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F
ed er a l r e s e r v e
B
a nk
O F DALLAS
W ILLIA M
H. WALLACE
FIRST V IC E PR E S ID E N T
March 1, 1990
DALLAS, TEXAS 75222
AND C H IE F O PER ATING O FFIC ER
Circular 90-11
TO:
The Chief Executive Officer of all
member banks and others concerned in
the Eleventh Federal Reserve District
SUBJECT
Proposed Amendment to Regulation Y
DETAILS
The Federal Reserve Board has announced an interim rule
and requested
public comment on a proposed amendment to its Regulation Y that would provide
procedures for notifying the Board of changes in senior executive officers and
directors at bank holding companies and state member banks that are newly
chartered, undercapitalized or in troubled condition. The proposed regulation
implements section 914 of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 (FIRREA) and clarifies the types of changes in control
of a state member bank or bank holding company that require a section 914
notice and the procedures for the filing of the notice. These regulatory
changes have been adopted by the Board on an interim basis since the FIRREA
provisions were effective immediately upon passage of that Act. State member
banks and bank holding companies are expected to follow the procedures set out
in the proposed regulation pending final action on the proposal.
Comments should be received by the Board by April 23, 1990, and should be
addressed to William W. Wiles, Secretary, Board of Governors of the Federal
Reserve System, 20th and Constitution Avenue, N.W., Washington, D.C. 20551.
All comments should refer to Docket No. R-0686.
ATTACHMENTS
The text of the Board’s proposal is attached.
MORE INFORMATION
For more information, please contact Mike Johnson at (214) 744-7306.
additional copies of this circular, please contact the Public Affairs
Department at (214) 651-6289.
For
Sincerely yours,
For additional copies of any c irc u la r please co n ta ct the Public A ffa irs Department at (214) 651-6289. Banks and others are
encouraged to use the follow ing incom ing WATS numbers in con tacting this Bank (800) 442-7140 (intrastate) and (800)
527-9200 (interstate).
This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)
FEDERAL RESERVE SYSTEM
12 CFR Part 225
[Regulation Y; Docket No. R-0686]
Bank Holding Companies and Change in Bank Control
Procedures Regarding Notices of Changes in
Senior Executive Officers and Directors Under
Section 914 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989
AGENCY:
Board of Governors of the Federal Reserve System.
ACTION:
Interim rule with request for public comment.
SUMMARY:
The Federal Reserve Board is proposing to amend its
Regulation Y, section 225 of Title 12, Code of Federal Regulations,
to implement the provisions of section 914 of the Financial
Institutions Reform, Recovery,
and Enforcement Act of 1989
("FIRREA”), Pub. L. 101-73, 103 Stat. 183. Section 914 Of FIRREA
requires bank holding companies and state member banks that have
recently undergone a change in control, have less than minimum
required capital, or are otherwise in troubled condition to file
a notice with the Board of Governors of the Federal Reserve System
("Board") prior to adding a member of the board of directors, or
employing an individual as a senior executive officer. This prior
notice requirement also applies to state member banks that have
been chartered within two years before the proposed management
change.
The Board may disapprove any proposed board member or
senior executive officer whose service is not considered to be in
the best interests of the depositors of the bank or the public.
The proposed regulation defines the terms "troubled condition" and
"senior executive officer." The proposed regulation also clarifies
the types of changes in control of a state member bank or bank
holding company that require a notice under section 914, and
establishes the procedures for filing the required notice.
Because the provisions of section 914 became effective on the
date of enactment of FIRREA, the Board proposes to follow the
procedures set forth in the proposed rule on an interim basis until
adoption of a final regulation. The Board requests comment on any
issue raised by the proposed rule.
DATES:
Comments must be received no later than April 23, 1990.
ADDRESS:
Comments, which should refer to Docket No. R-0686, may
be mailed to the Board of Governors of the Federal Reserve System,
20th and C Streets, N.W., Washington, D.C. 20551, Attention: Mr.
