasury; Board of
Governors of th e Federal Reserve
System; Federal D eposit Insurance
Corporation; Office of T hrift
S upervision, Treasury.
ACTION: Joint final rule.
SUMMARY: T he Office of th e C om ptroller
of the C urrency (OCC), Board of
Governors of th e Federal Reserve
System (Board), Federal D eposit
Insurance Corporation (FDIC), an d
Office of T hrift S upervision (OTS)
(collectively, th e agencies) are revising
th e ir rules regarding m anagem ent
interlocks. T his final rule conform s the
interlocks rules to recent statutory
changes, m odernizes an d clarifies the
rules, an d redu ces unnecessary
regulatory b u rd en s w here feasible,
consistent w ith statutory requirem ents.
In so doing, it reflects com m ents
received on th e proposed ru le an d the
agencies’ further internal
considerations.
EFFECTIVE DATE: T his joint ru le is
effective O ctober 1,1996.
FOR FURTHER INFORMATION, CONTACT:
OCC: Sue E. A uerbach, S enior Attorney^
Bank A ctivities a n d Structure D ivision
(202) 874—
5300; Em ily R. M cNaughton,
N ational Bank Exam iner, C redit &
M anagem ent Policy (202) 874-5170;
Jackie D urham , Senior Licensing Policy
A nalyst (202) 874-5060; or M ark J.
T enhundfeld, Senior A ttorney,
40293
Legislative an d Regulatory A ctivities
(202) 874-5090, 250 E Street, SW.,
W ashington, DC 20219.
Board: T hom as M. Corsi, Senior
A ttorney (202/452-3275), or T ina Woo,
A ttorney (202/452-3890), Legal
D ivision, Board of G overnors of theFederal Reserve System. For the hearing
im p aired only, T elecom m unication
Device for Deaf (TDD), D orothea
T hom pson (202/452-3544), Board of
G overnors of th e Federal Reserve
System, 20th an d C Streets, NW „
W ashington DC 20551.
FDIC: Curtis Vaughn, E xam ination
Specialist, D ivision of Supervision,
(202) 898-6759; or M ark M ellon,
Counsel, Regulation an d Legislation
Section, Legal D ivision, (202) 898-3854,
Federal Deposit Insurance Corporation,
550 17th Street, NW., W ashington, DC
20429.
OTS: D avid Bristol, S enior A ttorney,
B usiness T ransactions D ivision, (202)
906-6461; or D onna Deale, Program
Manager, S upervision Policy, (202) 9 0 6 7488.
SUPPLEMENTARY INFORMATION:
Background
Section 303 o f th e Riegle C o m m u n ity
D evelopm ent a n d Regulatory
Im p ro vem ent A c t o f 1994 (CDRI A ct)
Section 303(a) of the CDRI Act (12
U.S.C. 4803(a)) requires the agencies to
review th e ir regulations in order to
stream line and m odify the regulations to
im prove efficiency, red u ce unnecessary
costs, and elim inate u nw arran ted
constraints on credit availability.
Section 303(a) also requires the agencies
to w ork jointly to m ake uniform all
regulations an d guidelines
im plem enting com m on statutory or
supervisory policies. T he agencies have
review ed th e ir respective m anagem ent
interlocks regulations w ith these
pu rposes in m in d an d are am ending the
regulations in w ays designed to m eet
the goals of section 303(a).
T he agencies have m ade th e follow ing
changes to th e ir respective m anagem ent
interlocks rules in order to com ply w ith
the m andate of section 303(a):
• T he final rules revise th e definition
of “ senior m anagem ent official” to
elim inate u ncertainty as to w h en an
em ployee of a depository institu tio n
w ill be consid ered to be a senior
m anagem ent official for p urp oses of the
D epository Institution M anagem ent
Interlocks Act (12 U.S.C. 3201-3208)
(Interlocks Act). M oreover, th e final
rules conform th is definition to
definitions of sim ilar term s used
elsew here in th e agencies’ regulations.
• The final rules revise the definition
of “representative or n o m in ee” to clarify
40294
Federal Register / Vol. 61, No. 150 / Friday, August 2, 1996 / Rules and Regulations
that the agencies w ill determ ine that a
person is acting as a representative or
nom inee on b ehalf of ano ther person
only w h en th ere is an agreem ent,
express or im plied, obligating th e first
person to act on the second p erso n ’s
behalf w ith respect to m anagem ent
responsibilities.
•
The final rules reflect a
reinterpretation of the Interlocks Act by
the agencies that perm its m anagem ent
interlocks w ith in a relevant
m etropolitan statistical area (MSA)
w hen eith er of th e depository
institutions in the MSA has assets of
less than $20 m illion (the agencies
previously interpreted the Interlocks
Act to perm it interlocks betw een
unaffiliated institution s in MSA only if
both depository institutio ns have assets
of less th an $20 m illion). T his expands
the pool of available m anagerial talent
for sm all depository institutions.
In im plem enting the Interlocks A ct’s
“regulatory stan d ard s” exem ption
(Regulatory S tandards exem ption) and
the exem ption u n d er a “m anagem ent
official consignm ent program ”
(M anagement Consignm ent exem ption),
the final rules contain certain
presum ptions an d define key term s so
as to elim inate unnecessary burdens.
The final rules remove the provision
concerning statutorily grandfathered
m anagem ent interlocks, given that it is
unnecessary in light of the changes
m ade to the Interlocks A ct by the CDRI
Act..
The agencies believe th at these
changes w ill stream line an d m odify
their respective m anagem ent interlocks
regulations, th u s furthering th e goals of
section 303 of the CDRI Act. These
changes are explained m ore fully in the
discussion of the final rule and
com m ents received.
S u m m a ry o f S ta tu to ry Changes
The CDRI Act am ended the Interlocks
Act by rem oving the agencies’ broad
authority to exem pt otherw ise
im perm issible interlocks an d replacing
it w ith the authority to exem pt
interlocks u n d er m ore narrow
circum stances. The CDRI A ct also
required a depository organization w ith
a “g randfathered” interlock to apply for
an extension of th e grandfather period if
the organization w anted to keep the
interlock in p la ce .1
P ursuant to th e changes m ade by the
CDRI Act, a depository institution
seeking an exem ption from the
Interlocks A ct’s restrictions m ust qualify
either for a Regulatory S tandards
exem ption or a M anagem ent
Consignm ent exem ption. A n applicant
seeking a Regulatory S tandards
exem ption m u st subm it a board
resolution certifying th a t no other
candidate from th e relevant com m unity
has the necessary expertise to serve as
a m anagem ent official, is w illing to
serve, a n d is n o t otherw ise prohibited
by the Interlocks A ct from serving.
Before granting th e exem ption request,
the appropriate agency m u st find th at
the ind ividual is critical to the
in stitu tio n ’s safe and soun d operations,
that the interlock w ill no t p rod uce an
anticom petitive effect, an d th a t the
m anagem ent official m eets any
additional requirem ents im posed by the
agency. U nder th e M anagem ent
Consignm ent exem ption, the
appropriate agency may perm it an
interlock that otherw ise w o u ld be
prohibited by th e Interlocks A ct if th e
agency determ ines that the interlock
w ould: (1) im prove the pro vision of
credit to low- an d m oderate-incom e
areas; (2) increase the com petitive
position of a m inority- or w om en-ow ned
institution; or (3) strengthen the
m anagem ent of a new ly chartered
institution or an in stitu tio n th a t is in an
unsafe or u n so u n d co nditio n (see text
following “M anagem ent C onsignm ent
exem ption” in this pream ble for a
discussion regarding interlocks
involving a new ly chartered institu tio n
or an in stitu tio n th a t is in an unsafe or
u n so u n d condition).
The Proposal
On D ecem ber 29, 1995, th e agencies
pub lished a joint notice of proposed
rulem aking (proposal) (60 FR 67424) to
im plem ent tb 3se statutory changes. In
addition, the proposal perm itted
interlocks involving tw o institutions
located in the sam e relevant
m etropolitan statistical area (RMSA) if
th e institu tions w ere n o t also located in
the sam e com m unity and if at least one
of the in stitu tio n s h ad total assets of less
th an $20 m illion. Finally, th e proposal
stream lined an d clarified th e agencies’
interlocks rules in various respects.
The Final Rule and Comments Received
The agencies received a total of 26
com m ents,2 som e of w hich w ere sent to
more th an one agency. Com m enters
overw helm ingly supported the
proposal. A few com m enters, w hile
supporting th e proposal, suggested th a t
the agencies m ake ad ditio nal changes as
discussed later in this pream ble. M ost of
1 The agencies c om p leted th e ir rev iew of requests
for extensions by M arch 23, 1995, as directed by the
statute. Therefore, the provision regarding
2 The B oard received 10 co m m en ts from th e
extending th e grandfather period is m oot for
public, w h ile the OCC, FDIC, a n d O TS receiv ed 6,
p urposes o f th is regulation.
6, a n d 4, respectively.
th e provisions in th e proposal received
either no com m ents or uniform ly
favorable com m ents. A ccordingly,
except w here noted in the text that
follows, the agencies have adopted
w ithou t revision th e changes to their
respective interlocks rules th a t w ere set
forth in th e proposal.
The follow ing discussion sum m arizes
the am end m ents to th e agencies’
m anagem ent interlock rules an d the
com m ents received.
A u th o rity, Purpose, and Scope
T his section in the agencies’ final
rules identifies the Interlocks A ct as the
statutory authority for the m anagem ent
interlocks regulation. It also states that
the p urpose of the ru les governing
m anagem ent interlocks is to foster
com petition betw een unaffiliated
institutions. Finally, th is section
identifies th e types of institu tio ns to
w hich each agency’s regulation applies.
T he OCC ru le uses the term “D istrict
b an k ” to describe banks operating u n d er
th e Code of Laws of th e D istrict of
Columbia. (See definition of “D istrict
ban k ” at § 26.2(k).)
D efinitions
A nticom petitive effect
T he final ru les define th e term
“anticom petitive effect” to m ean “a
m onopoly or substantial lessening of
com petition,” a definition derived from
the Bank M erger Act (12 U.S.C. 1828(c)).
T he term “ anticom petitive effect” is
u sed in the Regulatory S tandards
exem ption. U nd er the Regulatory
S tandards exem ption, the appropriate
agency m ay approve a request for an
exem ption to th e Interlocks A ct if,
among other things, the agency finds
th at con tin u atio n of service by the
m anagem ent official does not produce
an anticom petitive effect w ith respect to
th e affected institution.
The statute does n o t define the term
“anticom petitive effect,” no r does the
legislative history to th e CDRI A ct point
to a p articu lar definition. T he context of
th e Regulatory S tandards exem ption
suggests, how ever, that th e agencies
should apply th e term “ anticom petitive
effect” in a m an ner that perm its
interlocks th a t present no substantial
lessening of com petition. By prohibiting
an interlock th a t w ould result in a
m onopoly or substantial lessening of
com petition, the definitiqn preserves
the free flow of credit and other banking
services th a t the Interlocks Act is
designed to protect. M oreover, use of a
definition fam iliar to the banking
in dustry enables th e agencies to
accom plish th e legislative purpose of
Federal Register / Vol. 61, No. 150 / Friday, August 2, 1996 / Rules and Regulations
the Interlocks A ct w itho ut im posing
unnecessary regulatory burdens.
Area M edian Income
The final rules define “area m edian
incom e” as th e m edian family incom e
for the MSA in w hich an in stitution is
located or the statew ide
nonm etropolitan m edian fam ily incom e
if an in stitu tio n is located outside an
MSA. The term “ area m edian incom e”
is used in th e definition of “ low- an d
m oderate-incom e areas,” w h ich in turn
is used in th e im plem entation of th e
M anagem ent Consignm ent exem ption.
Critical
The final rules define “critical” as
“im portant to restoring or m aintaining a
depository organization’s safe and
sound operatio ns.” The term “critical”
is used in the Regulatory S tandards
exem ption. U nder th a t exem ption, the
appropriate agency m ust find that a
proposed m anagem ent official is critical
to the safe an d sound operations of the
affected institution. 12 U.S.C.
3207(b)(2)(A).
N either the statute n o r its legislative
history defines “critical.” T he agencies
are concerned that a narrow
interpretation of this term w ould nullify
th e Regulatory S tandards exem ption. If
som eone w ere “critical” to the safe and
sound operations of an institution only
if the institu tio n w ould fail but for the
service of th e person in question, the
exem ption w o u ld have little relevance,
because the standard w o uld be
im possible to meet. Given th a t Congress
clearly in tended for the Regulatory
Standards exem ption to perm it
interlocks u n d er some circum stances,
the question thus becom es how to
define tho se circum stances.
T he agencies believe that the
definition adopted in these final ru les is
consistent w ith the legislative in ten t by
insuring th a t only persons of
dem onstrated expertise an d im portance
to th e in stitu tio n 's safe and so und
operations m ay serve p u rsu an t to a
Regulatory Standards exem ption.
D epository Institution
T he final rules m ake no substantive
change to th e definition of “ depository
in stitu tio n .” Tw o com m enters noted
that several of th e agencies interpret
“depository in stitu tio n ” to inclu de only
those institutions that accept deposits
(see, e.g., Board Staff O p inion of March
2 9 ,1 9 8 3 ,1 F.R.R.S. 3-838; OCC NoObjection Letter No. 93-01, October,
1993; FDIC Interpretive Letter No. 8 5 27), an d requested that the agencies
clarify th a t these interpretations w ill not
be affected by the final rules. The OCC,
Board, an d FDIC note that th e final rales
change n eith er th e definition of
“ depository in stitu tio n ” n o r the
application of th a t definition, an d that
th e interp retations cited rem ain accurate
statem ents of the positions of these
agencies.
Low- an d M oderate-incom e Areas
The final rules define th is term as a
census tract (or, if an area is not in a
census tract, a block num bering area
delineated by the U nited States Bureau
of the Census) in w hich th e m edian
family incom e is less th an 100 percent
of the area m edian incom e. This term is
used in th e M anagem ent C onsignm ent
exem ption that perm its an otherw ise
im perm issible interlock if th e interlock
w o u ld im prove the provision of credit
to a low- an d m oderate-incom e area.
T he final rules clarify that the agencies
w ill evaluate w hether an area is low- or
m oderate-incom e by com paring the
m edian family incom e for the census
tract to be helped (or, if there is no
census tract, the block num bering area
delineated by the U nited States Bureau
of the Census) w ith the area m edian
income. Incom e data w ill be derived
from the m ost recent decennial census.
O ne com m enter requested th a t the
agencies use a cutoff of 120 percent of
the area m e d ian incom e for determ ining
w hether an area is “ low- or m oderateincom e.” This" com m enter suggested
that this h igher cutoff w ould be
consistent w ith the flexibility vested in
th e agencies to im plem ent the
M anagem ent Consignm ent exem ption in
a w ay designed to make it easier for
institutions to serve econom ically
disadvantaged areas.
The agencies agree that a cutoff above
80 percent of the area m ed ian incom e is
appropriate, given th a t “low -incom e” is
defined in T itle I, Subtitle A of the CDRI
Act (titled “Com m unity D evelopm ent
Banking an d F inancial In stitu tio n s”) to
m ean n o t m ore than 80 percent of the
area m ed ian incom e. 12 U.S.C. 4702(17).
The agencies believe that Congress, by
using the term “m oderate-incom e” in
additio n to “ low -incom e” in section
338(b) of the CDRI Act (w hich created
th e M anagem ent Consignm ent
exem ption), intend ed for th at term to
apply to an area w here the m edian
family incom e exceeds the cutoff for
low incom e established elsew here in the
CDRI Act. .
