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F ederal R eserv e Bank O F DALLAS R O B E R T D. M C T E E R , J R . PRESIDENT AND C H IE F E X E C U T IV E O F F IC E R P«. | . June 28, 1994 ao TFXAS 7 5 2 6 5 -5 9 0 6 N o t i c e 94-64 TO: The C h i e f E x e c u t i v e O f f i c e r o f each f i n a n c i a l i n s t i t u t i o n in t h e E l e v e n t h F eder al Reserve D i s t r i c t SUBJECT Revi se d Pamphl ets f o r R e g u l a t i o n A ( E x t e n s i o n s o f C r e d i t by F e d e r a l R es er ve Bank s), R e g u l a t i o n 0 (Loans t o E x e c u t i v e O f f i c e r s , D i r e c t o r s and P r i n c i p a l S h a r e h o l d e r s o f Member Ban ks ), and R e g u l a t i o n AA ( U n f a i r o r D e c e p t i v e Acts o r P r a c t i c e s ) DETAILS The Board o f Governors o f t h e F e d er al Res er ve System has r e v i s e d R e g u l a t i o n A, e f f e c t i v e J a n u a r y 30, 1994. In a d d i t i o n , t h e Board r e v i s e d R e g u l a t i o n 0, e f f e c t i v e May 18, 1992, and R e g u l a t i o n AA, e f f e c t i v e May 1, 1992. Due t o a l i m i t e d s u p p l y , t h i s Bank was u n a b l e t o d i s t r i b u t e t h e R e g u l a t i o n 0 and t h e Reg ul a t i o n AA p amp hl et s e a r l i e r . We r e g r e t any i n c o n v e n i e n c e t h i s may have c a u s e d . Amendments t o R e g u l a t i o n 0 i n s l i p - s h e e t form were d i s t r i b u t e d in N o t i c e 93-47 and N o t i c e 93- 72. A d d i t i o n a l amendments were d i s t r i b u t e d in N o t i c e 94 -3 1. The amendments s h o ul d be r e t a i n e d in y o u r R e g u l a t i o n s b i n d e r al ong w i t h t h e r e v i s e d p am ph le t . No amendments t o R e g u l a t i o n AA have been d i s t r i b u t e d . For additional copies, bankers and others are encouraged to use one of the following toll-free numbers in contacting the Federal Reserve Bank of Dallas: Dallas Office (800) 333-4460; El Paso Branch Intrastate (800) 592-1631, Interstate (800) 351-1012; Houston Branch Intrastate (800) 392-4162, Interstate (800) 221-0363; San Antonio Branch Intrastate (800) 292-5810. This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) - 2 - ENCLOSURES The r e v i s e d p amp hl et s a r e e n c l o s e d . MORE INFORMATION For more i n f o r m a t i o n r e g a r d i n g R e g u l a t i o n A, p l e a s e c o n t a c t t h e D is c o u n t and C r e d i t Department a t (214) 922-5333. For more i n f o r m a t i o n r e g a r d i n g Regu la t i o n 0, p l e a s e c o n t a c t J a n e Anne Schmoker a t (214) 922- 5101. For more i n f o r m a t i o n r e g a r d i n g R e g u l a t i o n AA, p l e a s e c o n t a c t Eugene Coy a t (214) 922-6201. For a d d i t i o n a l c o p i e s o f t h i s Bank’ s n o t i c e or the pamphlets, p le ase c o n ta c t the Public A f f a ir s Department a t (214) 922-5254. Sincerely yours, Board of Governors of the Federal Reserve System Regulation A Extensions of Credit by Federal Reserve Banks 12 CFR 201; as amended effective January 30, 1994 * Any inquiry relating to this regulation should be addressed to the Federal Reserve Bank of the Federal Reserve District in which the inquiry arises. May 1994 Contents Page Page Section 201.1—Authority, scope and purpose....................................................... (a) Authority and sco p e.......................... (b) Purpose............................................... Section 201.2—Definitions........................... Section 201.3—Availability and terms . . . . (a) Adjustment credit.............................. (b) Seasonal credit................................... (c) Extended credit ................................. (d) Emergency credit for others.............. Section 201.4—Limitations on availability and assessments...................... (a) Advances to or discounts for undercapitalized insured depository institutions....................... (b) Advances to or discounts for critically undercapitalized insured depository institutions....................... (c) Assessments.............. ......................... (d) Information........................................ Section 201.5—Advances and discounts . . Section 201.6—General requirements.......... (a) Credit for capital purposes................ 1 (b) Compliance with law and 1 regulation .......................................... 1 (c) Information........................................ 1 (d) Indirect credit foroth ers.................... 3 Section 201.7—Branches and agencies . . . . 3 3 Section 201.8—Federal Intermediate Credit Banks............................................ 3 Section 201.9—No obligation to make 3 advances or discounts.............................. 