William W. Wiles, Secretary; or may be delivered to Room B-2223
between 8:45 a.m. and 5:00 p.m. All comments received will be made
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available to the public, and may
between 8:45 a.m. and 5:15 p.m.
be
inspected
in Room
B-112 2
FOR FURTHER INFORMATION CONTACT:
Scott G. Alvarez, Assistant
General Counsel (202/452-3583), or Mark J. Tenhundfeld, Attorney
(202/452-3612), Legal Division; or Sidney M. Sussan, Assistant
Director (202/452-2638) , Division of Banking Supervision and
Regulation, Board of Governors of the Federal Reserve System,
Washington,
D.C.
20551.
For the hearing impaired only.
Telecommunications Service for the Deaf, Earnestine Hill or
Dorothea Thompson (202/452-3544).
SUPPLEMENTARY INFORMATION:
Background: On August 9, 1989, the President signed into law the
Financial Institutions Reform, Recovery, and Enforcement Act of
1989 ("FIRREA"), Pub. L. 101-73, 103 Stat. 183.
Section 914 of
FIRREA requires certain banks and bank holding companies to notify
the appropriate Federal banking agency 30 days prior to the
proposed addition of any individual to the board of directors of
the bank or bank holding company, and to the employment of any
individual as a senior executive officer.
In particular, this section requires state member banks and
bank holding companies to provide this notice to the Board if the
state member bank or bank holding company:
(1)
has been chartered less than 2 years in the case of a
state member bank;
(2)
has undergone a change in control within the preceding
.2-year period; or
(3)
is not in compliance with appropriate minimum capital
requirements or is otherwise in a "troubled condition."
The Board must disapprove a notice under this section if the Board
finds that the competence, experience, character, or integrity of
the individual indicates that it would not be in the best interests
of the depositors of the bank or in the best interests of the
public for the individual to be employed by, or associated with,
the bank or bank holding company.
This proposed regulation implements the provisions of
section 914 of FIRREA. In proposing this regulation, the Board has
consulted with the Office of the Comptroller of the Currency, the
Federal Deposit Insurance Corporation, and the Office of Thrift
Supervision, each of which must also propose regulations under
Section 914 applicable to financial institutions that they
supervise.
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1.
Definition of "Troubled Condition11
Section 914 by its terms applies to financial institutions
that are not in compliance with the minimum capital requirements
applicable to the institution or that are "otherwise in a troubled
condition."
In the Board's view, compliance with applicable
minimum capital requirements includes compliance with the generally
applicable capital adequacy guidelines as well as compliance with
any capital directive or Board order applicable to the specific
institution, even where that directive or order may require capital
levels above the generally applicable minimum level in the Board's
guidelines.
Section 914 of FIRREA requires the Board to promulgate
regulations that define the term "troubled condition" for purposes
of the notice requirements of this section.
Because section 914
already applies by its terms to financial institutions that are not
in compliance with applicable minimum capital requirements, the
Board's proposed definition of "troubled condition" focuses on
other measures of the financial condition of the institution. The
Board proposes to define an institution in "troubled condition" as
any institution that: 1) has received a composite rating of 4 or
5 at its most recent commercial examination or inspection; 2) is
subject to a cease and desist order or written agreement requiring
action to improve the financial condition of the institution; or
3)
is expressly informed by the Board or appropriate Federal
Reserve Bank that it is considered in troubled condition for
purposes of the notice provisions of section 914.
The Board
believes that this definition of "troubled condition" covers only
those state member banks and bank holding companies whose financial
condition makes review of changes in management appropriate. The
proposed regulation contemplates that the Federal Reserve System
will expressly inform individual state member banks and bank
holding companies if other facts indicate that close scrutiny of
changes in the management or directors of the institution under
this subpart is appropriate.
2.
Definition of "Senior Executive Officer"
Section 914 also requires the Board to define the term "senior
executive officer." The Board has proposed a functional approach
in defining the term "senior executive officer."
The proposal
designates as a "senior executive officer" those individuals who
have significant influence over the policymaking decisions of
financial institutions, regardless of the individual's title. The
functions identified by the Board as those of senior executive
officers include the functions of chief executive officer, chief
operating officer, chief financial officer, chief lending officer,
and chief investment officer.
