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F ederal reserve Bank of Dallas DALLAS, TE X A S 75222 Circular No. 83-29 February 28, 1983 REGULATION L MANAGEMENT OFFICIAL INTERLOCKS (Final Rule) TO ALL MEMBER BANKS AND OTHERS CONCERNED IN THE ELEVENTH FEDERAL RESERVE DISTRICT: The Board of Governors of the Federal Reserve System has amended its Regulation L (Management Official Interlocks) to clarify the circumstances under which certain interlocks among depository institutions may be continued until 1988. A ttached is a copy of the m aterial as published in the Federal Register on February 7, 1983. Questions concerning the m aterial contained in this circular should be directed to the Legal D epartment, Extension 6228. Additional copies of this circular will be furnished upon request to the Public Affairs D epartment, Extension 6289. Sincerely yours, William H. Wallace First Vice President Banks and others are encouraged to use the follow ing incom ing WATS numbers in con tacting this Bank: 1-800-442-7140 (intrastate) and 1-800-527-9200 (interstate). For calls placed locally, please use 651 plus the extension referred to above. This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) FEDERAL RESERVE press release For immediate release December 29, 1982 The Federal Reserve Board today announced adoption in final form of an amendment to its Regulation L — Management Official Interlocks — clarifying the circumstances under which certain interlocks among depository institutions may be continued until 1988. The Board and the other Federal depository institutions supervisory agencies proposed this amendment to their regulations in October. The revised rule is being adopted by the five agencies as proposed. The amendment to Regulation L will become effective upon publication jointly by the five agencies in the Federal Register, expected about the middle of January. Following is the amended Section 212.5 of Regulation L: Grandfathered interlocking relationships A person whose interlocking service in a position as a management official of two or more depository organizations began prior to November 10, 1978, and was not immediately prior to that date in violation of Section 8 of the Clayton Act is not prohibited from continuing to serve in such interlocking positions until November 10, 1988. Any management official who has been required to terminate or who has terminated service in one or more such interlocking positions as a result of a merger, acquisition, consolidation, or establishment of an office that formerly was defined as a change in circumstances in Section 212.6(a) (1981) is not prohibited from continuing or resuming such service until November 10, 1988. - 0- FE D ER A L R E SER VE SYS TE M [12 C.F.R. PART 212] D E P A R T M E N T OF THE TR EA S U R Y C O M P T R O L L E R OF THE C U RR EN CY [12 C.F.R. PART 26] FE DE RA L DE P O S I T INS UR ANC E C O R P O R A T IO N [12 C.F.R. PART 348] FE DER AL HOME LOAN BANK BOARD [12 C.F.R. PART 5 6 3 f ] N A T I O N A L C RE D I T U N IO N A D M I N I S T R A TI ON [12 C.F.R. PART 711] Docket No. 82 M A N A G E M E N T O F F I CI AL INTERLOCKS AGENCIES: Board of G o v e rn or s of the Federal Com pt ro ll er of the Currency, tion, Federal Federal Home Loan Bank Board, Deposit Reserve System, Insurance C o r p o r a and National Credit Union Administra tio n. ACTION: Final SUMMARY: Rule. The Federal Federal Deposit respective terminated Federal Home Loan Bank Cre di t Uni on A d m i n i s t r a t i o n are amending re gu lat ion s In sti tut ion Ma na g e m e n t to permit Co m p t r o l l e r of the Currency, Insur anc e Cor poration, Board and Nat ion al their Reserve Board, imple me nti ng Interlo cks Act, the D e p o si to ry 12 U.S.C. § 3201 e_t s e q . , a ma na g e m e n t off icial of a d e p o s i t o r y o r g a n i z a t i o n who a gr a n d f a t h e r e d circumst anc es, as de fin ed interlock because of a cha ng e by the agencies, for the du r a t i o n of the g r a n d fat he r agencie s are ex te n di ng to resume the per io d under the Act. to such m a n a g e m e n t of f i c i a l s in interlock The the benefit 2 - - of a sta tutory a me nd men t to the Act, of f ic ia l s c u r r e n t ly con tinue serving wh ic h permi ts ma na ge me nt in g r a n d f a t