The agencies disagree, how ever, that
a cutoff above 100 percent of area
m edian incom e is appropriate. The
agencies co ntinue to believe th a t th e 100
percent cutoff proposed best effectuates
the Congressional purpose of facilitating
the flow of credit to econom ically
disadvantaged areas. M oreover, the
thresh old adopted is a com m only used
40295
definition for “m oderate-incom e” in
other statutory provisions.3
M anagem ent Official
The final rules define “ m anagem ent
official” to include a senior executive
officer, a director, a branch m anager, a
trustee of an organization u n d e r the
control of trustees, or any person w ho
has a representative or nom inee serving
in such capacity. T he definition
excludes (1) A person w hose
m anagem ent functions relate either
exclusively to th e busin ess of retail
m erchandising or m anufacturing or
principally to business outside the
U nited States of a foreign com m ercial
bank an d (2) a person excluded by
section 202(4) of the Interlocks A ct (12
U.S.C. 3201(4)).
The final rules rem ove the ph rase “an
em ployee or officer w ith m anagem ent
functio ns,” w hich appeared in the
former rule. In its place, the agencies
have u sed the term “senior executive
officer” as defined by each agency in its
regulation pertaining to the prior notice
of changes in senior executive officers,
w hich im plem ent section 32 of the
Federal D eposit Insurance A ct (FDI Act)
(12 U.S.C. 1831i) as added by section
914 of the F inancial Institutions Reform,
Recovery, an d Enforcem ent A ct of 1989
(FIRREA) (Pub. L. No. 1 0 1 -7 3 ,1 0 3 Stat.
183). The agencies have m ade this
change to elim inate th e u ncertainty and
attendant com pliance burd en created by
th e am biguous term “m anagem ent
fun ction s.” T he final rules incorporate
specific illustrative exam ples of
positions at depository organizations
th at w ill be treated as senior executive
officers. See 12 CFR 5.51(c)(3) (OCC); 12
CFR 225.71(a) (Board); 12 CFR
303.14(a)(3) (FDIC); and 12 CFR
574.9(a)(2) (OTS). The agencies believe
that these definitions w ill allow
depository organizations to identify
im perm issible interlocks w ith greater
certainty and th u s w ill enhance
com pliance.
One com m enter requested that the
agencies am end the rules to expand the
exem ption th a t exists for ind ividuals
w hose m anagem ent functions relate to
th e business of retail m erchandising or
m anufacturing. In response to this
request, th e agencies carefully review ed
th eir respective rules and conclud ed
th at the rules as drafted are sufficiently
broad to address the concerns expressed
by the com m enter. T his com m enter also
requested that the agencies clarify the
procedures by w hich som eone may
confirm th a t an organization com plies
3 See, e.g., 12 U.S.C. 4502(10) (defining
“m o d erate-inco m e” in th e context of th e statute
ad dressin g gov ernm en t sp o n sored enterprises).
40296
Federal Register /. Vol. 61, No. 150 / Friday, August 2, 1996 / Rules and Regulations
w ith th e regulation. T he agencies note
th a t an organization m ay request from
th e appropriate regulator at any tim e
confirm ation th a t a given interlock
com plies w ith applicable law. The
agencies have elected not to im pose any
procedural requirem ents in the
regulation on this type of request.
Relevant M etropolitan Statistical Area
(RMSA)
T he final rules, like the former rules,
define “ relevant m etropolitan statistical
area (RMSA)” as an MSA, a prim ary
MSA, or a consolidated MSA that is not
com prised of designated prim ary MSAs.
H owever, unlike th e form er rules, the
final rules clarify th a t th is definition
w ill be used to the extent th a t the Office
of M anagem ent an d Budget (OMB)
defines and applies the term s MSA,
prim ary MSA, an d consolidated MSA.
T his change reflects the fact th a t OMB
defines “consolidated M SA ” to include
tw o or m ore prim ary MSAs. Given that
a consolidated MSA, by OMB’s
definition, is com prised of prim ary
MSAs, the reference to a consolidated
MSA in the Interlocks A ct and the
agencies’ regulations is inappropriate.
T he final rules enable the agencies to
im plem ent the statute in a w ay that
com plies w ith both the sp irit and the
letter of the Interlocks Act.
R epresentative or N om inee
T he final rules define “representative
or n o m in ee” as som eone w ho serves as
a m anagem ent official and has an
obligation to act on behalf of som eone
else. The final rules rem ove the rest of
th e definition that appeared in the
form er rule, how ever, an d insert in lieu
th ereof a statem ent that the appropriate
agency w ill find that som eone has an
obligation to act on behalf of som eone
else only if there is an agreem ent
(express or im plied) to act on behalf of
another. T his change clarifies that the
determ in ation of w h eth er som eone
serves a representative or no m inee w ill
d ep en d on w hether there is a basis to
conclud e that an agreem ent exists to act
on som eone’s behalf.
P rohibitions
T he former rules prohib ited interlocks
in th e follow ing three instances. First,
no tw o unaffiliated depository
organizations m ay have an interlock if
they (or th eir depository institu tio n
affiliates) have depository in stitution
offices in the same com m unity. Second,
a depository organization m ay not have
an interlock w ith any unaffiliated
depository organization if either
depository organization h as assets of
$20 m illion or m ore and th e depository
organizations (or depository institution
affiliates of either) have depository
in stitution offices in the sam e RMSA.4
T hird, if a depository organization has
total assets exceeding $1 billion, it (and
its affiliates) may not have an interlock
w ith any depository organization w ith
total assets exceeding $500 m illio n (or
affiliate thereof), regardless of location.
T he final rules am end the restriction
applicable to institutions w ith assets
equal to or exceeding $20 m illion to
b etter conform to th e purposes of the
Interlocks Act. W hereas th e form er rules
pro hib ited interlocks in an RMSA if one
of th e organizations has total assets of
$20 m illion or more, the final rules
apply the RM SA-wide p rohibition only
if b oth organizations have total assets of
$20 m illion or more. Interlocks w ith in
a com m unity involving unaffiliated
depository organizations w ill co ntinue
to be prohibited, regardless of the size
of th e organizations.
T he agencies believe th a t th is change
is consistent w ith both th e language and
th e in tent of the Interlocks Act. W hile
th e statute uses th e plural “ depository
in stitu tio n s” in section 203(1) of the
Interlocks Act (12 U.S.C. 3202(1)), in
context, the w ording is am biguous and
n eith er the statute nor its legislative
history com pels the conclusion th at the
interlock m ust involve tw o institution s
w ith less th an $20 m illion in assets
before the less restrictive prohibition
applies.
T he Interlocks Act seeks to prohibit
interlocks that could enable tw o
institutions to engage in anticom petitive
behavior. However, an in stitu tio n w ith
total assets of less than $20 m illion is
likely to derive m ost of its business from
th e com m unity in w hich it is located
an d is unlikely to com pete w ith
in stitution s that do not have offices in
that com m unity. Therefore, an interlock
involving one institu tion w ith assets
u n d e r $20 m illion an d another
institu tio n w ith assets of at least $20
m illion not in th e same com m unity is
not likely to lead to th e anticom petitive
condu ct that the Interlocks Act is
designed to prohibit.
T he agencies believe, m oreover, that
th e change w ill prom ote rather than
in hibit com petition. E xpanding th e pool
of m anagerial talent for in stitu tio n s w ith
assets u n d er $20 m illion cou ld enhance
th e ability of sm aller institutions to
com pete by im proving th e m anagem ent
of these institutions.
Every com m ent on this change either
supp o rted the change w ith o u t
qualification or supp orted th e change
and asked the agencies go even farther.
A few com m enters suggested th a t the
agencies should raise the asset
thresholds discussed earlier an d /o r
provide blanket exceptions for
in stitutions w ith total assets below
certain levels. The agencies no te that the
Interlocks.Act, w h ich establishes the
thresholds at w hich th e various
prohibitions apply, does not vest the
agencies w ith authority to change these
levels or to exem pt classes of
organizations from the sta tu te’s
prohibitions. A ccordingly, th e agencies
have not adopted th e changes proposed
by these com m enters.
Interlocking R elationships E xpressly
P erm itted b y Statute
T he final rules state the exem ptions
found in 12 U.S.C. 3204 (l)-(8 ).5 The
final rules reorder the exem ptions set
forth in th e current regulations in order
to conform the list of exem ptions to the
list set forth in the Interlocks Act.
Regulatory Standards E xem p tio n
T he final rules set forth the
requirem ents that a depository
organization m ust satisfy in o rder to
obtain a Regulatory S tandards
exem ption. The rules im p lem en t the
requirem ent regarding certification by
allow ing a depository organization’s
board of directors (or the organizers of
a depository organization th a t is being
formed) to certify to the appropriate
agency that no other qualified candidate
has been found after undertakin g
reasonable efforts to locate qualified
candidates w ho are not proh ibited from
service u n d er the Interlocks Act. If read
narrow ly, the Interlocks Act could
require a depository organization to
evaluate every person in a given locale
th at m ight be qualified and interested.
T his w ould create a requirem ent that, in
practice, w ould be im possible to satisfy.
Given that Congress w o uld not have
in clu d ed an exem ption that w o u ld have
no practical application, th e agencies
believe th a t th e “reasonable efforts”
stand ard is consistent w ith th e
legislative intent.
5 T he Interlocks A ct co ntain s an add itio n al
exem p tio n for savings asso ciatio ns an d savings an d
loan h olding co m panies th at h ave issu ed stock in
c o n nectio n w ith a qualified stock issuance p ursu ant
to sectio n 10(q) of the H o m e O w n e rs ' Loan A ct (12
U.S.C. 1467a(q)). See 12 U.S.C. 3204(9). T he OTS
therefore w ill c o n tin u e to list a n a d d itio n a l
exem p tion in its interlocks reg u latio n th at the other
agencies do not list. A n other ex em ptio n provides
for interlocks as a resu lt o f an em ergency
a cqu isition of a savings association a u th o riz e d in
accord ance w ith section 13(k) o f th e Federal
D eposit Insurance A ct (12 U.S.C. 1823(k)) if the
FDIC has given its ap prov al to th e interlock. The
4 A com m u n ity as th a t term is defin e d in the rules FDIC w ill c o n tinu e to list an a d d itio n a l exem ption
is sm aller th a n an RMSA. T h ere m ay be several
in its m anagem ent interlocks reg ulatio n th a t the
oth er agencies do not list.
c om m u n itie s in one RMSA.
Federal Register / Vol. 61, No. 150 / Friday, August 2, 1996 / Rules and Regulations
The final rules also set forth
presum ptions th a t the agencies w ill
apply w h en review ing an application
for a Regulatory Standards exem ption.
First, each agency w ill presum e that an
interlock w ill n o t have an
anticom petitive effect if it involves
in stitution s that, if merged, w ould not
trigger a challenge from the agencies on
com petitive grounds. T his presum ption
is unavailable, how ever, for interlocks
subject to the M ajor Assets prohibition.
Generally, the agencies w ill not object
to a m erger on com petitive grounds if
the post-m erger H erfindahl-H irschm an
Index (HHI) for th e market is less than
1800 an d th e m erger increases the HHI
by 200 points or less. T his presum ption
w ill enable applican ts to avoid the
unnecessary burd en of subm itting a
com petitive analysis in several
instances. The agencies have found this
HHI benchm ark to be a useful guide to
evaluating anticom petitive effects of
interlocks.6 However, the agencies may
decide th a t this presum ption sh ould not
be conclusive in appropriate
circum stances, such as w hen approval
of an interlock request w ould lead to
several institu tio ns being linked by
overlapping management.
Second, tne agencies w ill presum e
that a person is critical to an
in stitu tio n ’s safe an d so und operations
if the agencies also approved that
in dividual u n d e r section 914 of FIRREA
and the in stitu tio n in question either
w as a new ly chartered institution, failed
to m eet m in im um capital requirem ents,
or otherw ise w as in a “troubled
cond itio n ” as defined in the review ing
agency’s section 914 regulation at the
tim e the section 914 filing was
approved.7
The final rules also address the
duration of an interlock perm itted u n d er
the Regulatory S tandards exem ption.
The statute does not require that these
interlocks term inate. In light of this
open-ended grant of authority, the
agencies have n o t adopted a specific
term for a perm itted exem ption. Instead,
an agency m ay require an institu tio n to
term inate the interlock if the agency
determ ines that th e m anagem ent official
in question either no longer is critical to
6 See, e.g., th e OCC’s Bank M erger C om petitive
A nalysis Screen (OCC A dvisory Letter 95— July
4,
18,1995); D epartm ent o f Justice M erger G uid elin es
(49 FR 26823, June 29 ,1984) (applied by th e Board);
FDIC Statem en t of Policy: Bank Merger
Transactions (54 FR 39045, Sept. 22, 1989).
7 This p re su m p tio n also applies to in d iv id uals
w hose service as a sen io r executive officer is
approved by th e OCC p u rsu a n t to the stand ard
co n ditio n s im p o se d o n new ly ch artered national
banks a n d to in d iv id u a ls w hose service as a
m anagem ent official is ap pro ved by the FDIC as a
co n ditio n of a gran t o f deposit in su rance prior to
th e opening of th e depository in stitutio n .
th e safe and sou nd operations of the
affected organization or th at co ntinued
service w ill p rod uce an anticom petitive
effect. The agencies w ill provide
affected organizations an opportunity to
subm it inform ation before they m ake a
final determ ination to require
term ination of an interlock.
O ne com m enter suggested th at the
agencies clarify that the 15-m onth grace
period that applies w hen an interlock
m ust be term inated due to a change in
circum stances also applies in the case of
a Regulatory S tandards exem ption that
m ust be term inated. The agencies agree
w ith the com m enter that it is
appropriate in m ost cases to grant a
grace period follow ing the term ination
of a Regulatory Standards exem ption in
order to m inim ize the disruption of the
affected institu tio n that otherw ise m ight
be caused by the loss of a m anagem ent
official.
T here m ay be circum stances,
how ever, w here im m ediate term ination
of a regulatory standards exem ption
w ou ld be appropriate. For instance, if
an organization obtains an exem ption
on the basis of m isleading inform ation,
the organization’s prim ary regulator w ill
require th e organization to take
appropriate steps to im m ediately
rem edy the situation. The final rules
th u s provide for th e possibility of a
grace period, w ith the caveat that the
agencies m ay, u n d e r appropriate
circum stances, order the im m ediate
term ination of a Regulatory S tandards
exem ption.
A nother com m enter suggested that
th e agencies lim it the term of a
Regulatory S tandards exem ption w hen
the-exem ption is granted. This
com m enter opined th at depository
organizations w ould benefit from the
greater certainty by avoiding questions
concerning w h ether a director m ust
vacate h is or h er position on a board.
The agencies believe that the procedures
in the final rules for term inating a
Regulatory S tandards exem ption w ill
provide an affected organization w ith
am ple certainty concerning the
perm issibility of continued service.
40297
received an exem ption if they m et the
statutory criteria.
M anagem ent C onsignm ent E xem ption
T he final rules im plem ent the
M anagem ent Consignm ent exem ption,
set forth in section 209(c) of the
Interlocks Act (12 U.S.C. 3207(c)), by
restating the statutory criteria w ith three
clarifications. First, th e final rules state
that the agencies consider a “new ly
chartered in stitu tio n ” to be an
institution that has been chartered for
less than tw o years at th e tim e it files
an application for exem ption. This
standard is consistent w ith certain other
banking agency thresholds for
determ ining w hen an institution is
considered new ly chartered (see, e.g., 12
CFR 5.51(d). 225.72(a)(1); 303.14(b)).