3 Section 201.51—Short-term adjustment credit for depository institutions.............. Section 201.52—Extended credit for depository institutions.............................. 3 4 4 4 4 4 4 4 5 5 5 5 5 5 5 (a) Seasonal credit................................... 5 (b) Other extendedc re d it......................... 5 FEDERAL RESERVE ACT Sections 10B, 13, 1 9 ................................... 7 Regulation A Extensions of Credit by Federal Reserve Banks 12 CFR 201; as amended effective January 30, 1994 SECTION 201.1— Authority, Scope and Purpose the FDI Act (12 USC 18310(b)(1)(E)) and the implementing regulations. (a) Authority and scope. This part* is issued under the authority of sections 10A, 10B, 13, 13A, and 19 of the FRA (12 USC 347a, 347b, 343 et seq., 347c, 348 et seq., 374, 374a, and 461), other provisions of the FRA, and section 7(b) of the International Banking Act of 1978 (12 USC 347d) and relates to extensions of credit by Federal Reserve Banks to depository institutions and others. (c) (1) Depository institution means an institu tion that maintains reservable transaction accounts or nonpersonal time deposits and is— (i) an insured bank as defined in section 3 of the FDI Act (12 USC 1813(h)) or a bank which is eligible to make applica tion to become an insured bank under section 5 of such act (12 USC 1815); (ii) a mutual savings bank as defined in section 3 of the FDI Act (12 USC 1813(f)) or a bank which is eligible to make application to become an insured bank under section 5 of such act (12 USC 1815); (iii) A savings bank as defined in section 3 of the FDI Act (12 USC 1813(g)) or a bank which is eligible to make applica tion to become an insured bank under section 5 of such act (12 USC 1815); (iv) An insured credit union as defined in section 101 of the Federal Credit Union Act (12 USC 1752(7)) or a credit union which is eligible to make application to become an insured credit union pursuant to section 201 of such Act (12 USC 1781); (v) A member as defined in section 2 of the Federal Home Loan Bank Act (12 USC 1422(4)); or (vi) A savings association as defined in section 3 of the FDI Act (12 USC 1813(b)) which is an insured depository institution as defined in section 3 of the act (12 USC 1813(c)(2)) or is eligible to apply to become an insured depository institution under section 5 of the act (12 USC 1815(a)). (2) The term depository institution does not include a financial institution that is not re quired to maintain reserves under Regula tion D (12 CFR 204) because it is organ ized solely to do business with other financial institutions, is owned primarily by the financial institutions with which it does (b) Purpose. This part establishes rules under which Federal Reserve Banks may extend credit to depository institutions and others. Extending credit to depository institutions to accommodate commerce, industry, and agri culture is a principal function of Federal Re serve Banks. While open market operations are the primary means of affecting the overall supply of reserves, the lending function of the Federal Reserve Banks is an effective method of supplying reserves to meet the particular credit needs of individual depository institu tions. The lending functions of the Federal Reserve System are conducted with due re gard to the basic objectives of monetary pol icy and the maintenance of a sound and or derly financial system. SECTION 201.2— Definitions For purposes of this part, the following defini tions shall apply: (a) Appropriate federal banking agency has the same meaning as in section 3 of the FDI Act (12 USC 1813(q)). (b) Critically undercapitalized insured deposi tory institution means any insured depository institution as defined in section 3 of the FDI Act (12 USC 1813(c)(2)) that is deemed to be critically undercapitalized under section 38 of ♦T h e words “this part,” as used herein, mean Regula tion A (Code of Federal Regulations, title 12, chapter II, part 201). 1 § 201.2 business, and does not do business with the general public. (d) Liquidation loss means the loss that any deposit insurance fund in the FDIC would have incurred if the FDIC had liquidated the institution— (1) in the case of an undercapitalized in sured depository institution, as of the end of the later of— (i) 60 days— (A) in any 120-day period; (B) during which the institution was an undercapitalized insured depository institution; and (C) during which advances or dis counts were outstanding to the deposi tory institution from any Federal Re serve Bank; or (ii) the 60-calendar-day period following the receipt by a Federal Reserve Bank of a written certification from the chairman of the Board of Governors or the head of the appropriate federal banking agency that the institution is viable. (2) in the case of a critically undercapital ized insured depository