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FEDERAL. RESERVE BANK
OF DALLAS

November 6, 1933.

REGULATION L
INTERLOCKING BANK DIRECTORATES AND OTHER RELATIONSHIPS
UNDER THE CLAYTON ACT

To the Member Bank Addressed:
For your information and guidance, I am enclosing a copy of the Federal Reserve
Board’s Regulation L, Series of 1933, (superseding Regulation L, Series of 1930) which
relates to interlocking bank directorates and other relationships under the Clayton Act.
If any director, officer or employee of the bank addressed has entered into, or de­
sires to enter into any of the prohibited relationships referred to in Regulation L, and does
not already hold a permit therefor from the Federal Reserve Board, he should make ap­
plication for such a permit, in accordance with the provisions of Regulation L.
Section 8A of the Clayton Act (the new amendment added to that Act by the Bankink Act of 1933) prohibits certain interlocking relationships between a member bank and
any corporation (except a mutual savings bank) or partnership which, after January 1,
1934, shall make loans secured by stock or bond collateral. Where such relationships are
covered by permits that have already been issued by the Federal Reserve Board (even
though issued prior to the enactment of Section 8A ), it is unnecessary for the individuals
involved to obtain new permits. It should be borne in mind, however, that all permits
issued by the Board prior to June 16, 1933, covered interlocking relationships involving
banking institutions only; whereas the new prohibitions in Section 8A apply also to re­
lationships in which a non-banking institution may be involved, and in such cases it is
of course, necessary for permits to be obtained if the interested parties desire to continue
such relationships after January 1, 1934. The Federal Reserve Board has authority to
issue such permits if it is convinced that it would not be incompatible with the public
interest to do so.
Forms for use in applying for permits may be procured from this office upon request.
Yours very truly,

Federal Reserve Agent.
Enclosure

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FEDERAL RESERVE BOARD

INTERLOCKING BANK DIRECTORATES AND
OTHER RELATIONSHIPS UNDER
THE CLAYTON ACT

REGULATION L

Effective November 19 1933

REGULATION L, SERIES OF 1933
(Superseding Regulation L, Series of 1930)

INTERLOCKING BANK DIRECTORATES AND
OTHER RELATIONSHIPS UNDER
THE CLAYTON ACT
SECTION I. STATUTORY PROVISIONS

Sections 8 and 8A of the Clayton Antitrust Act approved October 15,
1914, as amended by the Acts of May 15, 1916, May 26, 1920, March
9, 1928, March 2, 1929, and June 16, 1933.1
S e c . 8. That from and after two years from the date of the approval of
this Act no person shall at the same time be a director or other officer or
employee of more than one bank, banking association, or trust company
organized or operating under the laws of the United States, either o f which
has deposits, capital, surplus, and undivided profits aggregating more than
$5,000,000; and no private banker or person who is a director in any
bank or trust company organized and operating under the laws o f a State,
having deposits, capital, surplus, and undivided profits aggregating more
than $5,000,000, shall be eligible to be a director in any bank or banking
association organized or operating under the laws of the United States.
The eligibility of a director, officer, or employee under the foregoing pro­
visions shall be determined by the average amount of deposits, capital,
surplus, and undivided profits as shown in the official statements of such
bank, banking association, or trust company filed as provided by law
during the fiscal year next preceding the date set for the annual election
of directors, and when a director, officer, or employee has been elected or
selected in accordance with the provisions of this Act it shall be lawful for
him to continue as such for one year thereafter under said election or
employment.

No bank, banking association, or trust company organized or operating
under the laws of the United States, in any city or incorporated town or
village of more than two hundred thousand inhabitants, as shown by the
last preceding decennial census o f the United States, shall have as a direc­
tor or other officer or employee any private banker or any director or other
officer or employee o f any other bank, banking association, or trust com­
pany located in the same place: P rovid ed , That nothing in this section
shall apply to mutual savings banks not having a capital stock represented
by shares, to joint-stock land banks organized under the provisions o f the
Federal Farm Loan Act, or to other banking institutions which do no
commercial banking business: P rovid ed fu rth er , That a director or other
officer or employee of such bank, banking association, or trust company
may be a director or other officer or employee of not more than one other
bank or trust company organized under the laws o f the United States or
Amended by sec. 25 o f the Federal Reserve Act as amended Sept. 7, 1916. and by act
approved Dec. 24, 1919, amending the Federal Reserve Act, as to corporations engaged in
foreign banking and financial operations. See secs. 25 and 25(a) o f Federal Reserve Act.