Second, the final rules clarify th a t the
exem ption available for “m inority- and
w om en-ow ned in stitu tio n s” is available
for an institution that is ow ned either by
m inorities or w om en. In analyzing the
exem ptions to the Interlocks Act that
th e Federal banking agencies have »
approved, the H ouse Conference Report
to the CDRI A ct (H.R. Conf. Rep. No.
6 5 2 ,103d Cong., 2d Sess. 181 (1994))
(Conference Report) states that the types
of institutio ns that have received
exem ptions in clu de those that are
“ ow ned by w om en or m inorities.”
T hese exem ptions ultim ately w ere
codified in the Interlocks Act.
A ccordingly, th e agencies have
concluded th at Congress intended the
M anagem ent Consignm ent exem ption to
assist institu tion s ow ned by w om en
an d /o r by m inorities, b ut did not intend
to require the institution to be ow ned by
both.
T hird, the final rules perm it an
interlock if the interlock w ould
»
strengthen the m anagem ent of either a
new ly chartered institu tio n or an
in stitution that is in an unsafe or
u n so u n d condition. Section 209(c)(1)(C)
of the Interlocks Act (12 U.S.C.
3207(c)(1)(C)) perm its an exem ption if
the interlock w ou ld “strengthen the
m anagem ent of new ly chartered
in stitution s that are in an unsafe or
u n so u n d co nd itio n .” However, this
G randfathered Interlocking
provision contains w hat appears on its
R elationships— R em oved
face to be an error, given that an
exem ption lim ited to situations
Section 338(a) of the CDRI Act
involving new ly chartered institutions
authorizes the agencies to extend a
'th a t also are in an unsafe an d u n so u n d
grandfathered interlock for an
condition w ould have no practical
ad ditional five years if the m anagem ent
official in question satisfies the statutory utility. The chartering agencies do not
approve an application for a bank or
criteria for obtaining an extension.
T he final rules rem ove the sections
thrift charter unless the applicant
seeking a charter can dem onstrate that
addressing the grandfather exem ption
because they are unnecessary and
th e proposed new financial institution
w ill operate in a safe and sound m an n er
red u n d an t in light of the statute.
for the foreseeable future. W hile there
Individuals w ho w ished to extend their
m ay be an extraordinary instance w here
exem ption already have app lied for and
40298
Federal Register / Vol. 61, No. 150 / Friday, August 2, 1996 / Rules and Regulations
a new ly chartered in stitution
im m ediately experiences unforeseen
problem s so severe that they threaten
the safety an d so undness of that
institution, there is nothing in th e
legislative history to suggest that
Congress in ten d ed to lim it the
M anagem ent C onsignm ent exem ption to
such rare instances.
M oreover, the legislative history of
th e CDRI A ct suggests that the agencies
are to apply the M anagem ent
Consignm ent exem ption in cases
involving either new ly chartered
institution s or in stitution s that are in an
unsafe or u n so u n d condition. The
C onference Report notes that the
agencies have used their exem ptive
authority to grant exem ptions in lim ited
cases w here institutions “are
particularly in need of m anagem ent
guidance an d expertise to operate in a
safe an d so u n d m an ner.” Id. The
Conference Report goes on to state that
“Exam ples of exceptions perm issible
u n d e r an agency m anagem ent official
consignm ent program include
im proving th e provision of ci'edit to
low- and m oderate-incom e areas,
increasing th e com petitive position of
m inority- an d w om en-ow ned
institutions, an d strengthening the [sic]
m anagem ent o f new ly chartered
institution s or in stitution s that are in an
unsafe or u n so u n d con dition .” Id. at 182
(em phasis added).
Finally, Congress used the
exem ptions in th e agencies’ current
rules as the m odel for the M anagem ent
C onsignm ent exem ption. See id. at 1 8 1 182. These exem ptions distinguish
new ly chartered institution s from
in stitution s that are in an unsafe or
unso und condition. The reference in the
CDRI A ct’s legislative history to the
current regulatory exem ptions suggests
that Congress intend ed to codify these
exem ptions.
For these reasons, the agencies w ill
perm it M anagem ent Consignm ent
exem ptions if th e m anagem ent official
w ill strengthen either a new ly chartered
in stitution or an institution that is in an
unsafe or u n so u n d condition.
The final rules set forth tw o
presum ptions th a t th e agencies w ill
apply in connection w ith an application
for an exem ption u n d er the
M anagem ent Consignm ent exem ption.
First, th e agencies w ill presum e that an
in dividual is capable of strengthening
th e m anagem ent of an institution that
has been chartered for less than tw o
years if the review ing agency approved
th e in d iv id u al to serve as a m anagem ent
official of th a t institution p u rsu an t to
section 914 of FIRREA.8 Second, the
agencies w ill presum e that an
in d iv id u al is capable of strengthening
th e m anagem ent of an institutio n that is
in an unsafe or u n so u n d condition if th e
review ing agency approved the
in dividual to serve u n d er section 914 as
a m anagem ent official of th at institu tio n
at a tim e w hen th e institution w as not
in com pliance w ith m inim um capital
requirem ents or otherw ise w as in a
“troubled co n d itio n .”
T he agencies believe that
presum ption s of suitability are less
valid w hen ap plied to the other
M anagem ent Consignm ent exem ptions
because there is no reason to conclu de
th a t a m anagem ent official approved
u n d e r section 914 necessarily w ill
im prove the flow of credit to low- and
m oderate-incom e areas or increase the
com petitive po sition of m inority- or
w om en-ow ned institutions. M oreover,
th e final rules do not contain a
presum ption regarding effects on
com petition, given that th is is not a
factor to be consid ered by th e agencies
w h en review ing an application for a
M anagem ent C onsignm ent exem ption.
T he final rules set forth th e lim its on
th e duration of a M anagem ent
Consignm ent exem ption. The Interlocks
A ct lim its a M anagem ent C onsignm ent
exem ption to tw o years, w ith a possible
extension for u p to an additional tw o
years if the app lican t satisfies at least
one of the criteria for obtaining a
M anagem ent C onsignm ent exem ption.
T he final ru les im plem ent this
lim itation by requiring interested parties
to subm it an application for an
extension at least 30 days before the
expiration of the initial term of the
exem ption and by clarifying th a t the
presum ption s th a t apply to initial
applications also apply to extension
applications.
O ne com m enter suggested that the
agencies sh ould b e consistent in how
they address the duration of a
M anagem ent C onsignm ent exem ption
w ith how the agencies address the
duration of a Regulatory Standards
exem ption, and perm it a M anagem ent
Consignm ent exem ption to last u n til the
appropriate agency orders th e interlock
term inated. The statute is clear,
how ever, that a M anagem ent
C onsignm ent exem ption may not last
m ore th an one initial tw o-year term and
one extension o f u p to an ad d itional tw o
years in appropriate circum stances.
A ccordingly, the agencies have not
adopted the approach suggested by the
com m enter.
Change in C ircum stances
T he final rules provide a 15-month
grace period for nongrandfathered
interlocks that becom e im perm issible
due to a change in circum stances. T his
period m ay be shortened by the agencies
u n d er ap p ro p u d te circum stances.
Paperwork Reduction Act
OCC: The collection of inform ation
requirem ents contained in th is final rule
have been review ed and approved by
th e Office of M anagem ent and Budget in
accordance w ith the Paperw ork
R eduction A ct of 1995 (44 U.S.C.
3507(d)) u n d e r control n u m b er 1 55 7 0196. Com m ents on the collections of
inform ation sho u ld be sent to th e Office
of M anagem ent an d Budget, Paperw ork
R eduction Project (1557-0196),
W ashington, DC 20503, w ith copies to
th e Legislative and Regulatory A ctivities
D ivision (1557-0196), Office of the
C om ptroller of th e Currency, 250 E
Street, SW, W ashington, DC 20219.
The collection of inform ation
requirem ents in this final rule are found
in 12 CFR 26.4(h)(l)(i), 26.5(a)(1),
26.5(a)(2), 26.6(a), and 26.6(c). This
inform ation is required by the Interlocks
A ct, and w ill be used by th e OCC to
evaluate com pliance w ith the
requirem ents of th e Interlocks Act by
national banks an d District banks. The
collections of inform ation are required
to obtain a benefit.
R espondents are not required to
respond to the foregoing collection of
inform ation u nless it displays a
currently valid OMB control num ber.
T he likely respond ents are national
banks and D istrict banks.
E stim a ted average a n n u al burden
h ou rs p er respondent: 3 hours.
E stim ated n u m b er o f respondents:
100.
Start-up costs to respondents: None.
Board: In accordance w ith section
3506 of the Paperw ork R eduction Act of
1995 (44 U.S.C. Ch. 35; 5 CFR 1320
A ppendix A .l), the Board review ed the
final rule u n d er th e authority delegated
to the Board by the Office of
M anagem ent an d Budget. Com m ents on
th e collections of inform ation should be
sent to the Office of M anagem ent and
Budget, Paperw ork Reduction Project
(7100-0046, 7100-0134, 7100-0171,
8 This presumption also applies to an individual
7100-0266), W ashington, DC 20503,
whose service as a senior executive officer of a
national bank is approved pursuant to the standard
w ith copies of such com m ents to be sent
conditions imposed by the OCC on newly chartered to Mary M. M cLaughlin, Federal
national banks and to an individual whose service
Reserve Board Clearance Officer,
as a management official is approved by the FDIC
D ivision of Research an d Statistics, M ail
as a condition of a grant of deposit insurance prior
Stop 97, Board of Governors of the
to the opening of the depository institution.
Federal Register / Vol. 61, No. 150 / Friday, August 2, 1996 / Rules and Regulations
CDRI Act, an d w ill be used by the FDIC
Federal Reserve System, W ashington,
to evaluate com pliance w ith the
DC 20551.
T he collection of inform ation
requirem ents of the Interlocks Act by •
requirem ents in this final rule are found in su red nonm em ber banks. The likely
in 12 CFR 212.4(h)(l)(i), 212.5(a)(1),
respon den ts are insured nonm em ber
212.5(a)(2), 212.6(a), and 212.6(c). T his
banks.
inform ation is required to evidence
E stim ated n u m b er o f respondents: 6
com pliance w ith the requirem ents of the applicants p er year.
Interlocks A ct as am ended by section
E stim ated average a nnual burden per
338 of th e CDRI Act. The respondents
respondent: 4 hours.
E stim ated a n n u a l fre q u en c y o f
are state m em ber banks an d subsidiary
recordkeeping: Not applicable (one-time
depository institu tio ns of bank holding
application).
com panies.
E stim a ted total a n n u a l recordkeeping
Currently, inform ation on
m anagem ent official interlocks is
burden: 24 hours.
OTS: The collection of inform ation
gathered as a part of the following
applications: m em bership in the Federal requirem ents contained in this rule have
been review ed and approved by the
Reserve System (OMB No. 7100-0046);
Office of M anagem ent and Budget for
state m em ber bank mergers (OMB No.
review in accordance w ith the
7100-0266); changes in bank control
Paperw ork R eduction Act of 1995 (44
(OMB No. 7100-0134); and bank
U.S.C. 3507(d)). Com m ents on the
holding com pany acquisitions of
depository in stitu tio n s (OMB No. 7100- collection of inform ation sh ould be sent
0171). T he estim ated portion of burden
to the Office of M anagem ent and
for each applicatio n th at is attributable
Budget, Paperw ork Reduction Project
to m anagem ent interlocks averages 4
(1550-0051), W ashington, DC 20503,
hours, an d th e bu rd en ranges from as
w ith copies to the Business
m uch as 6 h o urs to as little as 0.5 hours. T ransactions D ivision (1550-0051),
It is estim ated that 822 applications are
Office of T hrift S upervision, 1700 G
filed annually, w ith an estim ate of 3,288 Street, NW., W ashington, DC.
hours of annual burden. Based on an
The collection of inform ation
hourly cost of $20, the annual cost to
requirem ents in this final rule are found
the public is estim ated to be $65,760.
in 12 CFR 563f.4(h)(l)(i), 563f.5(a)(l),
The Federal Reserve believes th a t th e
563f.5(a)(2), 563f.6(a), and 563f.6(c).
final rule w ill have a m inim al effect on
T his inform ation is required by the
respondent burden.
Interlocks Act, and w ill be used by the
T he Federal Reserve may not conduct
OTS to evaluate com pliance w ith the
or sponsor, an d an organization is not
requirem ents of the Interlocks Act by
required to respond to, these
savings associations. The collections of
inform ation collections unless they
inform ation are required to obtain a
display currently valid OMB control
benefit.
num bers.
R espondents are not required to
No issues of confidentiality u n d e r the respond to the foregoing collection of
provisions of the Freedom of
inform ation unless it displays a
Inform ation Act norm ally arise for the
currently valid OMB control num ber.
applications.
The likely respo ndents are savings
FDIC: T he collections of inform ation
associations.
contained in th is final rule have been
E stim ated average a nnual burden
review ed and approved by the Office of
hours p er respondent: 4 hours.
M anagem ent an d Budget u n d er control
E stim a ted n u m b er o f respondents: 8.
num ber 3064—
0118 in accordance w ith
Start-up costs to respondents: None.
the Paperw ork Reduction Act of 1995
Regulatory Flexibility Act
(44 U.S.C. 3507(d)). Com m ents on th e
collections of inform ation should be
P ursuant to section 605(b) of the
sent to the Office of M anagem ent and
Regulatory F lexibility Act (RFA) (5
U.S.C. 605(b)), the regulatory flexibility
Budget, P aperw ork Reduction Project
analysis otherw ise required u n d er
(3604-0118), W ashington, DC 20503,
w ith copies of such com m ents to be sent section 603 of th e RFA (5 U.S.C. 603) is
not requ ired if the head of the agency
to Steven F. Hanft, Office of the
certifies th a t th e rule w ill not have a
Executive Secretary, Room F-453,
significant econom ic im pact on a
Federal D eposit Insurance Corporation,
substantial n um ber of sm all entities and
550 17th Street, NW., W ashington, DC
the agency pu blishes such certification
20429.
The collection of inform ation
and a succinct statem ent explaining the
requirem ents in this final rule are found reasons for su ch certification in the
in 12 CFR 348.4(i)(l)(i), 348.5(a)(1),
Federal Register along w ith its final
348.5(a)(2), 348.6(a), and 348.6(c). This
rule.
P ursuant to section 605(b) of the RFA,
inform ation is required by the Interlocks
the agencies hereby certify th at this rule
Act as am ended by section 338 of the
40299
w ill not have a significant econom ic
im pact on a substantial num ber of sm all
entities. The agencies expect that this
rule w ill not (1) have significant
secondary or in ciden tal effects on a
substantial n u m b er of sm all entities or
(2) create any additional bu rd en on
sm all entities. T he changes to the
exem ptions are required by the
Interlocks Act. T he agencies have ad ded
presum ptions th a t w ill stream line and
sim plify the application procedures for
obtaining an exem ption from the
Interlocks Act prohibitions, an d have
defined key term s used in the
provisions im plem enting these
exem ptions in a way that is in ten d ed to
elim inate any unnecessary burden. As
noted in the pream ble discussion of the
changes m ade by the final rule, th e
agencies have m ade substantive changes
that w ill perm it m ore flexibility to
institutions w ith total assets of less than
$20 m illion, clarified th e circum stances
u n d er w h ich som eone w ill be deem ed
to be a “ representative or no m inee,” and
am ended th e definition of “ senior
m anagem ent official” so as to provide
greater clarity and to conform this
definition w ith definitions of sim ilar
term s used in other regulations.