h e r ed such service until November occ ur re n ce of a chang e EF F EC TI V E DATE: p ub l i c a t i o n 1988, d e sp it e the in circumstances. The a m e nd me nt is immediat ely effe ct ive upon in the Federal R e g i s t e r . FOR F U R T H E R INF OR MA TI ON CONTACT: M e l a n i e Fein (202) Reserv e System; Com p t r o l l er or Ba rb a ra 10, interlocks to 452-3594, of the Currency; Corporation; (202) (202) 452-3564 or Board of Go v e r no rs of the Federal Ros ema ri e Oda I. G ers ten B r on we n M a s o n (202) 447-1880, Pamela E.F. 389-4171, David J. Bristol (202) Off ic e of the LeCren Federal (202) 389-4171, Depos it Insurance 377-6461 or Ke nne th F. Hall (202) 377-6466, Federal Home Loan Bank Board; (202) 357-1030, National C r ed it Un ion Adm inistration. S UP P L E M E N T A R Y 110 was signed Management INFORMATION: On December into law amending Interlocks Act 26, 1981, the De po s i t o r y ("Interlocks Act"), s e q . , to p ro vid e that mergers, or Steven R. Bisker acquisitions, Public Law 97 Institution 12 U.S.C. consolidations the e s t a b l i s h m e n t of of f i c e s do not c o ns t i t u t e c h an ge s ci r c u m s t a n c e s locks. that require C ons eq uen tl y, re gu la ti on pu bl ish ed and in te r m i n a t io n of gr an df a t h e r e d in a final § 3201 et in ter at 47 Fed. - Reg. 47369 whi ch (October specified ci rc um s t a n c e s that con tin ue 1982) - the agencies re scinded pr ov is io ns those events c o ns tit ute d change s requiring This action had cu rr en tl y 26, 3 t e r m i nat io n of g r an df at he re d the effect of p er mi tt in g man ag em en t serving in gr an df a t h e r e d interlocks. of fi cia ls inter loc kin g po si tio ns such service until Nov ember oc cu rr en ce of a merger, in 10, consolidation, 1988, despit e the ac q u i s i t io n or to the es ta bl i s h m e n t of an office. This related who termina ted Under Act, final their the rulemaking 12 U.S.C. regu lat ion s in ter locking int erlocking service service the age ncies are amending such ma na ge me nt for reason other of fi ci al s than a chan ge any per son wh o resigned or o t h er w is e change termina te d in ci rc um s t a n c e s not be p e r m i t t e d respective to resume their interlock in ci r c u m s t a n c e s enu me ra te d to resume the interlock. from a g r a n d f a t h e r e d such service for reasons other interlock than a after e n a ct me nt of the a m e nd me nt would to resume The ag en ci es believe the C o ng re ss io na l their a gr an df a t h e r e d in the reg ulations would not be pe rm itt ed Similarly, such service. the d u ra ti on of the gr an dfa the r period. A m an ag em en t official who termina ted for some to resume au th ori ty gr ant ed by § 209 of the Interlocks § 3207, to permit re gul ati on allows m a na g e m e n t o f fi ci als the that inte rl ock ing service. this a m e n d m e n t intent und er l y in g is co ns is te nt with the st at uto ry am en dme nt to - 4 - afford an u n in te rr up te d g r a n d fat he r were in ex is te n ce wh en intent was ex pr es se d period to resume the d u ra ti on of the gra nd fa th er 15, 1981) Interes ted pe rso ns were re gul ati on Octobe r for 26, received. chan ge invited 47 Fed. The commenters' of the amendment. that man ag em en t interlocking period. 127 Cong. ci r c u m s t a n c e s by listing included in that phr as e Rec. S. for 15309 from the date of p u b l i c a t i o n on Reg. 47404. F o ur te en com men ts were rea ction was o v e r w h e l m i n g l y In response the ref erence service to comment on the proposed to one comment in the lan guage of the amendment, cl ar if ie d This (remarks of Senator G a r n ) . thirty days 1982. that in a st atement during C on gre ss ion al o f f i ci al s would be per mi tt ed Dec. interlocks the Interl oc ks Act was enacted. co n s i d e r a t i o n of the st at ut ory am endment (daily ed. for in favor recommending the agencies have to the former d e f i n i t io n of change the types of transa cti ons that no longer a in that were apply to g r a n d f a t h er ed interlocks. The ame nd me nt s U.S.C. date are made effe ct ive 553(d)(1), to 5 w h i ch a u t h or iz es waiver of a de lay ed effe cti ve in the case of a su bs tan tiv e an e x e mp ti on