The Board has not identified
specific titles that constitute "senior executive officers" because
titles for senior executive functions vary widely among bank
holding companies and banks.
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In addition to the five functions specifically identified, the
proposed regulation would also apply to any person with significant
influence over major policymaking decisions of the institution.
This provision is intended to cover consultants and other
individuals who may in fact be acting as a senior executive officer
at a particular institution.
The Board notes that Regulation 0 (12 CFR Part 215), which
addresses loans to bank insiders, defines "executive officer" to
include a person who participates in the major policymaking
functions of the bank and includes, by title, a bank's chairman of
the board, president, vice-president, cashier, secretary, and
treasurer.
The new statute, in contrast, reaches only "senior
executive officers." Thus, the Board believes the scope of the new
statute is narrower than the existing definition in Regulation 0.
The Board's proposed regulation does not
include the
appointment of an advisory director to an institution's board of
directors. To qualify for this exemption as an advisory director,
an individual must not be elected to the position by the company's
shareholders, must not be authorized to vote on any matters before
the board of directors, and must provide solely general policy
advice to the board of directors. The Board and the Reserve Bank
retain authority to find in specific cases that an individual who
is nominally an advisory director is in fact functioning as a
director or senior executive officer for purposes of the notice
provisions of this subpart.
The notice requirements of section 914 are applicable whenever
an institution subject to this section seeks to add an individual
to the institution's board of directors. The Board believes that
this provision applies whether the addition is made as a result of
expansion of the number of members of the board of directors or
through the replacement of existing directors.
In both cases, an
individual who was not previously a member of the board of
directors has been added to the board.
Similarly, the provisions
of section 914 appear to apply to the employment of any individual
as a senior executive officer, whether that employment results from
external hiring or from internal promotion or re-assignment of
responsibilities to include the functions of a senior executive
officer.
The notice requirement would also apply to a senior
executive officer who is proposed as a director of the institution
and to a director who is offered employment as a senior executive
officer.
3.
Definition of Change in Control
As noted above, the notice requirement under section 914 is
triggered when the bank or bank holding company has undergone a
"change in control" within two years preceding the proposed
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addition of a director or employment of a senior executive officer.
The term "change in control" is not defined in section 914 or
explained in the legislative history of that section.
The Board does not believe that this term was
intended by
Congress to encompass every situation involving a change in
ownership of a state member bank or bank holding company.
For
example, the acquisition of more than 5 percent of the voting
shares of a bank by a registered bank holding company requires
approval of the Board under section 3 of the Bank Holding Company
Act ("BHC Act") but may not involve a "change in control" for
purposes of section 914 or any other statute.
The Board believes that it is consistent with thelanguage and
purpose of section 914 to require that notices be filed under this
section by state member banks and bank holding companies that have
been the subject of a notice of change in control pursuant to the
Change in Bank Control Act. The language of section 914 parallels
the Change in Bank Control Act in several respects, most notably
by using the same terms as in the Change in Bank Control Act and
by expressly adopting the information requirements and standards
for review contained in that Act.
Thus, section 914 appears to
contemplate situations involving a change in control that would
require a notice under the Change in Bank Control Act.
The Board does not believe that, as a general matter,
transactions subject to section 3 of the BHC Act should trigger
the requirements of section 914. These transactions are expressly
exempt from the Change in Bank Control Act.
Moreover, in
connection with the review of all applications by bank holding
companies under the BHC Act, the Board already carefully considers
the managerial resources of the bank holding company. Bank holding
companies are also subject to continuing Board supervision and
examination,
including
regular
review
of
their
managerial
resources.
Accordingly, there appears little regulatory purpose
to broadly interpreting the requirements of section 914 to apply
to all transactions subject to section 3 of the BHC Act.
The Board believes that it is appropriate to require notices
of changes in directors and senior executive officers at bank
holding companies in a limited number of bank holding company
formations that are exempt from the requirements of the Change in
Bank Control Act.
In certain cases, a bank holding company
formation involves the first-time acquisition of a bank by a
previously unregulated company.