institution, as of the end of the 5-day period beginning on the date the institution became a critically un dercapitalized insured depository institution. (e) Increased loss means the amount of loss to any deposit insurance fund in the FDIC that exceeds the liquidation loss due to— (1) an advance under section 10B(l)(a) of the FRA that is outstanding to an under capitalized or critically undercapitalized in sured depository institution without pay ment having been demanded as of the end of the periods specified in paragraphs (d)(1) and (2) of this section; or (2) an advance under section 10B(l)(a) of the Federal Reserve Act that is made after the end of such periods. (f) Excess loss means the lesser of the in creased loss or that portion of the increased loss equal to the lesser of— (1) the loss the Board of Governors or any Federal Reserve Bank would have incurred on the amount by which advances under section 10B(l)(a) exceed the amount of ad 2 Regulation A vances outstanding at the end of the periods specified in paragraphs (d)(1) and (2) of this section if those increased advances had been unsecured; or (2) the interest received on the amount by which the advances under section 10B(l)(a) exceed the amount of advances outstanding, if any, at the end of the periods specified in paragraphs (d)(1) and (2) of this section. (g) Transaction account and nonpersonal time deposit have the meanings specified in Regu lation D (12 CFR 204). (h) Undercapitalized insured depository insti tution means any insured depository institution as defined in section 3 of the FDI Act (12 USC 1813(c)(2)) that— (1) is not a critically undercapitalized in sured depository institution; and (2) (i) is deemed to be undercapitalized under section 38 of the FDI Act (12 USC 18310(b)(1)(C)) and the implementing regulations; or (ii) has received from its appropriate fed eral banking agency a composite CAMEL rating of 5 under the Uniform Financial Institutions Rating System (or an equivalent rating by its appropriate federal banking agency under a compara ble rating system) as of the most recent examination of such institution. (i) Viable, with respect to a depository institu tion, means that the Board of Governors or the appropriate federal banking agency has de termined, giving due regard to the economic conditions and circumstances in the market in which the institution operates, that the institu tion is not critically undercapitalized, is not expected to become critically undercapitalized, and is not expected to be placed in conserva torship or receivership. Although there are a number of criteria that may be used to deter mine viability, the Board of Governors be lieves that ordinarily an undercapitalized in sured depository institution is viable if the appropriate federal banking agency has ac cepted a capital restoration plan for the depos itory institution under 12 USC 1831o(e)(2) and the depository institution is complying with that plan. § 201.4 Regulation A SECTION 201.3— Availability and Terms (a) Adjustment credit. Federal Reserve Banks extend adjustment credit on a short-term basis to depository institutions to assist in meeting temporary requirements for funds or to cush ion more persistent shortfalls of funds pending an orderly adjustment of a borrowing institu tion’s assets and liabilities. Such credit gener ally is available only for appropriate purposes and after reasonable alternative sources of funds have been fully used, including credit from special industry lenders such as Federal Home Loan Banks, the National Credit Union Administration’s Central Liquidity Facility, and corporate central credit unions. Adjust ment credit is usually granted at the basic dis count rate, but under certain circumstances a special rate or rates above the basic discount rate may be applied. (b) Seasonal credit. Federal Reserve Banks extend seasonal credit for periods longer than those permitted under adjustment credit to as sist smaller depository institutions in meeting regular needs for funds arising from expected patterns of movement in their deposits and loans. A special rate or rates at or above the basic discount rate may be applied to seasonal credit. (1) Seasonal credit is only available if— (i) the depository institution’s seasonal needs exceed a threshold that the institu tion is expected to meet from other sources of liquidity (this threshold is cal culated as certain percentages, established by the Board of Governors, of the institu tion’s average total deposits in the pre ceding calendar year); (ii) the Federal Reserve Bank is satisfied that the institution’s qualifying need for funds is seasonal and will persist for at least four weeks; and (iii) similar assistance is not available from special industry lenders. (2) The Board may