The im pact of these changes w ill be
to m inim ize, to the extent possible, the
costs of com plying w ith this final rule.
Executive Order 12866
OCC and OTS: The OCC and OTS
have determ ined that this rule is not a
significant regulatory action u n d er
Executive O rder 12866.
Unfunded Mandates Act o f 19,95
OCC and OTS: Section 202 of the'
U nfunded M andates Act of 1995
(Unfunded M andates Act) requires that
an agency prepare a budgetary im pact
statem ent before prom ulgating a rule
likely to result in a Federal m andate that
may result in the annual expenditure of
$100 m illion or m ore in any one year by
State, local, an d tribal governm ents, in
the aggregate, or by the private sector. If
a budgetary im pact statem ent is
required, section 205 of th e U nfunded
M andates Act requires an agency to
identify and consider a reasonable
num ber of alternatives before
prom ulgating th e rule.
The OCC an d OTS have determ ined
that this final rule w ill not result in
expenditures by State, local, and tribal
governm ents, or by th e private sector, of
more than $100 m illion in any one year.
A ccordingly, n eith er th e OCC n or the
OTS has prepared a budgetary im pact
statem ent or specifically addressed the
regulatory alternatives considered.
40300
Federal Register / Vol. 61, No. 150 / Friday, August 2, 1996 / Rules and Regulations
List o f Subjects
pu rposes of that section 202, shares held
by an indiv id u al in clu d e shares held by
m em bers of his or her im m ediate family.
A ntitrust, Banks, banking, H olding
“ Im m ediate fam ily” m eans spouse,
com panies, M anagem ent official
m other, father, child, grandchild, sister,
interlocks, N ational banks.
brother, or any of their spouses, w h ether
or no t any of th eir shares are held in
12 CFR Part 212
trust.
A ntitrust, Banks, banking, H olding
(2) For purposes of section 202(3)(B)
com panies, M anagem ent official
of th e Interlocks A ct (12 U.S.C.
interlocks.
3201(3)(B)), an affiliate relatio nship
involving a national bank based on
12 CFR Part 348
com m on ow nership does not exist if the
A ntitrust, Banks, banking, H olding
OCC determ ines, after giving the
com panies.
affected persons the opportun ity to
respond, that the asserted affiliation w as
12 CFR Part 563f
established in order to avoid the
A ntitrust, H olding com panies,
p rohibitions of the Interlocks A ct and
M anagem ent official interlocks, Savings
does not represent a tru e com m onality
associations.
of interest betw een the depository
Office o f the Comptroller o f the
organizations. In m aking this
Currency
determ ination, the OCC considers,
am ong other things, w h eth e r a person,
12 CFR Chapter I
including m em bers of his or her
Authority and Issuance
im m ediate family, w hose shares are
necessary to constitute th e group ow ns
For th e reasons set out in the joint
a nom in al percentage of the shares of
pream ble, the OCC revises part 26 of
on e of the organizations a n d the
chapter I of title 12 of the Code of
percentage is substantially
Federal Regulations to read as follows:
disproportionate to th a t p erso n ’s
ow nership of shares in th e other
PART 2&—MANAGEMENT OFFICIAL
organization.
INTERLOCKS
(b) A n tico m p etitive effect m eans a
Sec.
m onopoly or substantial lessening of
26.1 A uthority, purpose, a n d scope.
com petition.
26.2 Definitions.
(c) Area m edian in co m e m eans:
26.3 Prohibitions.
(1) The m edian fam ily incom e for the
26.4 Interlocking relatio n sh ip s p erm itted by
m etropolitan statistical area (MSA), if a
statute.
depository organization is located in an
26.5 Regulatory S tan dard s exem ption.
MSA; or
26.6 M anagem ent C onsignm ent exem ption.
(2) The statew ide nonm etropolitan
26.7 Change in circum stances.
m edian family incom e, if a depository
26.8 Enforcem ent.
organization is located ou tsid e an MSA.
Authority: 12 U.S.C. 93a a n d 3201-3208.
(d) C o m m u n ity m eans a city, tow n, or
§ 26.1 Authority, purpose, and scope.
village, an d contiguous or adjacent
(a) A uthority. T his part is issued
cities, tow ns, or villages.
(e) Contiguous or adja cen t cities,
u n d e r the provisions of the Depository
tow ns, or villages m eans cities, tow ns,
Institution M anagem ent Interlocks Act
or villages w hose borders touch each
(Interlocks Act) (12 U.S.C. 3201 et seq.),
o ther or w hose borders are w ith in 10
as am ended, and th e OCC’s general
road m iles of each other at th e ir closest
rulem aking au thority in 12 U.S.C. 93a.
points. The property line of an office
(b) Purpose. T he purpose of the
located in an u nincorporated city, tow n,
Interlocks Act an d th is part is to foster
or village is the boundary line of that
com petition by generally prohibiting a
city, tow n, or village for th e purpose of
m anagem ent official from serving tw o
th is definition.
nonaffiliated depository organizations
(f) Critical m eans im portant to
in situations w here the m anagem ent
restoring or m aintaining a depository
interlock likely w ould have an
organization’s safe and so und
anticom petitive effect.
operations.
(c) Scope. T his part applies to
(g) D epository holdin g co m p a n y
m anagem ent officials of national banks,
m eans a bank holding com pany or a
D istrict banks, and affiliates of either.
savings an d loan holding com pany (as
§26.2 Definitions.
m ore fully defined in section 202 of the
For purposes of th is part, the
Interlocks A ct (12 U.S.C. 3201)) having
follow ing definitions apply:
its principal office located in the U nited
(a)
A ffiliate. (1) T he term affiliate has States.
th e m eaning given in section 202 of the
(h) D epository institu tio n m eans a
Interlocks Act (12 U.S.C. 3201). For
com m ercial bank (including a private
12 CFR Part 26
bank), a savings bank, a tru st com pany,
a savings and loan association, a
build ing and loan association, a
hom estead association, a cooperative
bank, an industrial bank, or a credit
union, chartered u n d er th e law s o f the
U nited States and having a p rincip al
office located in th e U nited States.
A dditionally, a U nited States office,
including a branch or agency, of a
foreign com m ercial bank is a depository
institution.
(i)
D epository in stitu tio n affiliate
m eans a depository institu tio n that is an
affiliate of a depository organization.
(j) D epository organization m eans a
depository institu tio n or a depository
holding com pany.
(k) D istrict b a n k m eans any State bank
operating u n d er the Code of Law of the
D istrict of Columbia.
(1) Low- a n d m oderate-incom e areas
m eans census tracts (or, if an area is not
in a census tract, block num bering areas
delineated by the U nited States Bureau
of th e Census) w here th e m ed ian family
incom e is less than 100 percent of th e
area m edian income.
(m) M anagem ent official. (1) The term
m a n a gem en t official m eans:
(1) A director;
(ii) An advisory or honorary director
of a depository institu tio n w ith total
assets of $100 m illion or more;
(iii) A senior executive officer as that
term is defined in 12 CFR 5.51(c)(3);
(iv) A branch manager;
(v) A trustee of a depository
organization u n d er th e control of
trustees; and
(vi) Any person w ho h as a
representative or no m inee serving in
any of th e capacities in th is paragaph
(m)(l).
(2) The term m a n ag em ent official
does not include:
(i) A person w hose m anagem ent
functions relate exclusively to the
b usiness of retail m erchandising or
m anufacturing;
(ii) A person w hose m anagem ent
functions relate principally to the
b usiness outside th e U nited States of a
foreign com m ercial bank; or
(iii) A person described in the
provisos of section 202(4) of the
Interlocks Act (12 U.S.C. 3201(4))
(referring to an officer of a Statechartered savings bank, cooperative
bank, or tru st com pany th a t neither
m akes real estate mortgage loans nor
accepts savings).
(n) O ffice m eans a p rin cip al or branch
office of a depository in stitu tio n located
in the U nited States. O ffice does not
in clu de a representative office of a
foreign com m ercial bank, an electronic
term inal, or a loan p ro duction office.
(o) Person m eans a natural person,
corporation, or other business entity.
Federal Register / Vol. 61, No. 150 / Friday, August 2, 1996 ! Rules and Regulations
(p) R eleva nt m etropolitan statistical
area (RM SA) m eans an MSA, a prim ary
MSA, or a consolidated MSA th a t is not
com prised of designated prim ary MSAs
to th e ex tent that these term s are
defined an d applied by the Office of
M anagem ent an d Budget.
(q) R epresentative or n o m in ee m eans
a natural person w ho serves as a
m anagem ent official an d has an
obligation to act on behalf of another
person w ith respect to m anagem ent
responsibilities. The OCC w ill find that
a p erson h a s an obligation to act on
behalf of an o th er person only if the first
person has an agreem ent, express or
im plied, to act on behalf of th e second
person w ith respect to m anagem ent
responsibilities. The OCC w ill
determ ine, after giving the affected
persons an o p portunity to respond,
w heth er a person is a representative or
nom inee.
(r) Total assets. (1) The term total
assets m eans assets m easured on a
consolidated basis an d rep orted in the
m ost recen t fiscal year-end C onsolidated
Report of C ondition and Income.
(2) The term total assets does not
include:
(i) A ssets of a diversified savings and
loan holding com pany as defined by
section 10(a)(1)(F) of th e Home O w ners’
Loan A ct (12 U.S.C. 1467a(a)(l)(F))
other th a n th e assets of its depository
institu tio n affiliate;
(ii) A ssets of a bank holding com pany
that is exem pt from the prohibitions of
section 4 of th e Bank H olding Com pany
Act of 1956 pu rsu an t to an order issued
u n d er section 4(d) of that A ct (12 U.S.C.
1843(d)) other than the assets of its
depository in stitu tio n affiliate; or
(iii) A ssets of offices of a foreign
com m ercial bank other th an th e assets
of its U nited States branch or agency.
(s) U nited States m eans the U nited
States of A m erica, any State or territory
of the U nited States of A m erica, the
District of Columbia, Puerto Rico,'
Guam, A m erican Samoa, and the Virgin
Islands.
§26.3
Prohibitions.
(a) C om m unity. A m anagem ent
official of a depository organization may
not serve at the same tim e as a
m anagem ent official of an unaffiliated
depository organization if th e
depository organizations in question (or
a depository institu tio n affiliate thereof)
have offices in the same com m unity.
(b) R M SA . A m anagem ent official of a
depository organization m ay not serve at
th e same tim e as a m anagem ent official
of an unaffiliated depository
organization if the depository
organizations in question (or a
depository institu tio n affiliate thereof)
have offices in the same RMSA and each
depository organization has total assets
of $20 m illion or more.
(c) M ajor assets. A m anagem ent
official of a depository organization
w ith total assets exceeding $1 billion (or
any affiliate thereof) m ay not serve at
the same tim e as a m anagem ent official
of an unaffiliated depository
organization w ith total assets exceeding
$500 m illion (or any affiliate thereof),
regardless of the location of the tw o
depository organizations.
§ 26.4 Interlocking relationships permitted
by statute.
40301
agency at least 60 days before the dual
service is proposed to begin; and
(ii) The appropriate regulatory agency
does not disapprove th e d u al service
before the en d of the 60-day period.
(2) T he OCC m ay disapprove a notice
of proposed service if it finds that:
(i) T he service cannot be structured or
lim ited so as to preclude an
anticom petitive effect in financial
services in any part of the U nited States;
(ii) The service w ould lead to
substantial conflicts of interest or unsafe
or u n so u n d practices; or
(iii) The notificant failed to furnish all
the inform ation required by the OCC.
(3) The OCC m ay require th a t any
interlock perm itted u n d er this
paragraph (h) be term inated if a change
in circum stances occurs w ith respect to
one of the interlocked depository
organizations that w ould have provided
a basis for disapproval of the interlock
during the notice period.
T he prohibitions of § 26.3 do not
apply in the case of any one or m ore of
the follow ing organizations or to a
subsidiary thereof:
(a) A depository organization that has
been placed form ally in liquidation, or
w hich is in th e han ds of a receiver,
conservator, or other official exercising
a sim ilar function;
§ 26.5 Regulatory Standards exemption.
(b) A corporation operating u n d er
(a) Criteria. The OCC may perm it an
section 25 or section 25A of th e Federal
interlock that otherw ise w ould be
Reserve A ct (12 U.S.C. 601 et seq. and
12 U.S.C. 611 et seq., respectively) (Edge prohibited by the Interlocks Act an d
§ 26.3 if:
C orporations an d A greem ent
(1) T he board of directors of th e
Corporations);
depository organization (or the
(c) A credit u n io n being served by a
organizers of a depository organization
m anagem ent official of another credit
union;
being formed) that seeks the exem ption
(d) A depository organization that
provides a resolution to the OCC
does not do business w ith in the U nited
certifying th at the organization, after the
States except as an in cid en t to its
exercise of reasonable efforts, is unable
activities outside the U nited States;
to locate any other candidate from the
(e) A State-chartered savings and loan com m unity or RMSA, as appropriate,
guaranty corporation;
who:
(f) A Federal Home Loan Bank or any
(1) Possesses the level of expertise
other bank organized solely to serve
required by th e depository organization
depository institutions (a b ankers’ bank) and w ho is n o t prohibited from service
or solely for th e purpose of providing
by the Interlocks Act; and
securities clearing services an d services
(ii) Is w illing to serve as a
related thereto for depository
m anagem ent official; and
(2) The OCC, after review ing an
institutio ns an d securities com panies;
(g) A depository organization that is
application subm itted by the depository
closed or is in danger of closing as
organization seeking the exem ption,
determ ined by the appropriate Federal
determ ines that:
depository in stitu tio n s regulatory
(i) The m anagem ent official is critical
agency an d is acquired by another
to th e safe and sound operations of the
depository organization. T his exem ption affected depository organization; and
(ii) Service by the m anagem ent
lasts for five years, beginning on the
official w ill not produce an
date the depository organization is
anticom petitive effect w ith respect to
acquired; and
(h)(1) A diversified savings and loan
the depository organization.
(b) P resum ptions. The OCC applies
holding com pany (as defined in section
the follow ing p resum ptions w hen
10(a)(1)(F) of th e Home O w ners’ Loan
review ing any application for a
Act (12 U.S.C. 1467a(a)(l)(F)) w ith
Regulatory Standards exem ption:
respect to th e service of a director of
(1) A n interlock w ill n ot have an
such com pany w ho also is a director of
*anticom petitive effect if it involves
an unaffiliated depository organization
depository organizations that, if merged,
if:
w ould not cause the post-merger
(i) Both the diversified savings and
H erfindahl-H irschm an Index (HHI) to
loan holding com pany an d the
exceed 1800 an d w ould not cause the
unaffiliated depository organization
HHI to increase by m ore th an 200
notify th e ir appropriate Federal
points. T his presu m p tion does not
depository in stitutions regulatory
40302
Federal Register / Vol. 61, No. 150 / Friday, August 2, 1996 / Rules and Regulations
m anagem ent of a depository institu tio n
banks, D istrict banks, an d affiliates of
apply to depository organizations
either, an d m ay refer any case o f a
subject to th e M ajor A ssets p rohibition
described in paragraph (a)(3) of this
section if that official is approved by the prohibited interlocking rela tio n sh ip
of § 26.3(c).