In a limited number of other
cases, a group of individuals who seek to acquire control of a bank
or bank holding company may choose to form a new bank holding
company to acquire the shares of the institution rather than the
individuals acquiring the shares of the institution directly. Were
the individuals to acquire control of the institution directly, the
transaction would, in many instances, be subject to the provisions
of the Change in Bank Control Act. However, by choosing the bank
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holding company form, the transaction becomes subject to the
provisions of the Bank Holding Company Act and is expressly exempt
from the provisions of the Change in Bank Control Act.
The Board believes that bank holding company formations of
these types that involve an actual change in control and management
of a bank merit the same type of review of subsequent changes in
directors and management of the institution as would apply had the
individuals
acquired
the
institution's
shares
directly.
Accordingly, the Board proposes to apply the provisions of section
914 to changes in directors and senior executive officers at bank
holding companies that were formed within two years of the
management change.
The proposed regulation would not extend,
however, to bank holding companies that had been established in a
reorganization in which substantially all of the shareholders of
the bank holding company were shareholders of the bank prior to the
holding
company's
formation
unless
the
institution
is
undercapitalized, in troubled condition, or otherwise subject to
section 914. Similarly, the proposed regulation would not extend
to bank holding companies that are formed as an intermediate
holding company that is owned by a registered bank holding company,
unless the regulation is otherwise applicable.
The Board has not proposed to require that notices under
section 914 be filed by institutions involved in other transactions
that are exempt from the notice requirements of the Change in Bank
Control Act under that Act or under section 225.42 of the Board's
Regulation Y. (12 U.S.C. 1817(j); 12 CFR 225.42). In this regard,
the notice provisions of section 914 would not apply to state
member banks or bank holding' companies that are acquired by another
previously registered bank holding company in a transaction subject
to -either the Bank Holding Company Act or the Bank Merger Act
(12 U.S.C. 1828(c)), unless the institution does not meet the
appropriate minimum capital adequacy standards, is in troubled
condition, or otherwise is required to file a notice under this
section.
4.
Procedures for Filina Notice and Information Required in the
Notice
The responsibility for filing a notice under section 914 of
FIRREA rests with the institution seeking to add or employ an
individual as a director or senior executive officer.
Notices
under this section would be filed with the appropriate Reserve
Bank.
Section 914 provides that certain information required under
the Change in Bank Control Act is required in notices filed under
this section.
In particular, section 914 of FIRREA requires the
following information regarding a person who is the subject of a
notice: the identity, personal history, business background, and
experience
of
the
individual,
including material
business
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activities and affiliations during the past five years, a
description of any pending legal or administrative proceedings in
which the individual is a party, and an explanation of any criminal
indictment or conviction involving the individual.
The proposed
regulation adopts these information requirements.
The Board proposes that notices filed under this section take
the form of a letter containing the relevant information or the
relevant sections of the current form filed under the Change in
Bank Control Act.
The Board or Reserve Bank may modify these
requirements where appropriate,
and may request additional
information necessary to permit a full evaluation of the
competence, experience, character, or integrity of the individual
with respect to whom the notice has been filed, or of the public
interest factors the Board must consider.
Under the proposed regulation, the 30-day time period for
System review of a notice would not commence until the notificant
submits all the information required by the statute and requested
by the Board or the Reserve Bank. The notificant will be informed
by the Reserve Bank in writing once the notice is deemed to be
complete and is considered effective. This letter from the Reserve
Bank will also state when the 30-day period has begun as well as
when the 30-day period ends.
5.
Commencement of Service
Unless otherwise informed by the Board or Reserve Bank, an
individual for whom a notice has been filed under this section may
begin the proposed service as a member of the board of directors
or as a senior executive officer on the 31st day following the date
on which a complete notice is given to the appropriate Reserve
Bank.
Under the Board's proposed regulation, an individual may
begin his or her proposed service at an earlier date if the Board
or the Reserve Bank notifies the employing institution in writing
at an earlier date that the System does not intend to object to the
proposed employment.