establish special terms for seasonal credit when depository institu tions are experiencing unusual seasonal de mands for credit in a period of liquidity strain. (c) Extended credit. Federal Reserve Banks extend credit to depository institutions under extended credit arrangements where similar assistance is not reasonably available from other sources, including special industry lend ers. Such credit may be provided where there are exceptional circumstances or practices af fecting a particular depository institution in cluding sustained deposit drains, impaired ac cess to money market funds, or sudden deterioration in loan-repayment performance. Extended credit may also be provided to ac commodate the needs of depository institu tions, including those with longer-term asset portfolios, that may be experiencing difficul ties adjusting to changing money market con ditions over a longer period, particularly at times of deposit disintermediation. A special rate or rates above the basic discount rate may be applied to extended credit. (d) Emergency credit for others. In unusual and exigent circumstances, a Federal Reserve Bank may, after consultation with the Board of Governors, advance credit to individuals, partnerships, and corporations that are not de pository institutions if, in the judgment of the Federal Reserve Bank, credit is not available from other sources and failure to obtain such credit would adversely affect the economy. The rate applicable to such credit will be above the highest rate in effect for advances to depository institutions. Where the collateral used to secure such credit consists of assets other than obligations of, or fully guaranteed as to principal and interest by, the United States or an agency thereof, an affirmative vote of five or more members of the Board of Governors is required before credit may be extended. SECTION 201.4— Limitations on Availability and Assessments (a) Advances to or discounts fo r undercapital ized insured depository institutions. A Federal Reserve Bank may make or have outstanding advances to or discounts for a depository in stitution that it knows to be an undercapital ized insured depository institution, only— (1) if, in any 120-day period, advances or discounts from any Federal Reserve Bank to that depository institution are not out standing for more than 60 days during 3 § 201.4 which the institution is an undercapitalized insured depository institution; or (2) during the 60 calendar days after the receipt of a written certification from the chairman of the Board of Governors or the head of the appropriate federal banking agency that the borrowing depository insti tution is viable; or (3) after consultation with the Board of Governors.1 (b) Advances to or discounts fo r critically un dercapitalized insured depository institutions. A Federal Reserve Bank may make or have outstanding advances to or discounts for a de pository institution that it knows to be a criti cally undercapitalized insured depository insti tution only— (1) during the 5-day period beginning on the date the institution became a critically undercapitalized insured depository institu tion; or (2) after consultation with the Board of Governors.2 (c) Assessments. The Board of Governors will assess the Federal Reserve Banks for any amount that it pays to the FDIC due to any excess loss. Each Federal Reserve Bank shall be assessed that portion of the amount that the Board of Governors pays to the FDIC that is attributable to an extension of credit by that Federal Reserve Bank, up to 1 percent of its capital as reported at the beginning of the cal endar year in which the assessment is made. The Board of Governors will assess all of the Federal Reserve Banks for the remainder of the amount it pays to the FDIC in the ratio that the capital of each Federal Reserve Bank bears to the total capital of all Federal Re serve Banks at the beginning of the calendar year in which the assessment is made, pro vided, however, that if any assessment ex ceeds 50 percent of the total capital and sur plus of all Federal Reserve Banks, whether to distribute the excess over such 50 percent shall be made at the discretion of the Board of Governors. 1In unusual circumstances, when prior consultation with the Board is not possible, a Federal Reserve Bank should consult with the Board as soon as possible after extending credit that requires consultation under this paragraph. 2 See footnote 1 in section 201.4(a)(3). 