(2) A p roposed m anagem ent official is OCC to serve as a director or senior
involving these entities to the A ttorney
critical to the safe an d sound operations executive officer of that institu tio n
G eneral of the U nited States to enforce
of a depository institu tion if:
com pliance w ith the Interlocks A ct an d
pu rsu an t to 12 CFR 5.51 or p u rsu an t to
(i) T hat official is approved by the
th is part. If an affiliate of a national
conditions im posed on a new ly
OCC to serve as a director or senior
bank or a D istrict bank is subject to the
chartered national bank an d the
executive officer of that institution
prim ary regulation of ano ther Federal
institu tio n h ad operated for less than
pu rsu an t to 12 CFR 5.51 or p u rsu an t to
depository organization supervisory
tw o years at th e tim e the service u n d er
conditions im posed on a new ly
agency, th e n th e OCC does not
12 CFR 5.51 w as approved; and
chartered nation al bank; and
(2) A p roposed m anagem ent official is adm inister a n a enforce the Interlocks
(ii) T he in stitu tio n had operated for
capable of strengthening the
Act w ith respect to that affiliate.
less than tw o years, w as not in
m anagem ent of a depository institu tio n
Dated: July 22,1996.
com pliance w ith m inim um capital
described in paragraph (a)(4) of th is
Eugene A. Ludwig,
requirem ents, or otherw ise w as in a
section if th a t official is approved by the
Comptroller o f the Currency.
“troubled co n d itio n ” as defined in 12
OCC to serve as a director or senior
CFR 5.51 at the tim e the service u n d er
Federal Reserve System
executive officer of that institution
th at section w as approved.
p u rsu an t to 12 CFR 5.51 and the
12 CFR Chapter II
(c) D uration o f interlock. A n interlock institution w as not in com pliance w ith
Authority and Issuance
perm itted u n d e r this section may
m inim um capital requirem ents or
continue u n til th e OCC notifies the
otherw ise w as in a “troubled c o n d itio n ”
For the reasons set forth in th e joint
affected depository organizations
as defined u n d e r 12 CFR 5.51 at the
pream ble, the Board revises p art 212 of
otherw ise. T he OCC may require a
tim e service u n d e r that section w as
chapter II of title 12 of the Code of
national bank to term inate any interlock approved.
Federal R egulations to read as follows:
perm itted u n d e r this section if th e OCC
(c) D uration o f interlock. A n interlock
concludes, after giving th e affected
granted u n d er th is section m ay continue PART 212—MANAGEMENT OFFICIAL
persons th e o ppo rtun ity to respond, that for a p erio d of tw o years from th e date
INTERLOCKS
the determ inations u n d er paragraph
of approval. The OCC m ay extend this
Sec.
(a)(2) of th is section no longer m ay be
period for one additional tw o-year
212.1 A uthority, purpose, a n d scope.
m ade. A m anagem ent official m ay
period if the depository organization
212.2 Definitions.
continue serving the depository
applies for an extension at least 30 days
212.3 Prohibitions.
organization involved in the interlock
before the current exem ption expires
212.4 Interlocking relationships p e rm itte d
for a period of 15 m onths follow ing the
by statute.
an d satisfies one of the criteria specified
212.5 Regulatory S tandards exem ption.
date of the o rder to term inate the
in paragraph (a) of this section. The
212.6 M anagem ent C onsignm ent
interlock. T he OCC m ay shorten this
provisions set forth in paragraph (b) of
exem ption.
period u n d er appropriate
th is section also apply to applications
212.7 Change in circum stances.
circum stances.
for extensions.
212.8 Enforcem ent.
§ 26.6 Management Consignment
exemption.
§ 26.7
Change in circumstances.
(a) Term ination. A m anagem ent
(a) Criteria. T he OCC may perm it an
official shall term inate his or h e r service
interlock that otherw ise w ould be
or app ly for an exem ption to the
prohibited by the Interlocks A ct and
Interlocks Act if a change in
§ 26.3 if th e OCC, after review ing an
circum stances causes the service to
application subm itted by the depository becom e prohibited u n d er that Act. A
organization seeking an exem ption,
change in circum stances m ay include,
determ ines th at the interlock w ould:
b u t is not lim ited to, an increase in asset
(1) Im prove th e provision of credit to
size of an organization, a change in the
low- and m oderate-incom e areas;
delineation of th e RMSA or com m unity,
(2) Increase the com petitive position
th e establishm ent of an office, an
of a m inority- or w om en-ow ned
acquisition, a merger, a consolidation,
depository organization;
or any reorganization of th e ow nership
(3) Strengthen the m anagem ent of a
structure of a depository organization
depository institu tio n that has been
that causes a previously perm issible
chartered for less th a n tw o years at the
interlock to becom e prohibited.
tim e an application is filed u n d e r this
(b) Transition period. A m anagem ent
part; or
official described in paragraph (a) of this
(4) S trengthen the m anagem ent of a
section m ay continue to serve the
depository in stitu tio n that is in an
depository organization involved in the
unsafe or u n so u n d condition as
interlock for 15 m onths follow ing the
determ ined by th e OCC on a case-bydate of th e change in circum stances.
case basis.
’ T he OCC m ay shorten this period u n d er
(b) P resum ptions. The OCC applies
appropriate circum stances.
the follow ing presum ptions w hen
§ 26.8 Enforcement
review ing any application for a
Except as provided in this section, the
M anagem ent C onsignm ent exem ption:
(1) A p ropo sed m anagem ent official is O C C 'adm inisters and enforces the
capable of strengthening the
Interlocks A ct w ith respect to national
212.9 Effect o f Interlocks A ct o n C layton
Act.
Authority: 12 U.S.C. 3201-3208; 15 U.S.C.
19.
§ 212.1
Authority, purpose, and scope.
(a) A uthority. T his part is issued
u n d er the provisions of the D epository
Institution M anagem ent Interlocks Act
(Interlocks Act) (12 U.S.C. 3201 et seq.),
as am ended.
(b) Purpose. The purpose of the
Interlocks Act an d th is part is to foster
com petition by generally prohibiting a
m anagem ent official from serving tw o
nonaffiliated depository organizations
in situations w here the m anagem ent
interlock likely w ould have an
anticom petitive effect.
(c) Scope. T his part applies to
m anagem ent officials of state m em ber
banks, bank hold ing com panies, and
th eir affiliates.
§212.2
Definitions.
For purposes of this part, th e
follow ing definitions apply:
(a)
A ffiliate. (1) The term affiliate has
the m eaning given in section 202 of the
Interlocks A ct (12 U.S.C. 3201). For
purposes of th a t sectio n 202, shares held
Federal Register / Vol. 61, No. 150 / Friday, August 2, 1996 / Rules and Regulations
by an indiv idu al in c lu d e shares held by
m em bers of his or h er im m ediate family.
“Im m ediate fam ily” m eans spouse,
m other, father, child, grandchild, sister,
brother, or any of their spouses, w hether
or hot any of th e ir shares are held in
trust.
(2) For purposes of section 202(3)(B)
of the Interlocks A ct (12 U.S.C.
3201 (3){B)), an affiliate relationship
based on com m on ow nership does not
exist if th e Board determ ines, after
giving the affected persons the
opp ortunity to respond, that the
asserted affiliation w as established in
order to avoid th e prohibitions of the
Interlocks Act an d does not represent a
tru e com m onality of interest betw een
th e depository organizations. In making
this determ ination, th e Board considers,
am ong other things, w h eth er a person,
including m em bers of his or her
im m ediate family, w hose shares are
necessary to co nstitute the group ow ns
a nom inal percentage of the shares of
one of the organizations and the
percentage is substantially
disproportionate to th at p erso n’s
ow nership of shares in the other
organization.
(b) A n tico m p etitive effect m eans a
m onopoly or substantial lessening of
com petition.
(c) A rea m ed ia n in co m e means:
(1) The m edian fam ily incom e for the
m etropolitan statistical area (MSA), if a
depository organization is located in an
MSA; or
(2) T he statew ide nonm etropolitan
m edian family incom e, if a depository
organization is located outside an MSA.
(d) C o m m u n ity m eans a city, tow n, or
village, and contiguous and adjacent
cities, tow ns, or villages.
(e) Contiguous or adjacent cities,
tow ns, or villages m eans cities, tow ns,
or villages w hose borders touch each
other or w hose borders are w ithin 10
road m iles of each other at th eir closest
points. The property line of an office
located in an unincorporated city, tow n,
or village is the boundary line of that
city, tow n, or village for the purpose of
th is definition.
(f) Critical, as u sed in § 212.5, m eans
im portant to restoring or m aintaining a
depository organization’s safe and
sound operations.
(g) D epository h o ld in g co m p a n y
m eans a bank holding com pany or a
savings and loan holdin g com pany (as
m ore fully defined in section 202 of the
Interlocks Act (12 U.S.C. 3201)) having
its principal office located in the United
States.
(h) D epository institu tio n m eans a
com m ercial bank (including a private
bank), a savings bank, a tru st com pany,
a savings an d loan association, a
bu ildin g and loan association, a
hom estead association, a cooperative
bank, an in dustrial bank, or a credit
union, chartered u n d er the laws of the
U nited States and having a principal
office located in the U nited States.
A dditionally, a U nited States office,
including a branch or agency, of a
foreign com m ercial bank is a depository
institution.
(i)
D epository in stitu tio n affiliate
m eans a depository in stitution that is an
affiliate of a depository organization.
(j) D epository organization m eans a
depository in stitution or a depository
holding com pany.
(k) Low- a n d m oderate-incom e areas
m eans census tracts (or, if an area is not
in a census tract, block num bering areas
delineated by the U nited States Bureau
of th e Census) w here the m edian family
incom e is less than 100 percent of the
area m edian income.
(1) M anagem ent official. (1) T he term
m an a g em en t official means:
(1) A director;
(ii) A n advisory or honorary director
of a depository institu tio n w ith total
assets of $100 m illion or more;
(iii) A senior executive officer as th at
term is defined in 12 CFR 225.71(a);
(iv) A branch manager;
(v) A trustee of a depository
organization u n d er th e control of
trustees; and
(vi) A ny person w ho has a
representative or nom inee, as defined in
paragraph (p) of th is section, serving in
any of the capacities in this paragraph
(1 1).
)(
(2) The term m a n ag em ent official
does not include:
(i) A person w hose m anagem ent
functions relate exclusively to the
b usiness of retail m erchandising or
m anufacturing;
(ii) A person w hose m anagem ent
functions relate p rincipally to a foreign
com m ercial ban k ’s business outside the
U nited States; or
(iii) A person described in the
provisos of section 202(4) of the
Interlocks Act (referring to an officer of
a State-chartered savings bank,
cooperative bank, or trust com pany that
n eith er m akes real estate mortgage loans
n or accepts savings).
(m) O ffice m eans a p rincipal or
branch office of a depository institution
located in the U nited States. O ffice does
n o t include a representative office of a
foreign com m ercial bank, an electronic
term inal, a loan p roduction office, or
any office of a depository holding
com pany.
(n) Person m eans a natural person,
corporation, or other business entity.
(o) R elevant m etropolitan statistical
area (RM SA) m eans an MSA, a prim ary
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MSA, or a consolidated MSA th a t is not
com prised of designated Prim ary MSAs
to th e extent that these term s are
defined and applied by th e Office of
M anagem ent an d Budget.
(p) R epresentative or n o m in ee m eans
a natural person w ho serves as a
m anagem ent official and has an
obligation to act on behalf of another
person w ith respect to m anagem ent
responsibilities. The Board w ill find
that a person has an obligation to act on
behalf of another person only if the first
person has an agreem ent, express or
im plied, to act on behalf of the second
person w ith respect to m anagem ent
responsibilities. The Board will
determ ine, after giving the affected
persons an o pportunity to respond,
w heth er a person is a representative or
n om inee.
(q) T otal assets. (1) The term total
assets m eans assets m easured on a
consolidated basis and reported in the
m ost recent fiscal year-end C onsolidated
Report of C ondition an d Income.
(2) The term total assets does not
include:
(i) Assets of a diversified savings and
loan holding com pany as defined by
section 10(a)(1)(F) of the Home O w ners’
Loan Act (12 U.S.C. 1467a(a)(l)(F))
other th an th e assets of its depository
in stitution affiliate;
(ii) Assets of a bank holding com pany
that is exem pt from the prohibitions of
section 4 of the Bank H olding Com pany
A ct of 1956 p ursuant to an order issued
u n d er section 4(d) of th a t Act (12 U.S.C.
1843(d)) other th an th e assets of its
depository institu tio n affiliate; or
(iii) A ssets of offices of a foreign
com m ercial bank other than the assets
of its U nited States branch or agency.
(r) U nited States m eans th e U nited
States of America, any State or territory
of th e U nited States of America, the
D istrict of Columbia, P uerto Rico,
Guam, A m erican Samoa, an d the Virgin
Islands.
§212.3
Prohibitions.
(a) C om m unity. A m anagem ent
official of a depository organization may
n o t serve at the same tim e as a
m anagem ent official of an unaffiliated
depository organization if the
depository organizations in question (or
a depository institu tion affiliate thereof)
have offices in the same com m unity.
(b) R M SA. A m anagem ent official of a
depository organization may not serve at.
th e sam e tim e as a m anagem ent official
of an unaffiliated depository
organization if the depository
organizations in question (or a
depository institutio n affiliate thereof)
have offices in the sam e RMSA and each
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depository organization has total assets
of $20 m illion or more.
(c) M ajor assets. A m anagem ent
official of a depository organization
w ith total assets exceeding $1 billion (or
any affiliate thereof) m ay not serve at
th e same tim e as a m anagem ent official
of an unaffiliated depository
organization w ith total assets exceeding
$500 m illion (or any affiliate thereof),
regardless of the location of th e two
depository organizations.
§212.4 Interlocking relationships
permitted by statute.
The prohibitions of § 212.3 do not
apply in th e case of any one or m ore of
th e follow ing organizations or to a
subsidiary thereof:
(a) A depository organization that has
been placed form ally in liquidation, or
w hich is in the h an d s of a receiver,
conservator, or other official exercising
a sim ilar function;
(b) A corporation operating u n d er
section 25 or section 25A of th e Federal
Reserve A ct (12 U.S.C. 601 et seq. and
12 U.S.C. 611 et seq., respectively) (Edge
C orporations and A greem ent
Corporations);
(c) A credit u n io n being served by a
m anagem ent official of anoth er credit
union;
(d) A depository organization that
does not do b usiness w ith in the U nited
States except as an in c id en t to its
activities outside th e U nited States;
(e) A State-chartered savings and loan
guaranty corporation;
(f) A Federal H om e Loan Bank or any
other bank organized solely to serve
depository institu tion s (a ban kers’ bank)
or solely for the p urp ose of providing
securities clearing services an d services
related thereto for depository
institutions and securities com panies;
(g) A depository organization that is
closed or is in danger of closing as
determ ined by the appropriate Federal
depository in stitu tio n ’s regulatory
agency an d is acquired by another
depository organization. T his exem ption
lasts for five years, beginning on the
date the depository organization is
acquired; and
(h)(1) A diversified savings an d loan
holding com pany (as defined in section
10(a)(1)(F) of th e Home O w ners’ Loan
A ct (12 U.S.C. 1467a(a)(l)(F)) w ith
respect to the service of a director of
such com pany w ho also is a director of
an unaffiliated depository organization
if:
(i)
Both th e diversified savings and
loan holding com pany an d the
unaffiliated depository organization
notify their appropriate Federal
depository institution s regulatory
agency at least 60 days before th e d ual
service is proposed to begin; and
(ii) The appropriate regulatory agency
does not disapprove the dual service
before the en d of the 60-day period.
