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F e d e r a l R e s e r v e B a n k o f Da l l a s
DALLAS, TEXAS

February 22, 1961

REPRINT OF REGULATION L

To All Member Banks in the
Eleventh Federal Reserve District:
Enclosed is a copy of Regulation L, issued by the Board of
Governors of the Federal Reserve System, which has been re­
printed to conform with the style of the Code of the Federal
Regulations.
Member banks are requested to insert this reprint of the
Regulation in their ring binders containing the Regulations of
the Board of Governors and the Bulletins of this bank.
Yours very truly,
Watrous H. Irons
President

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

BOARD OF GOVERNORS
of the
FEDERAL RESERVE SYSTEM

INTERLOCKING BANK DIRECTORATES
UNDER THE CLAYTON ACT
▼

REGULATION L
(1 2 CFR 212)

As amended effective August 21, 1959

Print of October 1960

INQUIRIES REGARDING THIS REGULATION

Any inquiry relating to this regulation should be addressed to the
Federal Reserve Bank of the district in which the inquiry arises.

CONTENTS
Page
Sec. 212.0. Scope

of

P art ..............................................................................................

Sec. 212.1. P rohibitions

1

.............................................................................................

1

(a)

Directors, officers, and employees of member banks.........

1

(b)

Private bankers...........................................................................

1

Sec. 212.2. E xceptions ................................................................................................

1

(a)

Persons other than private bankers or directors, officers,
or employees of member banks..........................................

(b)

Banks not organized under National Bank Act, State law,
or laws of District of Colum bia..........................................

2

(c)

Relationships lawfully existing on August 23, 1935...........

2

(d )

Exceptions applicable to directors, officers, and employees
of member banks....................................................................

2

( e)

Exceptions applicable to private bankers.............................

3

Sec. 212.3. R elationships

1

B oard.......................................................

4

( a)

Morris Plan bank or similar institution...............................

4

(b )

Pending consolidation or merger..............................................

4

(c)

Trust company having no deposit accounts..........................

5

( d)

Exceptions applicable to a private banker.............................

5

(e)

Relationships lawfully existing on August 23, 1935 .............

6

Sec. 212.4. E nforcement ............................................................................................

6

Sec. 212.5. A mendments ............................................................................................

6

A ppendix -S tatutory P rovisions

7

permitted

by

REGULATION L

(12 CFR 212)
As amended effective August 21, 1959

INTERLOCKING BANK DIRECTORATES
UNDER THE CLAYTON ACT*
SECTION 212.0—SCOPE OF P A R T

This part is based upon and issued pursuant to the provisions of
section 8 of the Clayton Act (38 Stat. 732, 49 Stat. 718; 15 U.S.C. 19).1
SECTION 212.1—PRO H IBITION S

Under section 8 of the Clayton Act, except as stated in §212.2.
(a) Directors, officers, and employees of member banks.—No
person who is a director, officer, or employee of a member bank of the
Federal Reserve System can legally be at the same time a director,
officer, or employee of any other bank, banking association, savings
bank, or trust company organized under the National Bank Act or
organized under the laws of any State or of the District of Columbia;
(b ) Private bankers.—No private banker2 can legally be at the
same time a director, officer, or employee of any bank, banking asso­
ciation, savings bank, or trust company organized under the National
Bank Act or organized under the laws of any State or of the District
of Columbia.
SECTION 212.2— EX CE PTIO N S