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any State where the entire capital stock of one is owned by stockholders
in the other: A n d provid ed further, That nothing contained in this section
shall forbid a director of class A of a Federal reserve bank, as defined in
the Federal Reserve Act, from being an officer or director, or both an
officer and director, in one member bank: A n d p rovid ed further, That
nothing in this Act shall prohibit any private banker from being an officer,
director, or employee of not more than two banks, banking associations,
or trust companies, or prohibit any officer, director, or employee of any
bank, banking association, or trust company, or any class A director of a
Federal reserve bank, from being an officer, director, or employee o f not
more than two other banks, banking associations, or trust companies,
whether organized under the laws of the United States or any State, if in
any such case there is in force a permit therefor issued by the Federal
Reserve Board; and the Federal Reserve Board is authorized to issue such
permit if in its judgment it is not incompatible with the public interest,
and to revoke any such permit whenever it finds, after reasonable notice
and opportunity to be heard, that the public interest requires its revocation.
The consent of the Federal Reserve Board may be procured before the
person applying therefor has been elected as a class A director of a
Federal reserve bank or as a director of any member bank.
*

#

#

*

•

When any person elected or chosen as a director or officer or selected as
an employee of any bank or other corporation subject to the provisions o f
this Act is eligible at the time of his election or selection to act for such
bank or other corporation in such capacity his eligibility to act in such
capacty shall not be affected and he shall not become or be deemed
amenable to any of the provisions hereof by reason of any change in the
affairs of such bank or other corporation from whatsoever cause, whether
specifically excepted by any of the provisions hereof or not, until the
expiration of one year from the date of his election or employment.
Sec. 8A. That from and after the 1st day of January, 1934, no director,
officer, or employee o f any bank, banking association, or trust company,
organized or operating under the laws o f the United States shall be at the
same time a director, officer, or employee of a corporation (other than a
mutual savings bank) or a member of a partnership organized for any
purpose whatsoever which shall make loans secured by stock or bond
collateral to any individual, association, partnership, or corporation other
than its own subsidiaries.
SECTION II. DEFINITIONS

Within the meaning o f this regulation—
The term “ bank” shall include any bank, banking association, or trust
company organized or operating under the laws of the United States or of
any State thereof.
The term “ national bank” shall be construed to apply not only to
national banking associations but also to banks, banking associations, and
trust companies organized or operating under the laws o f the United States,
4

including all banks and trust companies doing business in the District of
Columbia, regardless of the sources of their charters.
The term “ resources” shall be construed to mean an amount equal to
the sum of the deposits, capital, surplus, and undivided profits, and, in
the case of a bank, banking association or trust company, shall be deter­
mined by the average amount of deposits, capital, surplus, and undivided
profits as shown in the official statements of such bank, banking associa­
tion or trust company filed as provided by law during the fiscal year next
preceding the date set for the annual election of directors.
The term “ state bank” shall include any bank, banking association, or
trust company incorporated under State law, except banks doing business
in the District of Columbia, referred to above.
The term “ private banker” shall apply to any unincorporated individual
engaging in one or more phases of the banking business as that term is
generally understood and to any member of an unincorporated firm engag­
ing in such business.
The term “ Edge corporation” shall mean any corporation organized
under the provisions of section 25(a) of the Federal Reserve Act, as
amended.
The term “ city of over 200,000 inhabitants” includes any city, incorpo­
rated town, or village of more than 200,000 inhabitants, as shown by the
last preceding decennial census of the United States. Any bank located
anywhere within the corporate limits of such city is located in a city of
over 200,000 inhabitants within the meaning of the Clayton Act, even
though it is located in a suburb or an outlying district at some distance
from the principal part of the city.
SECTION III. PROHIBITIONS OF CLAYTON ACT