(2) The Board may disapprove a
notice of proposed service if it finds
that:
(i) The service cannot be stru ctured or
lim ited so as to preclude an
anticom petitive effect in financial
services in any part of the U nited States;
(ii) T he service w o u ld lead to
substantial conflicts of interest or unsafe
or u n so u n d practices; or
(iii) The notificant failed to furnish all
th e inform ation required by the Board.
(3) The Board m ay require th a t any
interlock perm itted u n d er this
paragraph (h) be term inated if a change
in circum stances occurs w ith respect to
one of th e interlocked depository
organizations th a t w o u ld have provided
a basis for disapproval of the interlock
during the notice period.
§ 212.5
Regulatory Standards exemption.
(a) Criteria. T he Board may perm it an
interlock th a t otherw ise w ould be
prohibited by th e Interlocks A ct and
§212.3 if:
(1) The board of directors of the
depository organization (or the
organizers of a depository organization
being formed) th a t seeks the exem ption
provides a resolution to th e Board
certifying that th e organization, after the
exercise of reasonable efforts, is unable
to locate any other candidate from the
com m unity or RMSA, as appropriate,
who:
(1) Possesses the level of expertise
required by the depository organization
an d w ho is not pro hib ited from service
by the Interlocks Act; an d
(ii) Is w illing to serve as a
m anagem ent official; and
(2) T he Board, after review ing an
application subm itted by the depository
organization seeking the exem ption,
determ ines that:
(i) The m anagem ent official is critical
to th e safe and so u nd operations of the
affected depository organization; and
(ii) Service by th e m anagem ent
official w ill not p rod uce an
anticom petitive effect w ith respect to
th e depository organization.
(b) P resum ptions. T he Board applies
th e follow ing p resum ption s w hen
review ing any application for a
Regulatory Standards exem ption:
(1) A n interlock w ill not have an
anticom petitive effect if it involves
depository organizations that, if merged,
w o u ld not cause th e post-m erger
H erfindahl-H irschm an Index (HHI) to
exceed 1800 an d w o u ld not cause the
HHI to increase by m ore th an 200
points. T his p resum ption does not
apply to depository organizations
subject to the Major A ssets prohibition
of § 212.3(c).
(2) A proposed m anagem ent official is
critical to th e safe an d so u nd operations
of a depository institu tio n if:
(i) T hat official is approved by the
Board to serve as a director or senior
executive officer of th a t in stitution
pu rsu an t to 12 CFR 225.71; and
(ii) The institu tio n h a d operated for
less th an tw o years, w as n o t in
com pliance w ith m in im u m capital
requirem ents, or otherw ise w as in a
“troubled co n d itio n ” as defined in 12
CFR 225.71 at the tim e the service u n d er
th a t section w as approved.
(c) D uration o f interlock. A n interlock
perm itted u n d er this section m ay
continue u n til th e Board notifies the
affected depository organizations
otherw ise. T he Board m ay require
term ination of any interlock perm itted
u n d er th is section if th e Board
concludes, after giving the affected
persons th e o p portunity to respond, that
th e d eterm in atio n s u n d e r paragraph
(a)(2) of this section n o longer m ay be
m ade. A m anagem ent official may
co ntinue serving th e depository
organization involved in th e interlock
for a period of 15 m onths follow ing the
date of th e order to term inate the
interlock. The Board m ay shorten this
period u n d er appropriate
circum stances.
§ 212.6 Management Consignment
exemption.
(a) Criteria. T he Board m ay perm it an
interlock that otherw ise w o u ld be
pro hib ited by th e Interlocks Act an d
§ 212.3 if the Board, after review ing an
application subm itted by the depository
organization seeking an exem ption,
determ ines th a t th e interlock w ould:
(1) Im prove th e p rovision of credit to
low- and m oderate-incom e areas;
(2) Increase th e com petitive position
of a m inority- or w om en-ow ned
depository organization;
(3) S trengthen the m anagem ent of a
depository institu tio n th a t has been
chartered for less th an tw o years at the
tim e an application is filed u n d er this
part; or
(4) S trengthen the m anagem ent of a
depository institu tio n that is in an
unsafe or u n so u n d co ndition as
determ ined by the Board on a case-bycase basis.
(b) P resum ptions. T he Board applies
th e follow ing p resum ptions in
review ing any application for a
M anagem ent C onsignm ent exem ption:
(1) A proposed m anagem ent official is
capable of strengthening th e
m anagem ent of a depository institution
Federal Register / Vol. 61, No. 150 / Friday, August 2, 1996 / Rules and Regulations
described in paragraph (a)(3) of this
interlocking relationship involving
section if that official is approved by the these entities to the A ttorney General of
Board to serve as a director or senior
the U nited States to enforce com pliance
executive officer of th at institution
w ith the Interlocks Act an d this part. If
pursuant to 12 CFR 225.71 and the
an affiliate of a state m em ber bank or a
in stitution h ad operated for less than
bank holding com pany is subject to the
tw o years at the tim e th e service w as
prim ary regulation of an other Federal
approved; and
depository organization supervisory
(2) A proposed m anagem ent official is agency, then the Board does not
capable of strengthening the
adm inister an d enforce the Interlocks
m anagem ent of a depository institution
Act w ith respect to that affiliate.
described in paragraph (a)(4) of this
§ 212.9 Effect of Interlocks Act on Clayton
section if th e official is approved by the
Act.
Board to serve as a director or senior
The Board regards the provisions of
executive officer of the institution
the first three paragraphs of section 8 of
pursuant to 12 CFR 225.71 and the
the Clayton Act (15 U.S.C. 19) to have
institution w as not in com pliance w ith
been su pplan ted by the revised and
m inim um capital requirem ents or
otherw ise w as in a “troubled co n d itio n ” m ore com prehensive prohibitions on
m anagem ent official interlocks betw een
as defined u n d e r 12 CFR 225.71 at the
depository organizations in the
tim e service w as approved.
(c)
Duration o f interlock. A n interlock Interlocks Act.
granted u n d er this section may continue
Dated: July 10, 1996.
for a period of tw o years from the date
W illiam W. W iles,
of approval. The Board m ay extend this
Secretary o f the Board.
period for one add itio n al tw o-year
Federal Deposit Insurance Corporation
period if the depository organization
applies for an extension at least 30 days
12 CFR Chapter III
before th e current exem ption expires
Authority and Issuance
and satisfies one of the criteria specified
in paragraph (a) of this section. The
For the reasons set forth in th e joint
provisions set forth in paragraph (b) of
pream ble, pu rsu an t to its authority
this section also apply to applications
u n d er section 209 of th e Depository
for extensions.
Institution M anagem ent Interlocks Act
(12 U.S.C. 3207), the Board of Directors
§212.7 Change in circumstances.
of the FDIC revises part 348 of chapter
(a) Term ination. A m anagem ent
III of title 12 of the Code of Federal
official shall term inate his or her service
Regulations to read as follows:
or apply for an exem ption to the
Interlocks Act if a change in
PART 348—MANAGEMENT OFFICIAL
circum stances causes the service to
INTERLOCKS
becom e prohibited u n d er th at Act. A
Sec.
change in circum stances m ay include,
bu t is not lim ited to, an increase in asset 348.1 A uthority, purpo se, a n d scope.
348.2 Definitions.
size of an organization, a change in the
delineation of th e RMSA or com m unity, 348.3 Prohibitions.
348.4 Interlocking relationships perm itted
the establishm ent of an office, an
by statute.
acquisition, a merger, a consolidation,
348.5 Regulatory S tand ards exem ption.
or any reorganization of the ow nership
348.6 M anagem ent C onsignm ent
structure of a depository organization
exem ption.
that causes a previously perm issible
348.7 Change in circum stances.
348.8 Enforcem ent.
interlock to becom e prohibited.
(b) Transition period. A m anagem ent
Authority: 12 U.S.C. 3207, 12 U.S.C.
official described in paragraph (a) of this 1823(k).
section m ay continue to serve the state
§348.1 Authority, purpose, and scope.
m em ber bank or bank holding com pany
(a) A uthority. T his part is issued
involved in the interlock for 15 m onths
u nd er the provisions of the D epository
following the date of th e change in
Institution M anagem ent Interlocks Act
circum stances. T he Board may shorten
(Interlocks Act) (12 U.S.C. 3201 et seq.),
this period u n d er appropriate
as am ended.
circum stances.
(b) Purpose. T he purpose of the
§ 212.8 Enforcement.
Interlocks Act an d this part is to foster
Except as provided in this section, the com petition by generally prohibiting a
Board adm inisters and enforces the
m anagem ent official from serving two
Interlocks Act w ith respect to state
nonaffiliated depository organizations
m em ber banks, bank holding
in situations w here th e m anagem ent
com panies, and affiliates of either, and
interlock likely w ou ld have an
may refer any case of a prohibited
anticom petitive effect.
40305
(c) Scope. T his part applies to
m anagem ent officials of insured
nonm em ber banks and th e ir affiliates.
§ 348.2
Definitions.
For purposes of this part, the
following definitions apply:
(a) A ffiliate. (1) The term affiliate has
th e m eaning given in section 202 o f the
Interlocks Act (12 U.S.C. 3201). For
purposes of section 202, shares held by
an individual include shares held by
m em bers of his or her im m ediate family.
“ Im m ediate fam ily” m eans spouse,
m other, father, child, grandchild, sister,
brother or any of th eir spouses, w hether
or not any of their shares are h eld in
trust.
(2) For purposes of section 202(3)(B)
of the Interlocks Act (12 U.S.C.
3201(3)(B)), an affiliate relationship
involving an insured nonm em ber bank
based on com m on ow nership does not
exist if th e FDIC determ ines, after giving
th e affected persons the op portunity to
respond, that the asserted affiliation was
established in order to avoid the
prohibitions of the Interlocks Act and
does not represent a true com m onality
of interest betw een the depository
organizations. In m aking this
determ ination, the FDIC considers,
am ong other things, w h eth er a person,
including m em bers of his or her
im m ediate family w hose shares are
necessary to constitute th e group, ow ns
a nom inal percentage of the shares of
one of th e organizations and the
percentage is substantially
disproportionate to th at p erso n ’s
ow nership of shares in th e other
organization.
(b) A n tico m p etitive effect m eans a
m onopoly or substantial lessening of
com petition.
(c) Area m ed ia n in co m e means:
(1) The m edian family incom e for the
m etropolitan statistical area (MSA), if a
depository organization is located in an
MSA; or
(2) T he statew ide nonm etropolitan
m edian family incom e, if a depository
organization is located outside an MSA.
(d) C o m m u n ity m eans a city, tow n, or
village, an d contiguous or adjacent
cities, tow ns, or villages.
(e) C ontiguous or adjacent cities,
tow ns, or villages m eans cities, tow ns,
or villages w hose borders touch each
other or w hose borders are w ithin 10
road m iles of each other at their closest
points. The property line of an office
located in an u nin corporated city, tow n,
or village is th e boundary line of that
city, tow n, or village for the purpose of
th is definition.
(f) Critical m eans im portant to
restoring or m aintaining a depository
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Federal Register / Vol. 61, No. 150 / Friday, August 2, 1996 / Rules and Regulations
organization’s safe an d sound
operations.
(g) D epository h o ld ing com pa n y
m eans a b ank holding com pany or a
savings an d loan holding com pany (as
m ore fully defined in section 202 of th e
Interlocks Act (12 U.S.C. 3201)) having
its prin cip al office located in the U nited
States.
(h) D epository in stitu tio n m eans a
com m ercial b ank (including a private
bank), a savings bank, a tru st com pany,
a savings and loan association, a
b uilding an d loan association, a
hom estead association, a cooperative
bank, an ind ustrial bank, or a credit
union, chartered u n d er the law s of the
U nited States an d having a principal
office located in the U nited States.
A dditionally, a U nited States office,
in cluding a branch or agency, of a
foreign com m ercial bank is a depository
institution.
(i) D epository in stitu tio n affiliate
m eans a depository institu tio n that is an
affiliate of a depository organization.
(j) D epository organization m eans a
depository institution or a depository
holding com pany.
(k) Low- a n d m oderate-incom e areas
m eans census tracts (or, if an area is not
in a census tract, block num bering areas
delineated by the U nited States Bureau
of th e Census) w here the m edian family
incom e is less th an 100 percent of the
area m edian income.
(1) M anagem ent official. (1) The term
m a n ag em ent official m eans:
(1) A director;
(ii) An advisory or honorary director
of a depository institutio n w ith total
assets of $100 m illion or more;
(iii) A senior executive officer as that
term is defined in 12 CFR 303.14(a)(3);
(iv) A b ranch manager;
(v) A trustee of a depository
organization u n d er the control of
trustees; and
(vi) A ny person w ho has a
representative or nom inee serving in
any of the capacities in th is paragraph
(l)(i).
(2) The term m a n a g em en t official
does not include:
(i) A person w hose m anagem ent
functions relate.exclusively to the
business of retail m erchandising or
m anufacturing;
(ii) A person w hose m anagem ent
functions relate p rincipally to the
b usiness o utside the U nited States of a
foreign com m ercial bank; or
(iii) A person described in the
provisos of section 202(4) of the
Interlocks Act (12 U.S.C. 3201(4))
(referring to an officer of a Statechartered savings bank, cooperative
bank, or tru st com pany th a t neither
m akes real estate mortgage loans nor
accepts savings).
(m) O ffice m eans a prin cip al or
branch office of a depository institution
located in the U nited States. O ffice does
not in c lu d e a representative office of a
foreign com m ercial bank, an electronic
term inal, or a loan production office.
(n) Person m eans a natural person,
corporation, or other business entity.
(0) R elevant m etropolitan statistical
area (RM SA )’m eans an MSA, a prim ary
MSA, or a consolidated MSA th a t is not
com prised of designated Prim ary MSAs
to the extent that these term s are
defined an d applied by the Office of
M anagem ent and Budget.
(p) R epresentative or n o m inee m eans
a natural person w ho serves as a
m anagem ent official and has an
obligation to act on beh alf of another
person w ith respect to m anagem ent
responsibilities. The FDIC w ill find that
a person has an obligation to act on
behalf of an other person only if th e first
person has an agreem ent, express or
im plied, to act on behalf of th e second
person w ith respect to m anagem ent
responsibilities. T he FDIC will
determ ine, after giving the affected
persons an o p portunity to respond,
w hether a person is a representative or
n om inee.
(q) Total assets. (1) T he term total
a ssets inclu des assets m easured on a
consolidated basis an d reported in the
m ost recent fiscal year-end Consolidated
Report of C ondition an d Income.
(2) The term total assets does not
include:
(1) A ssets of a diversified savings and
loan holding com pany as defined by
section 10(a)(1)(F) of th e Home O w ners’
Loan Act (12 U.S.C. 1467a(a)(l)(F))
other th an the assets of its depository
in stitu tio n affiliate;
(ii) A ssets of a bank ho lding com pany
th at are exem pt from the prohibitions of
section 4 of the Bank H olding Com pany
Act of 1956 p u rsu an t to an order issued
u n d er section 4(d) of th a t Act (12 U.S.C.
1843(d)) other th a n the assets of its
depository institution affiliate; or
(iii) Assets of offices of a foreign
com m ercial bank other th an the assets
of its U nited States bran ch or agency.
(r) U nited States m eans th e U nited
States of A m erica, any State or territory
of th e U nited States of A m erica, the
D istrict of Columbia, P uerto Rico,
G uam , A m erican Samoa, an d th e Virgin
Islands.