The Board proposes to amend its Rules Regarding Delegation of
Authority to permit the Reserve Banks to take all actions necessary
regarding a notice filed under this subpart, including determining
the informational sufficiency of the notice, issuing letters that
the System does not intend to object to a proposed appointment, and
issuing notices of disapproval of a proposed appointment.
6.
Disapproval of a Notice and Appeals
The statute provides that an agency is required to disapprove
a notice if the competence, experience, character, or integrity of
the individual with respect to whom the notice is submitted
indicates that it would not be in the best interest of the
depositors of the bank or in the best interest of the public to
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permit the individual to be employed by, or associated with, the
bank or bank holding company.
These standards have been adopted
in the proposed regulation.
The Reserve Bank or the Board will inform the notificant in
writing in the event the Federal Reserve System objects to the
proposed service by an individual for whom a notice has been filed.
The written notice of disapproval will contain an explanation of
the basis for disapproval.
Under the proposed regulation, the disapproved individual, the
state member bank or the bank holding company notificant may appeal
the disapproval to the Board. The appeal must be received by the
Board within 15 calendar days of the effective date of the notice
of disapproval.
The appeal must be made in writing and must
contain all facts, documents, and arguments that the appealing
party wishes to be considered in the appeal.
The disapproved
individual may not serve as a director or senior executive officer
while the appeal is pending.
The Board will issue a written
statement of its final decision to the appealing party.
In connection with an appeal, the Board may, in its sole
discretion,
order an informal hearing if requested by the
disapproved individual or the notificant and if the Board finds
that oral argument is appropriate or that a hearing is necessary
to resolve issues of material fact.
Section 914 does not confer
a statutory right to a hearing.
The Board requests comment on
whether,
in light of the court decisions in this area, a
disapproved individual would have any constitutional right to a
hearing in the case of a disapproval under section 914.
(See,
e.g., Feinbera v. FDIC. 420 F. Supp. 109 (D.C. 1976); Connelly v.
Comptroller of the Currency. 876 F.2d 1209 (5th Cir. 1989)).
7.
Waiver Provisions
Section 914 of FIRREA permits the appropriate Federal banking
agency to waive the notice provisions of this section in the event
of extraordinary circumstances.
The Board's proposal allows the
Board or the appropriate Reserve Bank to waive the notice provision
if the delay associated with prior notice would threaten the safety
or soundness of the state member bank or bank holding company
involved, or any of the holding company's subsidiary banks.
The
notice requirements may also be waived if delay would harm the
public interest or if extraordinary circumstances exist that
justify a waiver. If a waiver is granted, the individuals subject
to the waiver may immediately assume responsibility as a director
or senior executive officer.
As provided by section 914, the
proposed regulation states that waiver of the notice provisions
does not affect the Board's authority to issue a subsequent notice
of disapproval within 30 days after the waiver has been granted.
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8.
Interim Applicability
The provisions of section 914 of FIRREA were made immediately
effective upon enactment of that Act on August 9, 1989.
As a
result, state member banks and bank holding companies are currently
required by statute to file notices with the Board regarding
proposed changes in directors and senior executive officers. The
Board believes that it is in the public interest to clarify
immediately the scope of section 914 and the procedures that should
be followed by state member banks and bank holding companies on an
interim basis pending adoption of a final regulation. Accordingly,
the Board for good cause, finds that the proposed rules should be
adopted on an interim basis and that notice and public comment
prior to adoption of an interim rule is impracticable and contrary
to the public interest under 5 USC 553(b)(B). The Board finds, for
the same reasons, that there is good cause under 5 USC 553(d)(3)
to make the interim rule effective immediately without regard to
the 30-day period provided in 5 USC 553(d). Accordingly, the Board
expects state member banks and bank holding companies to follow the
procedures set out in the proposed regulation pending final action
on the regulation.
Regulatory Flexibility Act
This rule implements specific statutory requirements imposed
by the Financial Institutions Reform, Recovery, and Enforcement Act
of 1989.
Section 914 of that Act imposed specific prior notice
requirements on certain types of banks and bank holding companies.
This prior notice requirement is intended to permit the Federal
banking agencies to monitor changes in the senior management and
board of directors of banks and bank holding companies that are
undercapitalized, in troubled condition, have been newly chartered,
or have recently undergone a change in control.