or i m me dia tel y pur sua nt rule wh ic h gran ts or recognizes relieves a restriction. R e g u l a t o r y F l e x i b i l i t y Act A n a l y s i s . Pu rsuant (Pub. to sectio n 605(b) of the R e g u l a t o r y F l e x i b i l i t y Act L. No. 96-354, U.S.C. § 601 e_t s e q .) , the Board of Go ve rn or s of the Federal 5 - Re s e r v e System, 5 - the Se c r et a r y of the Treasury, the B oa rd of Di r e c t o r s of the Feder al D e p o s i t Insu ra nce Corporation, Federal Home Lo a n Bank Board, the and the B oa rd of Di re ct or s of the Na tional Cre dit Union A d m i n i s t r a t i o n certi fy that the amen dm en t will not have a si gn if ica nt ec on o m ic number of small entities. impact on a substantial The a m e nd me nt w o u l d ease the app l i c a t i o n of the e x i st i ng regulations. am e n d m e n t is ex pe c t e d to be b en efi ci al The effect of the rather than advers e and small ent ities are ge n e ra l ly exp ec te d to share the ben efi ts of the am en d m e nt equally wi th larger institutions. R e g u l a t o r y Impact A n a l y s i s . Executive Order 12291 of F e b r u a r y Pur su an t 17, to Se ct io n 1981, 3(g)(1) it has been d e t e r m i n e d that the am en dme nt does not con st it ut e a ma jo r rule w i t h i n me a n i n g of S ec tio n 1(b) eases res tri ct i on s imposed by re g ul at io ns of of the E x e c u t i v e Order. the The amen dm en t imp lem en ti ng the D e p o s i t o r y I n s ti tu ti on M a n a g e m e n t I nt er lo ck s Act, 12 U.S.C. § 3201 et s e q ., and w o u l d have no a d ver se eff ec t on the op er at io ns of the de po s i t o r y such, insti tut ion s subje ct to it. As the a me ndm en t w o u ld not have an annual effec t on the ec on om y of $100 m i l l i o n or more, for consumers, individual g eo gr a p h i c regions, competition, w o u l d not aff ec t cost or prices industries, g o ve rn m e n t ag en cie s or and w o u l d not have ad v e r se effec ts on employment, investment, pro ductivity, ab il it y of Un it e d States b a se d e n t e r p r i se s forei gn ba se d ent erp ris es or on the to compet e wit h in do m e s t i c or exp or t markets. - 6 - List of Su bj ec ts 12 C FR Part 26 Nationa l banks, 12 C F R Part Antitrust, 12 C F R Part Antitrust, H ol di ng M an ag e m e n t official interlocks. 212 Holding companies. 348 Banks, Banking, Federal Depos it Insurance Corporation, companies. 12 C F R Part Antitru st, 563f S av ing s and loan associations. 12 C F R Part 711 Antitru st, Cr ed i t unions. Accor din gl y, pu rsu ant to their section 209 of the D e p o s i t o r y Act (12 U.S.C. Re ser ve System, Deposi t § 3207), respective a u th or ity under I n s t it ut io n M a n a g e m e n t Interlocks the Board of Go v e r no rs of the Federal the C o m p t r o l l e r of the Currency, Insurance Corp or at io n, the Federal the Federal Home Loan Bank Board, and the Na ti o na l Cr ed it U ni on A d m i n i s t r a t i o n amend 12 C.F.R. amending Parts follows: 212, 26, 348, 563f, and 711, respectively, as by FEDERAL RESERVE SYSTEM [12 C.F.R. PART 212] MANAGEMENT OFFICIAL INTERLOCKS FINAL RULE 12 C.F.R. Part 212 is amended as follows: 1. The authority citation for Part 212 reads as follows: Authority: 2. 12 U.S.C. § 3201 et seq. Section 212.5 is amended by revising it as follows: Section 212.5 - Grandfathered interlocking relationships A person whose interlocking service in a position as a management official of two or more depository organizations began prior to November 10, 1978, and was not immediately prior to that date in violation of Section 8 of the Clayton Act serve in such (15 U.S.C. § 19) interlocking is not prohibited from continuing to positions until November 10, 1988. Any management official who has been required to terminate or who has terminated service in one or more such interlocking positions as a result of a merger, acquisition, consolidation, or establishment of an office that formerly was defined as a change in circumstances in 12 C.F.R. § 212.6(a) (1981) is not prohibited from continuing or resuming such service until November 10, 1988. By order of the Board of Governors of the Federal Reserve effective January 19, 1983. (signed) William W. Wiles William W. Wiles Secretary of the Board [SEAL] System,