The provisions of section 8 of the Clayton Act:
(a)
Persons other than private bankers or directors, officers, or
employees of member banks.—Do not apply to a person who is
neither a private banker nor a director, officer, or employee of a
member bank of the Federal Reserve System;
♦The text corresponds to the Code of Federal Regulations, Title 12, Chapter II, Part 212;
cited as 12 CFR 212.
1Section 32 o f the Banking Act o f 1933 (49 Stat. 709 ; 12 U.S.C. 78) is applicable in certain
circumstances to interlocking relationships between member banks and underwriters and deal­
ers in securities. See Part 218.
Section 17 (c) o f the Public Utility Act of 1935 (49 Stat. 831; 15 U.S.C. 79g (c ) ) is appli­
cable in certain circumstances to interlocking relationships between banks and public utility
companies and public utility holding companies. Inquiries regarding this section should be
addressed to the Securities and Exchange Commission and not to the Board of Governors of
the Federal Reserve System.
Section 305 (b) of the Federal Power Act (49 Stat. 856; 16 U.S.C. 825d ( b ) ) is applicable
in certain circumstances to interlocking relationships between public utility companies and
banks which are authorized by law to underwrite or participate in the marketing of securities
of a public utility. Inquiries regarding this section should be addressed to the Federal Power
Commission and not to the Board o f Governors of the Federal Reserve System.
2The term “ private banker’ ' means an unincorporated individual engaged in the banking
business or a member of an unincorporated firm engaged in such business.
1

2

REGULATION L

S ec. 212.2

(b) Banks not organized under National Bank Act, State law,
or laws of District of Columbia.—Do not prohibit a private banker
or a director, officer, or employee of a member bank of the Federal
Reserve System from being at the same time a director, officer, or
employee of any number of other banking institutions not organized
under the National Bank Act or under the laws of any State or of the
District of Columbia3;

(c) Relationships lawfully existing on August 23, 1935.—Do
not prohibit, until February 1, 1939, any interlocking relationship
involving a member bank, which was in existence on August 23, 1935,
the date of the enactment of the Banking Act of 1935, and which, at
that time, was lawful under the Clayton Act, either (1) because it was
authorized by a permit4 then in effect5 or (2) because it was other­
wise not subject to the prohibitions of the Clayton Act6;
(d) Exceptions applicable to directors, officers, and employees
of member banks.— Do not prohibit a director, officer, or employee
of a member bank of the Federal Reserve System from being at
the same time a director, officer, or employee of any number of the
following:

(1)
Banks, banking associations, savings banks, or trust com­
panies, more than 90 per cent of the stock of which is owned
directly or indirectly by the United States or by any corporation
of which the United States directly or indirectly owns more than
90 per cent of the stock;
3
In other words, the provisions of section 8 of the Clayton A ct do not prohibit a private
banker or a director, officer, or employee of a member bank of the Federal Reserve System
from being at the same time a director, officer, or employee of any number of the following::
(а) Joint Stock Land banks, Federal Land banks. Federal Reserve banks, Federal Interme­
diate Credit banks, The Central Bank for Cooperatives, Federal Home Loan banks, foreign
banking corporations organized under section 25(a) o f the Federal Reserve Act (41 Stat. 378,
as amended: 12 U.S.C. 611-631) and other institutions organized under laws of the United
States other than the National Bank A c t ;
(б ) Banking institutions organized under the laws of territories, dependencies, or insular
possessions of the United States, such as Puerto Rico or the Canal Zone, and not organized
under the National Bank Act; and
(c) Banking institutions organized under the laws of foreign countries.
Federal Savings and Loan Associations and Federal Credit Unions are not organized under
the National Bank Act or under the laws of any State or of the District of Columbia, and
therefore are excepted on that ground irrespective of whether they are “ banks” or “ banking
associations” within the meaning of the statute.
4 Relationships which were lawful on August 23, 1935, because authorized by a permit then
in effect were lawful within the meaning of this exception irrespective of whether the permit­
tee was then also serving in other relationships which were within the prohibitions of the
Clayton Act but which were not authorized by such permit.
5It is immaterial whether or not such permit contained a provision limiting its duration,
provided it was in effect on August 23, 1935.
“ The provisions of the Clayton Act regarding interlocking bank directorates in effect prior
to August 23, 1935, are analyzed in Regulation L, Series of 1933, which was published in the
Federal Reserve Bulletin for November 1933, page 711.