(a) Under section 8 of the Clayton Antitrust Act, except as noted below
under section IV (a)
(1) No person who is a director or other officer2 or employee of a
national bank having resources aggregating more than $5,000,00Q can
legally serve at the same time as director, officer, or employee of any
other national bank, regardless of its location.
(2) No person who is a director in a State bank or trust company
having resources aggregating more than $5,000,000 or who is a private
banker having resources aggregating more than $5,000,000 can legally
serve at the same time as director of any national bank, regardless of
its location.
(3) No person can legally be a director, officer,2 or employee of a
national bank located in a city of more than 200,000 inhabitants who
is at the same time a private banker in the same city or a director,
officer, or employee of any other bank (State or national) located in
the same city, regardless of the size of such bank.
:The Federal Reserve Board has ruled that a Conservator of a national bank is not a
director, officer, or employee o f such bank within the meaning of the Clayton Antitrust Act.

5

(6)
Under section 8A of the Clayton Antitrust Act, except as noted be­
low under section IV (b) —
From and after January 1, 1934, no person can legally be director,
officer or employee of a national bank who is at the same time a direc­
tor, officer or employee of a corporation (other than a mutual savings
bank) or a member of a partnership organized for any purpose what­
soever which shall make loans secured by stock or bond collateral to
any individual, association, partnership or corporation other than its
own subsidiaries.
(c) The prohibitions of section 8 and section 8A are cumulative, i.e.,
the prohibitions contained in section 8A of the Clayton Antitrust Act are
in addition to those contained in section 8 thereof.
SECTION IV. EXCEPTIONS

There are certain exceptions to section 8 and certain exceptions to sec­
tion 8A, but they are not identical. Therefore, all the exceptions applicable
to each section are stated separately below in order to avoid confusion.
(a)

The provisions of section 8 of the Clayton Act—

(1) Do not apply to mutual savings banks not having a capital
stock represented by shares.
(2) Do not apply to joint-stock land banks organized under the
provisions of the Federal Farm Loan Act.
(3) Do not apply to banking institutions which do no commercial
banking business.
(4) Do not prohibit a person from being at the same time a direc­
tor, officer, or employee of a national bank and not more than one
other national bank, State bank, or trust company, where the entire
capital stock of one is owned by stockholders in the other.
(5) Do not prohibit a person from being at the same time a class A
director of a Federal reserve bank and also an officer or director, or
both an officer and a director, in one member bank.
(6) Do not prohibit a person who is serving as director, officer,
or employee of a national bank, even though it has resources aggre­
gating over $5,000,000, from serving at the same time as director,
officer, or employee of any number of State banks and trust com­
panies, provided such State institutions are not located in the same
city of over 200,000 inhabitants as the national bank and do not have
resources aggregating in the case of any one bank more than
$5,000,000.
(7) Do not prohibit a person from serving at the same time as
director, officer, or employee of any number o f national banks, pro­
vided no two of them are located in the same city of over 200,000 in­
habitants and no one of them has resources aggregating over
$5,000,000.
6