In enacting this
provision, Congress determined that the burden that may be
associated with the notice requirement was outweighed by the public
benefits of review of senior management at certain banking
institutions. The required notice is of short duration and should
not significantly disrupt the hiring and appointment procedures of
banks
or bank holding
companies,
including small
banking
organizations.
In order to minimize the burden associated with
this proposal, the Board has proposed a procedure that allows
action prior to the expiration of the statutory notice periods, and
a provision for waiver of the notice provisions in extraordinary
circumstances.
The Board also proposes to use existing forms,
thereby further minimizing any reporting burden.
Thus, the
proposal is not expected to have a significant economic impact on
a substantial number of small business entities within the meaning
of the Regulatory Flexibility Act (5 U.S.C. 601 e£ seq.).
Paperwork Reduction Act
The proposal would require certain banks and bank holding
companies to provide written notice to the Board prior to adding
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or replacing a director or senior executive officer. The Board has
proposed to permit these organizations to use existing reporting
forms in fulfilling this requirement.
List of Subjects in 12 CFR Part 225
Administrative practice and procedure, Appraisals, Banks,
Banking, Federal Reserve System, Holding companies, Reporting and
recordkeeping requirements, Securities.
For the reasons set forth in this notice, the Board proposes
to amend 12 CFR Part 225 as follows:
PART 225 - BANK HOLDING COMPANIES AND CHANGE IN BANK CONTROL
1. The authority citation for Part 225 is revised to read as
follows:
Authority:
12 U.S.C. 1817(j)(13),
1844(b), 3106, 3108, 3907 and 3909.
*
*
*
*
1818,
1831i,
1843(c)(8),
*
2. Subpart H, consisting of sections 225.71 through 225.73,
is added immediately following Subpart G to read as follows:
Subpart H - Notice of Addition or Change of Directors and Senior
Executive Officers
225.71 Definitions.
225.72
Director
and
officer
appointments;
prior
notice
requirement.
225.73 Procedures for filing, processing, and acting on notices;
standards for disapproval; waiver of notice.
§ 225.71 Definitions.
(a)
"Senior executive officer" means a person who, without
regard to title, exercises the authority of one or more of the
following positions:
chief executive officer, chief operating
officer, chief financial officer, chief lending officer, or chief
investment officer.
"Senior executive officer" also includes any
other person with significant influence over major policymaking
decisions of a state member bank or bank holding company.
(b)
"Bank or bank holding company in troubled condition"
means any state member bank or bank holding company that:
(1)
Has a composite rating, as determined in the most
recent report of examination or inspection, of 4 or 5 under the
commercial bank Uniform Interagency Bank Rating System or under
the Federal Reserve bank holding company rating system;
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(2)
Is subject to a cease and desist order or formal
written agreement that requires action to improve the financial
condition of the institution, unless otherwise informed in writing
by the Board or the appropriate Reserve Bank; or,
(3) Is expressly informed by the Board or Reserve Bank
that it is in troubled condition for purposes of the requirements
of this subpart on the basis of the institution's most recent
examination,
report of condition,
or inspection,
or other
information available to the Board.
§ 225.72 Director and officer appointments;
prior notice requirement.
(a) Prior notice. A state member bank or bank holding
company shall give the Board 30 days' written notice, as specified
in § 225.73 of this subpart, before adding or replacing any member
of the board
of directors
or employing or changing the
responsibilities of any individual to a position as a senior
executive officer of the bank or bank holding company, if:
(1)
The bank has
been chartered
less than two
years;
(2)
Within the preceding two years, the bank or
bank holding company has undergone a change in control that
required a notice to be filed pursuant to the Change in Bank
Control Act or Subpart E of this regulation;
(3)
Within the preceding two years, the bank
holding company became a registered bank holding company, unless
the bank holding company is owned or controlled by a registered
bank holding company, or the bank holding company was established
in a reorganization in which substantially all of the shareholders
of the bank holding company were shareholders of the bank prior to
the bank holding company's formation; or
(4)
The bank or bank holding company is not in
compliance with all minimum capital requirements applicable to the
institution as determined on the basis of the institution's most
recent report of condition, examination or inspection, or is
otherwise in troubled condition.