S ec. 212.2

REGULATION L

3

(2) Banks, banking associations, savings banks, or trust com­
panies which have been placed formally in liquidation or which
are in the hands of receivers, conservators, or other officials exer­
cising similar functions;
(3) Corporations principally engaged in international or foreign
banking or banking in a dependency or insular possession of the
United States which have entered into agreements with the Board
of Governors of the Federal Reserve System pursuant to section
25 of the Federal Reserve Act (39 Stat. 755, 41 Stat. 285, 286; 12
U.S.C. 601-605);
(4) Banks, banking associations, savings banks, or trust com­
panies, more than 50 per cent of the common stock of which is
owned directly or indirectly7 by persons who own directly or indi­
rectly7 more than 50 per cent of the common stock of such member
bank;
(5) Banks, banking associations, savings banks, or trust com­
panies not located and having no branch in the same city, town,
or village as that in which such member bank or any branch
thereof is located, or in any city, town, or village contiguous or
adjacent thereto8;
(6) Banks, banking associations, savings banks, or trust com­
panies not engaged in a class or classes of business9 in which such
member bank is engaged;
(7) Mutual savings banks having no capital stock;
(e)
Exceptions applicable to private bankers.— Do not prohibit
a private banker from being at the same time a member of any number
of firms of private bankers, or from being at the same time a director,
officer, or employee of any number of the following:
7The following are clear illustrations of indirect ownership: (1) where more than 50 per
cent of the stock of one bank is owned by the other bank; (2) where more than 50 per cent
of the stock of one bank is held in trust for the shareholders of the other bank; and (3) where
more than 50 per cent o f the stock of one bank is owned by a corporation all the stock of
which is owned by the shareholders of the other bank.
8 The Board has interpreted the term “ contiguous” as referring to cities, towns, and villages
whose corporate limits touch or coincide at some point, and has interpreted the word “ adja­
cent” as referring to cities, towns, and villages which, although not actually “ contiguous”
within the above interpretation of that word, are located in such close proximity and are so
readily accessible to each other as to be in practical effect a single city, town, or village, as
for example, cities, towns, or villages separated only by a water-course, or a suburb of a city
separated from that city by an intervening suburb.
9 The phrase “ class or classes of business” refers to the various types of business engaged in
by such institutions involving relationships with customers, such as (1) receiving commercial
deposits, (2) receiving savings deposits, (3) carrying checking accounts, (4) making com­
mercial loans, (5) making real estate loans, (6) making loans on stock or bond collateral, (7)
making “ personal” loans of the character usually made by Morris Plan or Industrial banks,
(8) engaging in corporate trust business, and (9) engaging in individual trust business.

4

REG U LATIO N L

Sec. 212.3

(1) Banks, banking associations, savings banks, or trust com­
panies, more than 90 per cent of the stock of which is owned
directly or indirectly by the United States or by any corporation
of which the United States directly or indirectly owns more than
90 per cent of the stock;
(2) Banks, banking associations, savings banks, or trust com­
panies which have been placed formally in liquidation or which
are in the hands of receivers, conservators, or other officials exer­
cising similar functions;
(3) Corporations principally engaged in international or foreign
banking or banking in a dependency or insular possession of the
United States which have entered into agreements with the Board
of Governors of the Federal Reserve System pursuant to section
25 of the Federal Reserve Act (39 Stat. 755, 41 Stat. 285, 286; 12
U.S.C. 601-605);
(4) Mutual savings banks having no capital stock.
SECTION 212.3— RELATIO NSH IPS P E R M IT T E D BY BOARD