(8) Do not prohibit a person who is not a director, officer, or em­
ployee of any national bank from serving at the same time as officer,
director, or employee of any number of State banks or trust com­
panies, regardless of their locations and resources.
(9) Do not prohibit a person who is an officer or employee but not
a director of a State bank from serving as director, officer, or em­
ployee of a national bank, even though either or both of such banks
have resources aggregating over $5,000,000, provided both banks are
not located in the same city of over 200,000 inhabitants.
(10) Do not prohibit a person who is an officer or employee but
not a director of a national bank from serving at the same time as
director, officer, or employee of a State bank, even though either or
both of such banks have resources aggregating over $5,000,000, pro­
vided both banks are not located in the same city of over 200,000
inhabitants.
(11) Do not prohibit a director, officer, agent, or employee of a
member bank which has invested in the stock of any corporation
principally engaged in international or foreign banking or financial
operations or banking in a dependency or insular possession of the
United States, under the provisions of section 25 of the Federal Re­
serve Act, from being at the same time a director, officer, agent, or
employee of any such foreign bank or financial corporation, if the
Federal Reserve Board has granted its approval.3
(12) Do not prohibit any officer, director, agent, or employee of
any member bank from being at the same time a director, officer,
agent, or employee of any Edge corporation in whose capital stock
the member bank shall have invested under the provisions of section
25 or section 25(a) of the Federal Reserve Act, if the Federal Re­
serve Board has granted its approval.3
(13) Do not prohibit an officer, director, agent, or employee of an
Edge corporation from being at the same time a director, officer,
agent, or employee of any other corporation in whose capital stock
such Edge corporation shall have invested under the provisions of
section 25(a) of the Federal Reserve Act, if the Federal Reserve
Board has granted its approval.3
(14) Do not prohibit a private banker or an officer, director, or
employee of any bank or a class A director of a Federal reserve bank
from being at the same time an officer, director, or employee of not
more than two other banks within the prohibitions of the Clayton
Act, if there is in force a permit therefor issued by the Federal Re­
serve Board.
•If a director, officer, agent, or employee is affected only by section 8 of the Clayton Act,
informal application for the approval o f the Federal Reserve Board under section 25 or 25(a)
of the Federal Reserve Act may be made in the form o f a letter addressed to the Board
either by the director, officer, agent, or employee involved or in his behalf by one of the
banks which he is serving, such application to be delivered to the Federal reserve agent at
the Federal reserve bank o f the district in which the bank now served by the applicant is
located. However, if a director, officer or employee is affected by section 8A o f the Clayton
Act, it is necessary for him to apply for and obtain a formal permit in accordance with the
provisions o f section V o f this regulation, since the above exceptions do not apply to section
8A o f the Clayton Act.

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The above exceptions are cumulative; but apply only to the prohibitions
of section 8. The exceptions to section 8A are stated below:
(6) The provisions of section 8A of the Clayton Act—
(1) Do not prohibit a person who is a director, officer, or employee
of a national bank from being at the same time a director, officer or
employee of a mutual savings bank.
(2) Do not prohibit a person who is a director, officer, or employee
of a national bank from being at the same time a director, officer or
employee of a corporation or a member of a partnership which shall
make loans secured by stock or bond collateral only to its own
subsidiaries.
(8)
Do not prohibit a person who is a director, officer or employee
of a national bank from being at the same time a director, officer or
employee of a corporation or a member of a partnership which does
not actually make loans secured by stock or bond collateral, even
though such corporation or partnership is permitted by law to make
such loans.
(4) Do not prohibit a person who is not a director, officer, or
employee of any national bank from serving at the same time as an
officer, director, or employee of any number of State banks or trust
companies, whether members of the Federal Reserve System or not.
(5) Do not prohibit a private banker or an officer, director, or
employee of any bank or a class A director of a Federal reserve
bank from being at the same time an officer, director, or employee
of not more than two other banks within the prohibitions of the
Clayton Act, if there is in force a permit therefor issued by the
Federal Reserve Board.
The above exceptions are cumulative, but apply only to the prohibitions
of section 8A. The exceptions to section 8 are stated separately in section
IV ( a ) of this regulation.
SECTION V. PERMISSION OF TH E FEDERAL RESERVE BOARD