(b)
Advisory directors.
(1) For purposes of this
subpart, except as provided in paragraph (b)(2) of this section,
the term "member of the board of directors" does not include an
advisory director who:
(i)
or bank holding company;
Is not elected by the shareholders of the
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(ii)
Is not authorized to vote
before the board of directors; and
(iii)
board of directors.
on any matters
Provides solely general policy advice to the
(2)
The Board or Reserve Bank may otherwise determine
that an advisory director is in fact functioning as a director or
senior executive officer for purposes of this subpart.
§ 225.73 Procedures for filing, processing, and acting
on notices; standards for disapproval; waiver of notice.
(a)(1) Filing notice. The notice reguired in § 225.72
of this subpart shall be filed with the appropriate Reserve Bank
and shall contain the information reguired by paragraph 6(A) of
the Change in Bank Control Act (12 U.S.C. 1817(j)(6)(A)) or
prescribed in the designated Board form, subject, in either case,
to the authority of the Reserve Bank or the Board to modify these
reguirements or reguire additional information.
(2)
Acceptance of notice. The 30-day notice per
specified in § 225.72 of this subpart shall begin on the date all
reguired information is received by the appropriate Reserve Bank
or the Board.
The Reserve Bank shall notify the bank or bank
holding company submitting the notice of the date all such required
information is received and the notice is accepted for processing,
and of the date on which the 30-day notice period will expire.
(b)
commencement of service.
(1)
At expiration of
period. A proposed director or senior executive officer may begin
service 30 days after a complete notice under paragraph (a) of this
section has been accepted by the Reserve Bank unless the Board or
Reserve Bank issues a notice of disapproval of the proposed
addition or employment before the end of the 30-day period.
(2)
Prior to expiration of period.
director or senior executive officer may begin service before the
expiration of the 30-day period if the Board or the Reserve Bank
notifies the bank or bank holding company in writing of the Board's
intention not to disapprove the addition or employment.
(c)
Notice of disapproval. The Board or Reserve Bank
must disapprove a notice under § 225.72 of this subpart if the
Board or Reserve Bank finds that the competence, experience,
character, or integrity of the individual with respect to whom the
notice is submitted indicates that it would not be in the best
interests of the depositors of the bank or in the best interests
of the public to permit the individual to be employed by, or
associated with, the bank or bank holding company.
The notice of
disapproval shall contain a statement of the basis for disapproval.
A
propos
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13-
(d)
Appeal.
(1)
The disapproved individual or the
state member bank or bank holding company may appeal to the Board
the disapproval of a notice under this subpart within 15 calendar
days of the effective date of the notice of disapproval.
An
appeal shall be in writing and explain the reasons for the appeal
and include all facts, documents, and arguments that the appealing
party wishes to be considered in the appeal.
(2)
The Board may, in its sole discretion, order an
informal hearing if the hearing is requested in writing by the
disapproved individual or the notificant at the time of an appeal,
and the Board finds that oral argument is appropriate or that a
hearing is necessary to resolve disputes regarding material issues
of fact.
(3)
The disapproved individual may not serve as a
director or senior executive officer while the appeal is pending.
Written notice of the final decision of the Board shall be sent to
the appealing party.
(e)(1) Waiver of notice. The Board or the Reserve Bank
may waive the prior notice required under this subpart if it finds
that:
(i) Delay would threaten the safety or soundness of
the state member bank or the bank holding company or any of its
bank subsidiaries;
(ii) Delay would not be in the public interest; or
(iii) Other extraordinary circumstances exist that
justify waiver of prior notice.
(2)
Effect on disapproval authority.
issued by the Board or Reserve Bank shall not affect the authority
of the Board or Reserve Bank to issue a notice of disapproval
within 30 days after such waiver.
By order of the Board of Governors of the Federal Reserve
System, February 13, 1990.
(signed) William W. Wiles
William W. Wiles
Secretary of the Board
Any waive
@FedFRASER