In addition to any relationships covered by the foregoing exceptions,
not more than one of the following relationships is hereby permitted10
by the Board of Governors of the Federal Reserve System in the case
of any one individual:
(a ) Morris Plan bank or similar institution.—Any private banker
or any director, officer, or employee of a member bank of the Federal
Reserve System may be at the same time a director, officer, or employee
of not more than one cooperative bank, credit union or other similar
institution; and any private banker or any director, officer, or employee
of a member bank of the Federal Reserve System who is lawfully serv­
ing as a director, officer, or employee of a Morris Plan bank or similar
institution on January 31, 1939 may continue such service until June
1,1940;
ib) Pending consolidation or merger.—Any director, officer, or
employee of a member bank of the Federal Reserve System may be at
the same time a director, officer, or employee of not more than one
other bank, banking association, savings bank, or trust company if the
records of both institutions show that active consideration is being
given to the consolidation or merger of such member bank and such
other bank, banking association, savings bank, or trust company, or
■'’ The provisions formerly contained in section 8 of the Clayton Act authorizing the issuance
of individual permits by the Board were repealed by section 329 of the Banking Act of 1935,
and the Act now provides that the Board “ may by regulation permit such service as a direc­
tor, officer, or employee of not more than one other such institution or branch thereof * *
(See first paragraph of section 8 (49 Stat. 718; 15 U.S.C. 19).) Accordingly, individual
permits will no longer be issued.

S ec. 212.3

REGULATION L

5

that active consideration is being given to the purchase of a substantial
portion of the assets and the assumption of a substantial portion of the
liabilities of one such institution by the other;
Provided, That no interlocking relationship permitted pursuant to
this paragraph shall continue for a period or periods aggregating more
than six months;11
(c) Member banks not exercising trust powers and trust com­
panies not holding deposits.—Any director, officer, or employee of a
member bank of the Federal Reserve System which does not exercise
trust powers may be at the same time a director, officer, or employee
of not more than one trust company which does not receive or hold
deposits,12 and any director, officer, or employee of a trust company
which is a member of the Federal Reserve System and which does not
receive or hold deposits12 may be at the same time a director, officer,
or employee of not more than one bank, banking association, or savings
bank which does not exercise trust powers;
(d) Exceptions applicable to a private banker.—Any private
banker may be at the same time a director, officer, or employee of not
more than one of the following:
(1) A bank, banking association, savings bank, or trust com­
pany organized under the laws of any State or of the District of
Columbia which is not a member bank of the Federal Reserve
System;
(2) A member bank more than 50 per cent of the common stock
of which is owned directly or indirectly by such private banker or
by a firm of private bankers of which he is a member;
(3) A member bank not located and having no branch in the
same city, town, or village as that in which such private banker or
a firm of private bankers of which he is a member maintains a
place of business, or in any city, town, or village contiguous or
adjacent thereto;13
(4) A member bank not engaged in a class or classes of busi11 In the case of any relationship existing on the date this part becomes effective, such 6
months period shall begin to run on the effective date of this part.
12 For the purpose of paragraph (c ) , the term “ deposits” shall not include funds received
and held in a fiduciary capacity.
13The Board has interpreted the term “ contiguous” as referring to cities, towns, and vil­
lages whose corporate limits touch or coincide at some point, and has interpreted the word
“ adjacent” as referring to cities, towns and villages which, although not actually “ contiguous”
within the above interpretation o f that word, are located in such close proximity and are so
readily accessible to each other as to be in practical effect a single city, town, or village, as
for example, cities, towns, or villages separated only by a water-course, or a suburb of a city
separated from that city by an intervening suburb.

REGULATION L

6

S ecs . 212.3-212.5

ness14 in which such private banker or a firm of private bankers
of which he is a member is engaged;
(e) [Reserved]
(/) Restrictions.—Any director, officer, or employee of a member
bank of the Federal Reserve System may be at the same time a direc­
tor, officer, or employee of not more than one bank which is principally
engaged in international or foreign banking and which does not receive
deposits or make loans in the United States except as may be inci­
dental to its international or foreign business.
SECTIO N 212.4— E N F O R C E M E N T