( ) In

a
general.— Section 8 of the Clayton Antitrust Act, as amended
by the acts of May 15, 1916, May 26, 1920, and March 9, 1928, authorizes
the Federal Reserve Board to permit any private banker or any officer,
director, or employee of any bank, banking association, or trust company,
or any class A director of a Federal reserve bank to serve as director,
officer, or employee of not more than two other banks, banking associa­
tions, or trust companies coming within the prohibitions of the Clayton
Act, if in the judgment of the Federal Reserve Board it is not incompatible
with the public interest, and permits may be issued covering relationships
between banks which are prohibited by section 8A as well as those pro­
hibited by section 8.
The Federal Reserve Board is authorized only to issue permits covering
private bankers and directors, officers and employees of banks, banking
8

associations and trust companies, and therefore cannot issue a permit to
a director, officer or employee of a national bank or a class A director of
a Federal reserve bank to be a director, officer or employee of a corpora­
tion other than a bank, banking association or trust company, or to be a
member of a partnership other than a firm of private bankers.4
( b ) When obtained.— Inasmuch as this exception to the prohibitions
o f the Clayton Act applies only when “ there is in force a permit therefor
issued by the Federal Reserve Board” , it is a violation of the law to serve
two or more banks in the prohibited classes before such a permit has been
obtained. A permit should be obtained, therefore, before becoming an
officer, director, or employee of more than one bank in the prohibited
classes. It may be procured before the person applying therefor has been
elected a director or appointed an officer or employee of any bank in the
prohibited classes.
(c) Applications fo r permission.— A person wishing to obtain a per­
mit from the Federal Reserve Board to serve banks coming within the
prohibitions of the Clayton Act should—
(1) Make formal application on F. R. B. Form 94, or, if a private
banker, on F. R. B. Form 94d.

(2) Obtain from each of the banks involved a statement on F. R. B.
Form 94a, showing the character of its business, together with a copy
of its last published statement of condition, and, if a private banker,
make a statement on F. R. B. Form 94e showing the character of his
or his firm’s business.
(3) Forward all these papers, in duplicate, to the Federal reserve
agent of his district, who will attach his recommendation on F. R. B.
Form 94b and forward them to the Federal Reserve Board.
Each of the forms referred to in this subsection is made a part of this
regulation.
( d ) Com patibility with the public interest.— In determining whether
the issuance o f such a permit would be compatible with the public interest,
the Federal Reserve Board will consider—
(1) Whether the banks involved are natural competitors;
(2) Whether their having the same directors, officers, or employees
would tend to lessen competition or to restrict credit;
(3) The condition and the character of the management of the
banks with which the applicant is connected and the extent of his
responsibility therefor;
(4) Whether the applicant discharges the duties and responsi­
bilities o f his office by attending directors’ meetings or otherwise;
(5) Whether the applicant, his family or his interests have abused
the credit facilities of the bank or banks he is already serving;
4See, however, exceptions Nos. 11, 12, and 13 on page 7.

9

(6) Whether the applicant’s influence upon the banks involved in
his application is likely to be helpful or harmful to such banks;
(7) The nature and extent of the loans made by each of such banks
secured by stock or bond collateral and the policy of each bank with
respect to making such loans; and
(8) Any other factors having a bearing upon the effect which the
issuance of the permit may have upon the public interest.
(e )
Burden is upon applicant and banks involved.— In view of the
fact that sections 8 and 8A of the Clayton Antitrust Act forbid interlocking
relationships between banks of certain classes except in cases where the
Federal Reserve Board finds the specific interlocking relationships not in­
compatible with the public interest and grants permits therefor, the burden
must rest upon each applicant for such a permit, and upon the banks in­
volved, to show to the satisfaction of the Board that it would not be
incompatible with the public interest to permit him to serve the banks
involved.
( /) A pproval or disapproval.— As soon as an application is acted
upon by the Board, the applicant will be advised of the action taken.
If the Board approves the application, a formal permit to serve the
banks involved will be issued to the applicant.
(g) Hearing.— If it appears to the Board that it would be incompatible
with the public interest to grant such a permit, the Board will so notify
the applicant and will afford him every opportunity to present any addi­
tional facts or arguments bearing on the subject before making final
decision in the case.
( h ) Effect o f permits.— A permit once granted continues in force
until revoked, and need not be renewed.
( i) Revocation.— All permits, however, are subject to revocation when­
ever the Federal Reserve Board, after giving reasonable notice to the per­
sons to whom they were issued and affording them an opportunity to be
heard, finds that the public interest requires their revocation.

10