§ 348.3
Prohibitions.
(a)
C om m unity. A m anagem ent
official of a depository organization m ay
n o t serve at the sam e tim e as a
m anagem ent official of an unaffiliated
depository organization if th e
depository organizations in question (or
a depository in stitu tio n affiliate thereof)
have offices in the same com m unity.
(b) R M SA . A m anagem ent official of a
depository organization may not serve at
th e sam e tim e as a m anagem ent official
of an unaffiliated depository
organization if the depository
organizations in question (or a
depository in stitu tio n affiliate thereof)
have offices in th e same RMSA an d each
depository organization has total assets
of $20 m illion or more.
(c) M ajor assets. A m anagem ent
official of a depository organization
w ith total assets exceeding $1 billion (or
any affiliate thereof) m ay not serve at
th e sam e tim e as a m anagem ent official
of an unaffiliated depository
organization w'ith total assets exceeding
$500 m illion (or any affiliate thereof),
regardless of th e location of the tw o
depository organizations.
§ 348.4 Interlocking relationships
permitted by statute.
The prohibitions of § 348.3 do not
apply in th e case of any one or more of
th e following organizations or to a
subsidiary thereof:
(a) A depository organization that has
been p laced form ally in liquidation, or
w hich is in th e h an d s of a receiver,
conservator, or other official exercising
a sim ilar function;
(b) A corporation operating u n d er
section 25 or section 25A of the Federal
Reserve Act (12 U.S.C. 601 et seq. and
12 U.S.C. 611 et seq., respectively) (Edge
C orporations an d A greem ent
Corporations);
(c) A cred it u n io n being served by a
m anagem ent official of anoth er credit
union;
(d) A depository organization that
does not do business w ith in the U nited
States except as an in cid en t to its
activities outside the U nited States;
(e) A State-chartered savings and loan
guaranty corporation;
(f) A Federal Home Loan bank or any
other bank organized solely to serve
depository in stitutio ns (a b ankers’ bank)
or solely for the p urpose of providing
securities clearing services an d services
related thereto for depository
in stitutions an d securities com panies;
(g) A depository organization that is
closed Or is in danger of closing as
determ in ed by the appropriate Federal
depository institutions regulatory
agency an d is acquired by another
depository organization. T his exem ption
lasts for five years, beginning on the
date th e depository organization is
acquired;
(h) A savings association w hose
acquisition has been authorized on an
em ergency basis in accordance w ith
section 13(k) of the Federal Deposit
Federal Register / Vol. 61, No. 150 / Friday, August 2, 1996 / Rules and Regulations
Insurance Act (12 U.S.C. 1823(k)) w ith
resulting dual service by a m anagem ent
official that w ould otherw ise be
prohibited u n d er the Interlocks Act
w hich may continue for u p to 10 years
from the date of the acquisition
provided that the FDIC has given its
approval for the continu ation of such
service; and
(i)(l) A diversified savings and loan
holding com pany (as defined in section
1 0 (a)(1 )(F) of the H om e O w ners’ Loan
Act (12 U.S.C. 1467a(a)(l)(F)) w ith
respect to the service of a director of
such com pany w ho is also a director of
an unaffiliated depository organization
if;
(1) Both the diversified savings and
loan holding com pany an d the
unaffiliated depository organization
notify their appropriate Federal
depository institutio ns regulatory
agency at least 60 days before the du al
service is proposed to begin; and
(ii) The appropriate regulatory agency
does not disapprove the d u al service
before the end of the 60-day period.
(2) The FDIC m ay disapprove a notice
of proposed service if it finds that;
(i) The service cannot be structured or
lim ited so as to preclude an
anticom petitive effect in financial
services in any part of th e U nited States;
(ii) The service w o u ld lead to
substantial conflicts of interest or unsafe
or unso u n d practices; or
(iii) The notificant failed to furnish all
the inform ation required by the FDIC.
(3) T he FDIC m ay require that any
interlock perm itted u n d e r this
paragraph (h) be term inated if a change
in circum stances occurs w ith respect to
one of the interlocked depository
organizations th at w o u ld have provided
a basis for disapproval of the interlock
during the notice period.
organization seeking th e exem ption,
determ ines that:
(i) The m anagem ent official is critical
to the safe and sound operations of the
affected depository organization; and
(ii) Service by the m anagem ent
official w ill not produce an
anticom petitive effect w ith respect to
the depository organization.
(b) P resum ptions. The FDIC applies
the following presum ptions w hen
review ing any applicatio n for a
Regulatory S tandards exem ption:
(1) An interlock w ill not have an
anticom petitive effect if it involves
depository organizations that, if merged,
w ould not cause th e post-merger
H erfindahl-H irschm an Index (HHI) to
exceed 1800 and w ould n o t cause the
HHI to increase by m ore th an 200
points. This presum ption shall not
apply to depository organizations
subject to the M ajor Assets prohibition
of § 348.3(c).
(2) A proposed m anagem ent official is
critical to the safe and sound operations
of a depository institution if:
(i) That official is approved by the
FDIC to serve as a director or a senior
executive officer of th at institu tion
pu rsuant to 12 CFR 303.14; and
(ii) The institutio n h ad operated for
less than tw o years, w as n o t in
com pliance w ith m in im um capital
requirem ents, or otherw ise w as in a
“troubled co n d itio n ” as defined by 12
CFR 303.14(a)(4) at the tim e the service
u n d er that section w as approved.
(c) Duration o f interlock. An interlock
perm itted u n d er this section m ay
continue until the FDIC notifies the
affected depository organizations
otherw ise. The FDIC m ay require
term ination of any interlock perm itted
u n d e r this section if the FDIC
concludes, after giving the affected
§ 348.5 Regulatory Standards exemption.
persons the opportunity to respond, that
(a) Criteria. The FDIC m ay perm it an the determ inations u n d e r paragraph
interlock that otherw ise w o uld be
(a)(2) of this section no longer m ay be
prohibited by the Interlocks Act and
m ade. A m anagem ent official may
§ 348.3 if:
continue serving the depository
(1) The board of directors of the
organization involved in the interlock
depository organization (or the
for a period of 15 m onths follow ing the
organizers of a depository organization
date of the order to term inate the
being formed) that seeks the exem ption
interlock. The FDIC m ay shorten this
provides a resolution to the FDIC
period u n d er appropriate
certifying that the organization, after the circum stances.
exercise of reasonable efforts, is unable
§348.6 Management Consignment
to locate any other can did ate from the
exemption.
com m unity or RMSA, as appropriate,
(a) Criteria. The FDIC m ay perm it an
who:
interlock th at otherw ise w o u ld be
(1) Possesses the level of expertise
prohibited by th e Interlocks A ct and
required by the depository organization
§ 348.3 if the FDIC, after review ing an
and w ho is not pro hib ited from service
application subm itted by th e depository
by the Interlocks Act; an d
(ii) Is w illing to serve as a
organization seeking an exem ption,
m anagem ent official; and
determ ines that the interlock w ould:
(2) The FDIC, after review ing an
(1) Improve the provision of credit to
application subm itted by th e depository low- an d m oderate-incom e areas;
40307
(2) Increase the com petitive position
of a m inority- or w om en-ow ned
depository organization;
(3) Strengthen the m anagem ent of a
depository institution th a t has been
chartered for less th an tw o years at the
tim e an application is filed u n d er this
part; or
(4) Strengthen the m anagem ent of a
depository institution th a t is in an
unsafe or u n so u n d cond ition as
determ ined by the FDIC on a case-bycase basis.
(b) P resum ptions. The FDIC applies
th e following presum ption s w hen
review ing any application for a
M anagem ent Consignm ent exem ption:
(1) A proposed m anagem ent official is
capable of strengthening the
m anagem ent of a depository institution
described in paragraph (a)(3) of this
section if th at official is approv ed by the
FDIC to serve as a director or a senior
executive officer of th a t in stitution
pursu an t to 12 CFR 303.14 and the
institution had operated for less than
tw o years at the tim e th e service under
12 CFR 303.14 w as approved; and
(2) A proposed m anagem ent official is
capable of strengthening the
m anagem ent of a depository institution
described in paragraph (a)(4) of this
section if that official is approved by the
FDIC to serve as a director or a senior
executive officer of th a t institution
p ursu ant to 12 CFR 303.14 and the
institutio n w as not in com pliance w ith
m inim um capital requirem ents or
otherw ise w as in a “troubled con d itio n ”
as defined u n d er 12 CFR 303.14 at the
tim e service u n d er that section w as
approved.
(c) Duration o f interlock. An interlock
granted u n d er this section m ay continue
for a period of tw o years from th e date
of approval. The FDIC may extend this
period for one ad d itional tw o-year
period if the depository organization
applies for an extension at least 30 days
before the current exem ption expires
an d satisfies one of th e criteria specified
in paragraph (a) of th is section. The
provisions set forth in paragraph (b) of
th is section also ap ply to applications
for extensions.
§ 348.7
Change in circumstances.
(a) Term ination. A m anagem ent
official shall term inate h is or her service
or apply for an exem ption to the
Interlocks Act if a change in
circum stances causes the service to
becom e prohibited u n d e r that Act. A
change in circum stances m ay include,
b u t is not lim ited to, an increase in asset
size of an organization, a change in the
delineation of the RMSA or com m unity,
the establishm ent of an office, an
acquisition, a merger, a consolidation,
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Federal Register / Vol. 61, No. 150 / Friday, August 2, 1996 / Rules and Regulations
or any reorganization of th e ow nership
stru ctu re of a depository organization
th a t causes a previously perm issible
interlock to becom e prohibited.
(b) Transition period. A m anagem ent
official described in paragraph (a) of this
section m ay con tin ue to serve the
in su red nonm em ber bank involved in
th e interlock for 15 m onths following
th e date of the change in circum stances.
T he FDIC m ay shorten th is period u nder
approp riate circum stances.
§ 348.8
Enforcement.
Except as pro vid ed in this section, the
FDIC adm inisters and enforces the
Interlocks A ct w ith respect to insured
nonm em ber banks and th eir affiliates
an d m ay refer any case of a prohibited
interlocking relationship involving
th ese entities to the A ttorney General of
th e U nited States to enforce com pliance
w ith the Interlocks Act and this part. If
an affiliate of an in su red nonm em ber
ban k is subject to th e prim ary regulation
of an o th er federal depository
organization supervisory agency, then
th e FDIC does not adm inister and
enforce the Interlocks Act w ith respect
to th a t affiliate.
D ated at W ashington, DC, th is 16th day of
July, 1996.
By o rd er of the Board of Directors.
F ederal D eposit Insurance Corporation
Robert E. Feldm an,
Deputy Executive Secretary.
Office o f Thrift Supervision
12 CFR Chapter V
Authority and Issuance
F or th e reasons set out in the joint
pream ble, the OTS revises part 563f of
ch ap ter V of title 12 of th e Code of
Federal Regulations to read as follows:
PART 563f— MANAGEMENT OFFICIAL
INTERLOCKS
Sec.
563f.l A uthority, purpose, and scope.
563f.2 Definitions.
563f.3 Prohibitions.
563f.4 Interlocking re lationships perm itted
by statute.
563f.5 Regulatory S tandards exem ption.
563f.6 M anagem ent C onsignm ent
exem ption.
563f.7 Change in circum stances.
563f.8 Enforcem ent.
563f.9 Interlocking relatio n sh ip s perm itted
p u rsu a n t to F ederal Deposit Insurance
Act.
Authority: 12 U.S.C. 3201-3208.
§ 563f.1
Authority, purpose, and scope.
(a) A uthority. T his part is issued
u n d e r the provisions of th e Depository
Institution M anagem ent Interlocks Act
(Interlocks Act) (12 U.S.C. 3201 et seq.),
as am ended.
other or w hose borders are w ith in 10
road m iles of each other at th e ir closest
points. The property line of an office
located in an u n incorp orated city, tow n,
or village is the boundary line of that
city, tow n, or village for th e purpose of
th is definition.
(f) Critical m eans im portant to
restoring or m aintaining a depository
organization’s safe and so un d
operations.
(g) D epository holding co m p a ny
m eans a bank hold ing com pany or a
§563f.2 Definitions.
savings and loan holding com pany (as
For purposes of this part, the
m ore fully defined in section 202 of the
follow ing definitions apply:
Interlocks A ct (12 U.S.C. 3201)) having
(a) A ffiliate. (1) The term affiliate has
its prin cip al office located in the U nited
th e m eaning given in section 202 of the
States.
Interlocks Act (12 U.S.C. 3201). For
(h) D epository in stitu tio n m eans a
purposes of that section 202, shares held com m ercial bank (including a private
by an ind ividual includ e shares held by
bank), a savings bank, a tru st com pany,
m em bers of his or her im m ediate family. a savings an d loan association, a
“ Im m ediate fam ily” m eans spouse,
bu ild in g an d loan association, a
m other, father, child, grandchild, sister,
hom estead association, a cooperative
brother, or any of their spouses, w hether bank, an ind ustrial bank, or a credit
or n o t any of th e ir shares are held in
u n io n , chartered u n d er the laws of the
trust.
U nited States an d having a p rincipal
(2) For purposes of section 202(3)(B) office located in the U nited States.
of th e Interlocks Act (12 U.S.C.
A dditionally, a U nited States office,
3201(3)(B)), an affiliate relationship
including a bran ch or agency, of a
involving a savings association or
foreign com m ercial bank is a depository
savings an d loan holding com pany
institution.
based on com m on o w nership does not
(i) D epository in stitu tio n affiliate
exist if the OTS determ ines, after giving
m eans a depository in stitution th at is an
th e affected persons the opportunity to
affiliate of a depository organization.
respond, that the asserted affiliation w as
(j) D epository organization m eans a
established in order to avoid the
depository institu tio n or a depository
pro hib ition s of the Interlocks Act and
ho lding com pany.
does not represent a true com m onality
(k) Low- a n d m oderate-incom e areas
of interest betw een th e depository
m eans census tracts (or, if an area is not
organizations. In m aking this
in a census tract, block num bering areas
determ ination, th e OTS considers,
delineated by the U nited States Bureau
am ong other things, w h ether a person,
of the Census) w here the m edian family
including m em bers of h is or her
incom e is less th a n 100 percent of the
im m ediate family, w hose shares are
area m ed ian income.
(1) M anagem ent official. (1) The term
necessary to constitute the group ow ns
m a n ag em ent official m eans:
a no m inal percentage of the shares of
(1) A director;
one of th e organizations an d the
(ii) A n advisory or honorary director
percentage is substantially
of a depository institu tio n w ith total
disproportionate to th a t p erson’s
assets of $100 m illion or more;
ow n ership of shares in th e other
(iii) A senior executive officer as that
organization.
term is defined in 12 CFR 574.9(a)(2);
(b) A n tico m p etitive effect m eans a
(iv) A branch manager;
m onopoly or substantial lessening of
(v) A trustee of a depository
com petition.
organization u n d e r the control of
(c) A rea m ed ia n inco m e means:
trustees; and
(1) The m edian family incom e for the
(vi) A ny person w ho h as a
m etropolitan statistical area (MSA), if a
representative or nom inee serving in
depository organization is located in an
any of th e capacities in th is paragraph
MSA; or
(2) T he statew ide nonm etropolitan
(Ml).T he term m a n ag em ent official,
„
(2)
m ed ian fam ily incom e, if a depository
does not include:
organization is located outside an MSA.