(а) Action by Federal Reserve Agent.—Each Federal Reserve
Agent shall cause the information contained in reports of examination
of member banks and other information available to him from other
sources to be analyzed in the light of the provisions of section 8 of the
Clayton Act relating to interlocking relationships involving banks;
and, in the case of any apparent violation of that section, shall com­
municate with the banking institutions and with the director, officer
or employee involved, with a view of ascertaining whether the relation­
ships involved arc in conformity with the law, and if not, obtaining
compliance with the law,
(б) Reports to Board.—In each case in which, after taking the
steps outlined above, the Federal Reserve Agent finds that the rela­
tionships involved are in violation of the law and have not been
brought into conformity with the law within a reasonable time after
the matter was brought to the attention of the banking institutions and
the officer, director or employee involved, the Federal Reserve Agent
shall report the facts to the Board of Governors of the Federal Reserve
System with a recommendation as to the action to be taken.
SECTION 212.5—A M E N D M E N T S

This part is subject to amendment or repeal, in whole or in part,
in the discretion of the Board of Governors of the Federal Reserve
System.
14 The phrase “ class or classes of business’' refers to the various types of business engaged in
by such institutions involving relationships with customers, such as (1) receiving commercial
deposits, (2) receiving savings deposits, (3) carrying checking accounts, (4) making com­
mercial loans, (5) making real estate loans, (6) making loans on stock or bond collateral, (7)
making ''personal'’ loans of the character usually made by Morris Plan or Industrial banks,
(8) engaging in corporate trust business, and (9) engaging in individual trust business.

7

APPENDIX
STA TU TO R Y PROVISIONS

Section 8 of the Clayton Act (U.S.C., title 15, sec. 19), as amended
by the Banking Act of 1935, reads in part as follows:
S e c . 8. N o private banker or director, officer, or employee of
any member bank of the Federal Reserve System or any branch
thereof shall be at the same time a director, officer, or employee
of any other bank, banking association, savings bank, or trust
company organized under the National Bank Act or organized
under the laws of any State or of the District of Columbia, or any
branch thereof, except that the Board of Governors of the Federal
Reserve System may by regulation permit such service as a direc­
tor, officer, or employee of not more than one other such institu­
tion or branch thereof; but the foregoing prohibition shall not
apply in the case of any one or more of the following or any
branch thereof:

(1) A bank, banking association, savings bank, or trust com­
pany, more than 90 per centum of the stock of which is owned
directly or indirectly by the United States or by any corporation
of which the United States directly or indirectly owns more than
90 per centum of the stock.
(2) A bank, banking association, savings bank, or trust com­
pany which has been placed formally in liquidation or which is
in the hands of a receiver, conservator, or other official exercising
similar functions.
(3) A corporation principally engaged in international or for­
eign banking or banking in a dependency or insular possession of
the United States which has entered into an agreement with the
Board of Governors of the Federal Reserve System pursuant to
section 25 of the Federal Reserve Act.
(4) A bank, banking association, savings bank, or trust com­
pany, more than 50 per centum of the common stock of which is
owned directly or indirectly by persons who own directly or indi­
rectly more than 50 per centum of the common stock of such
member bank.
(5) A bank, banking association, savings bank, or trust com­
pany not located and having no branch in the same city, town, or
village as that in which such member bank or any branch thereof
is located, or in any city, town, or village contiguous or adjacent
thereto.

REGULATION L

8

(6) A bank, banking association, savings bank, or trust com­
pany not engaged in a class or classes of business in which such
member bank is engaged.
(7) A mutual savings bank having no capital stock.
Until February 1, 1939, nothing in this section shall prohibit
any director, officer, or employee of any member bank of the
Federal Reserve System, or any branch thereof, who is lawfully
serving at the same time as a private banker or as a director,
officer, or employee of any other bank, banking association, sav­
ings bank, or trust company, or any branch thereof, on the date
of enactment of the Banking Act of 1935, from continuing such
service.
The Board of Governors of the Federal Reserve System is
authorized and directed to enforce compliance with this section,
and to prescribe such rules and regulations as it deems necessary
for that purpose.
*

*

*

*

*

*

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 of 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 capacity shall not be affected
and he shall not become or be deemed amendable to any of the
provisions hereof by reason of any change in the affairs of such
bank or other corporation from whatsoever cause, whether spe­
cifically excepted by any of the provisions hereof or not, until the
expiration of one year from the date of his election or employment.