(i) A person w hose m anagem ent
(d) C o m m u n ity m eans a city, tow n, or
functions relate exclusively to the
village, a n d contiguous or adjacent
bu siness of retail m erchandising or
cities, tow ns, or villages.
m anufacturing;
(e) C ontiguous or adjacent cities,
(ii) A p erson w hose m anagem ent
tow ns, or villages m eans cities, tow ns,
functions relate principally to the
or villages w hose borders touch each
(b) Purpose. T he purp ose of the
Interlocks Act an d th is part is to foster
com petition by generally prohibiting a
m anagem ent official from serving tw o
nonaffiliated depository organizations
in situations w here th e m anagem ent
interlock likely w ould have an
anticom petitive effect.
(c) Scope. T his part applies to
m anagem ent officials of savings
associations, savings and loan holding
com panies, an d affiliates of either.
Federal Register / Vol. 61, No. 150 / Friday, August 2, 1996 / Rules and Regulations
business outside the U nited States of a
foreign com m ercial bank; or
(ini A person described in the
provisos of section 202(4} of the
Interlocks A ct (12 U.S.C. 3201(4))
(referring to an officer of a Statechartered savings bank, cooperative
bank, or trust com pany that neither
m akes real estate mortgage loans nor
accepts savings).
(m) O ffice m eans a prin cip al or
branch office of a depository institution
located in the U nited States. O ffice does
not includ e a representative office of a
foreign com m ercial bank, an electronic
term inal, or a loan p rodu ction office.
(n) Person m eans a natural person,
corporation, or other business entity.
(0) R elevant m etropolitan statistical
area (RM SA) m eans an MSA, a prim ary
MSA, or a consolidated MSA that is not
com prised of designated Prim ary MSAs
to the extent th a t these term s are
defined an d ap plied by th e Office of
M anagem ent and Budget.
(p) R epresentative or n o m inee m eans
a natural person w ho serves as a
m anagem ent official an d has an
obligation to act on behalf o f another
person w ith respect to m anagem ent
responsibilities. The OTS w ill find that
a person has an obligation to act on
behalf of another person only if the first
person has an agreem ent, express or
im plied, to act on behalf of th e second
person w ith respect to m anagem ent
responsibilities. The OTS w ill
determ ine, after giving the affected
persons an o ppo rtu nity to respond,
w hether a person is a representative or
nom inee.
(q) Savings association means:
(1) A ny Federal savings association
(as defined in section 3(b)(2) of the
Federal Deposit Insurance Act (12
U.S.C. 1813(b)(2));
(2) A ny state savings association (as
defined in section 3(b)(3) of the Federal
Deposit Insurance Act (12 U.S.C.
1813(b)(3)) the deposits of w hich are
insured by the Federal Deposit
Insurance Corporation; and
(3) A ny corporation (other th an a bank
as defined in section 3(a)(1) of the
Federal Deposit Insurance Act (12
U.S.C. 1813(a)(1)) th e deposits of w hich
are insured by the Federal Deposit
Insurance Corporation, th a t the Board of
Directors of the Federal Deposit
Insurance Corporation an d the Director
of the Office of T hrift Supervision
jointly determ ine to be operating in
substantially the sam e m an n er as a
savings association.
(r) Total assets. (1) T he term total
assets m eans assets m easured on a
consolidated basis an d reported in the
m ost recent fiscal year-end C onsolidated
Report of Condition an d Income.
(2) The term total assets does not
include:
(i) Assets of a diversified savings and
loan holding com pany as defined by
section 10(a)(1)(F) of the H om e O w ners’
Loan Act (12 U.S.C. 1467a(a)(l)(F))
other th an the assets of its depository
in stitution affiliate;
(ii) Assets of a bank hold ing com pany
that is exem pt from the prohibitions of
section 4 of the Bank H olding Com pany
Act of 1956 p ursuant to an order issued
u n d er section 4(d) of th a t A ct (12 U.S.C.
1843(d)) other than the assets of its
depository institu tio n affiliate; or
(iii) Assets of offices of a foreign
com m ercial bank other th a n th e assets
of its U nited States branch or agency.
(s) U nited States m eans th e U nited
States of America, any State or territory
of the U nited States of A m erica, the
District of Columbia, P uerto Rico,
Guam, A m erican Samoa, an d the Virgin
Islands.
40309
12 U.S.C. 611 et seq., respectively) (Edge
Corporations an d A greem ent
Corporations);
(c) A credit un ion being served by a
m anagem ent official of an other credit
union;
(d) A depository organization that
does not do business w ith in th e U nited
States except as an in cid en t to its
activities outside the U nited States;
(e) A State-chartered savings and loan
guaranty corporation;
(f) A Federal Home Loan Bank or any
other bank organized solely to serve
depository institutions (a b ankers’ bank)
or solely for the purpose of providing
securities clearing services an d services
related thereto for,depository
institution s an d securities com panies;
(g) A depository organization that is
closed or is in danger of closing as
determ ined by the appro priate Federal
depository institutions regulatory
agency and is acquired by another
depository organization. T his exem ption
§ 563f.3 Prohibitions.
lasts for five years, beginning on the
(a) C om m unity. A m anagem ent
date the depository organization is
official of a depository organization may acquired;
not serve at the same tim e as a
(h)(1) A diversified savings and loan
m anagem ent official of an unaffiliated
holding com pany (as defined in section
depository organization if th e
10(a)(1)(F) of the Home O w ners’ Loan
depository organizations in question (or Act (12 U.S.C. 1467a(a)(l)(F)) w ith
a depository institu tion affiliate thereof) respect to the service of a director of
have offices in the sam e com m unity.
such com pany w ho also is a director of
(b) RM SA. A m anagem ent official of a an unaffiliated depository organization
depository organization m ay not serve at if:
(i)
Both the diversified savings and
th e same tim e as a m anagem ent official
loan holding com pany an d the
of an unaffiliated depository
unaffiliated depository organization
organization if the depository
notify their appropriate Federal
organizations in question (or a
depository institutio ns regulatory
depository institu tio n affiliate thereof)
have offices in the sam e RMSA and each agency at least 60 days before the dual
service is proposed to begin; and
depository organization has total assets
(ii) The appropriate regulatory ageijcy
of $20 m illion or more.
does not disapprove the dual service
(c) Major assets. A m anagem ent
before the end of the 60-day period.
official of a depository organization
(2) The OTS may disapprove a notice
w ith total assets exceeding $1 billion (or
of proposed service if it finds that:
any affiliate thereof) m ay not serve at
(i) T ne service cann ot be structured or
th e same tim e as a m anagem ent official
lim ited so as to preclude an
of an unaffiliated depository
anticom petitive effect in financial
organization w ith total assets exceeding
services in any part of th e U nited States;
$500 m illion (or any affiliate thereof),
(ii) The service w ould lead to
regardless of the location o f th e two
substantial conflicts of interest or unsafe
depository organizations.
or u n so u n d practices; or
§563f.4 Interlocking relationships
(iii) The notificant failed to furnish all
permitted by statute.
th e inform ation required by the OTS.
T he prohibitions of § 563f.3 do not
(3) The OTS may require th at any
interlock perm itted u n d e r this
apply in the case of any one or m ore of
th e following organizations or to a
paragraph (h) be term inated if a change
in circum stances occurs w ith respect to
subsidiary thereof:
(a) A depository organization that has
one of the interlocked depository
been placed formally in liquidation, or
organizations that w ould have provided
w hich is in the hands of a receiver,
a basis for disapproval of the interlock
conservator, or other official exercising
during the notice period; and
(i)
A ny savings association or any
a sim ilar function;
(b) A corporation operating u n d er
savings and loan holding com pany (as
section 25 or section 25A of the Federal
defined in section 10(a)(1)(D) of the
Reserve Act (12 U.S.C. 601 et seq. and
Home O w ners’ Loan Act) w hich has
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issu ed stock in co nnection w ith a
qualified stock issuance p u rsu an t to
section 10(q) of such Act, except that
th is paragraph (i) shall ap p ly only w ith
regard to service by a single
m anagem ent official of such savings
association or holding com pany, or any
sub sidiary of such savings association or
ho lding com pany, by a single
m anagem ent official of th e savings and
loan h olding com pany w h ich purchased
th e stock issued in connection w ith
such qualified stock issuance, an d shall
apply only w h en the OTS has
determ in ed th a t such service is
co nsistent w ith th e purposes of the
Interlocks A ct an d th e H om e O w ners’
Loan Act.
§ 5631.5
Regulatory Standards exemption.
(a) Criteria. The OTS m ay perm it an
interlock that otherw ise w o u ld be
pro hib ited by th e Interlocks A ct and
§ 563f.3 if:
(1) T h e board of directors of the
depository organization (or th e
organizers of a depository organization
being formed) that seeks the exem ption
provides a resolution to th e OTS
certifying that the organization, after the
exercise of reasonable efforts, is unable
to locate any other candidate from the
com m unity or RMSA, as appropriate,
who:
(1) Possesses the level of expertise
required by the depository organization
an d w h o is not prohibited from service
by th e Interlocks Act; and
(ii) Is w illing to serve as a
m anagem ent official; and
(2) T he OTS, after review ing an
applicatio n subm itted by th e depository
organization seeking th e exem ption,
determ ines that:
(i) T he m anagem ent official is critical
to the safe an d sound operations of the
affected depository organization; and
(ii) Service by the m anagem ent
official w ill not produce an
anticom petitive effect w ith respect to
th e depository organization.
(b) P resum ptions. T he OTS applies
th e follow ing p resum ptions w hen
review ing any application for a
Regulatory S tandards exem ption:
(1) A n interlock w ill not have an
anticom petitive effect if it involves
depository organizations that, if merged,
w o u ld n o t cause the post-m erger
H erfindahl-H irschm an Index (HHI) to
exceed 1800 an d w ould not cause the
HHI to increase by m ore th a n 200
points. T his presum ption shall not
apply to depository organizations
subject to the M ajor Assets prohibition
of § 563f.3(c).
(2) A proposed m anagem ent official is
critical to th e safe and so un d operations
of a depository institu tio n if:
(i) T hat official is approved by the
OTS to serve as a director or senior
executive officer of that institu tio n
p u rsu an t to 12 CFR 574.9; an d
(ii) T he institu tio n h ad operated for
less th a n tw o years, w as n o t in
com pliance w ith m inim um capital
requirem ents, or otherw ise w as in a
“troubled co n d itio n ” as defined in 12
CFR 574.9 at the tim e th e service u n d er
th a t section w as approved.
(c) D uration o f interlock. A n interlock
perm itted u n d er this section m ay
co n tin u e u n til th e OTS notifies the
affected depository organizations
otherw ise. The OTS m ay require
term ination of any interlock perm itted
u n d e r th is section if th e OTS concludes,
after giving the affected persons the
o p p o rtun ity to respond, th a t the
determ inations u n d er paragraph (a)(2) of
th is section no longer m ay be m ade. A
m anagem ent official m ay continue
serving th e depository organization
involved in the interlock for a period of
15 m o n th s follow ing th e date of the
order to term inate the interlock, unless
th e order term inating th e interlock
provides otherw ise.
§ 563f.6 Management Consignment
exemption.
(2) A proposed m anagem ent official is
capable of strengthening th e
m anagem ent of a depository institution
described in paragraph (a)(4) of this
section if that official is ap proved by the
OTS to serve as a director or senior
executive officer of th a t in stitution
p u rsu an t to 12 CFR 574.9 an d the
institu tio n w as not in com pliance w ith
m in im u m capital requirem ents or
otherw ise w as in a “troubled co n d itio n ”
as defined u n d e r 12 CFR 574.9 at th e
tim e service u n d e r th a t section w as
approved.
(c) D uration o f interlock. A n interlock
granted u n d er th is section m ay continue
for a p erio d of tw o years from th e date
of approval. T he OTS m ay extend this
period for one ad d itional tw o-year
period if the depository organization
applies for an extension at least 30 days
before th e current ex em ption expires
and satisfies one of th e criteria specified
in paragraph (a) of this section. The
provision s set forth i n paragraph (b) of
this section also apply to application s
for extensions.
§ 563f.7
Change in circumstances.
(a) Term ination. A m anagem ent
official shall term inate h is or h er service
or apply for an exem ption to the
Interlocks Act if a change in
circum stances causes th e service to
becom e prohibited u n d e r th a t Act. A
change in circum stances m ay include,
b u t is n o t lim ited to, an increase in asset
size of an organization, a change in the
delineatio n of the RMSA or com m unity,
the establishm ent of an office, an
acquisition, a merger, a consolidation,
or any reorganization of th e ow nership
structure of a depository organization
th a t causes a previously perm issible
interlock to becom e prohibited.
(b) Transition period. A m anagem ent
official described in paragraph (a) of this
section m ay co ntinue to serve the
depository organization involved in the
interlock for 15 m onths follow ing the
date of the change in circum stances.
The OTS m ay shorten th is p erio d u n d er
appropriate circum stances.
(a) Criteria. The OTS m ay perm it an
interlock that otherw ise w o u ld be
pro hibited by the Interlocks A ct and
§ 563f.3 if the OTS, after review ing an
application subm itted by th e depository
organization seeking an exem ption,
determ ines that the interlock w ould:
(1) Im prove th e provision of credit to
low- an d m oderate-incom e areas;
(2) Increase th e com petitive position
of a m inority- or w om en-ow ned
d epository organization;
(3) Strengthen the m anagem ent of a
depository institution that has been
chartered for less th an three years at the
tim e an application is filed u n d e r this
part; or
(4) Strengthen the m anagem ent of a
depository institu tio n th a t is in an
unsafe or u n so u n d cond ition as
determ in ed by th e OTS on a case-bycase basis.
§ 563T.8 Enforcement.
(b) P resum ptions. The OTS applies
Except as provided in this section, the
th e follow ing presu m p tio ns w hen
OTS ad m inisters an d enforces the
review ing any app lication for a
Interlocks A ct w ith respect to savings
M anagem ent C onsignm ent exem ption:
(1) A p roposed m anagem ent official is associations, savings an d loan holding
com panies, and affiliates of either, and
capable of strengthening the
may refer any case of a prohibited
m anagem ent of a depository institution
interlocking relationship involving
described in paragraph (a)(3) of this
section if that official is approved by the these entities to the A ttorney General of
th e U nited States to enforce com pliance
OTS to serve as a director or senior
w ith the Interlocks A ct an d th is part. If
executive officer of th a t in stitution
an affiliate of a savings association or
p u rsu an t to 12 CFR 574.9 a n d the
savings an d loan holding com pany is
institu tio n h ad operated for less than
subject to the prim ary regulation of
tw o years at th e tim e the service u nder
anoth er Federal depository organization
12 CFR 574.9 w as approved; an d
Federal Register 7 Vol. 61, No. 150 / Friday, August 2, 1996 / Rules and Regulations
supervisory agency, th e n th e OTS does
not adm inister an d enforce the
Interlocks Act w ith respect to that
affiliate.
§ 563f.9 Interlocking relationships
permitted pursuant to Federal Deposit
Insurance Act.
A m anagem ent official or prospective
m anagem ent official of a depository
organization m ay enter into an
otherw ise prohibited interlocking
relationship w ith another depository
organization for a period of u p to 10
years if such relationship is approved by
the Federal Deposit Insurance
C orporation p u rsu an t to section
13(k)(l)(A)(v) of the Federal Deposit
Insurance Act, as am ended (12 U.S.C.
1823(k)(l)(A)(v)).
Dated: July 1, 1996.
Jonathan L. Fiechter,
Acting Director.
[FR Doc. 96 -19400 F iled 8 -1 -9 6 ; 8:45 am]
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