4 Regulation A (d) Information. Before extending credit a Federal Reserve Bank should ascertain if an institution is an undercapitalized insured de pository institution or a critically undercapital ized insured depository institution. SECTION 201.5— Advances and Discounts (a) Federal Reserve Banks may lend to depos itory institutions either through advances se cured by acceptable collateral or through the discount of certain types of paper. Credit ex tended by the Federal Reserve Banks gener ally takes the form of an advance. (b) Federal Reserve Banks may make ad vances to any depository institution if secured to the satisfaction of the Federal Reserve Bank. Satisfactory collateral generally includes United States government and federal-agency securities, and, if of acceptable quality, mort gage notes covering one- to four-family resi dences, state and local government securities, and business, consumer, and other customer notes. (c) If a Federal Reserve Bank concludes that a depository institution will be better accom modated by the discount of paper than by an advance, it may discount any paper endorsed by the depository institution that meets the re quirements specified in the FRA. SECTION 201.6— General Requirements (a) Credit fo r capital purposes. Federal Re serve credit is not a substitute for capital. (b) Compliance with law and regulation. All credit extended under this part shall comply with applicable requirements of law and of this part. Each Federal Reserve Bank— (1) shall keep itself informed of the general character and amount of the loans and in vestments of depository institutions with a view to ascertaining whether undue use is being made of depository-institution credit for the speculative carrying of or trading in securities, real estate, or commodities, or for any other purpose inconsistent with the maintenance of sound credit conditions; and Regulation A (2) shall consider such information in de termining whether to extend credit. (c) Information. A Federal Reserve Bank shall require any information it believes appropriate or desirable to ensure that paper tendered as collateral for advances or for discount is ac ceptable and that the credit provided is used in a manner consistent with this part. (d) Indirect credit fo r others. No depository institution shall act as the medium or agent of another depository institution in receiving Federal Reserve credit except with the permis sion of the Federal Reserve Bank extending credit. SECTION 201.7- -Branches and Agencies (a) Except as may be otherwise provided, this part shall be applicable to United States branches and agencies of foreign banks sub ject to reserve requirements under Regulation D (12 CFR 204) in the same manner and to the same extent as depository institutions. SECTION 201.8- -Federal Intermediate Credit Banks (a) A Federal Reserve Bank may discount for any Federal Intermediate Credit Bank agricul tural paper or notes payable to and bearing the endorsement of the Federal Intermediate Credit Bank that cover loans or advances made under subsections (a) and (b) of section 2.3 of the Farm Credit Act of 1971 (12 USC 2074) and that are secured by paper eligible for discount by Federal Reserve Banks. Any paper so discounted shall have a period re maining to maturity at the time of discount of not more than nine months. SECTION 201.9— No Obligation to Make Advances or Discounts (a) A Federal Reserve Bank shall have no ob ligation to make, increase, renew, or extend any advance or discount to any depository institution. § 201.52 SECTION 201.51— Short-Term Adjustment Credit for Depository Institutions The rates for short-term adjustment credit pro vided to depository institutions under section 201.3(a) of Regulation A are: Federal Reserve Bank Rate Effective Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 July July July July July July July July July July July July 2, 2, 2, 6, 2, 2, 2, 7, 2, 2, 2, 2, 1992 1992 1992 1992 1992 1992 1992 1992 1992 1992 1992 1992 S E C T IO N 2 0 1 .5 2 - -E x te n d e d C re d it fo r D e p o sito ry In stitu tio n s (a) Seasonal credit. The rate for seasonal cred it ex ten ded to depository in stitu tio n s under section 201.3(b)(1) is a flexible rate that takes into account rates on market sources of funds, but in no case will the rate charged be less than the rate for short-term adjustm ent credit as set out in section 201.51. Federal Reserve Bank Rate Effective Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 July July July July July July July July July July July July 2, 2, 2, 6, 2, 2, 2, 7, 2, 2, 2, 2, 1992 1992 1992 1992 1992 1992 1992 1992 1992 1992 1992 1992 (b) Other extended credit. The rates for other extended credit provided to depository institu tions under sustained liquidity pressures or 5 § 201.52 Regulation A where there are exceptional circumstances or practices involving a particular institution under section 201.3(b)(2) are: Federal Reserve Bank Rate Effective Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 July July July July July July July July July July July July 2, 2, 2, 6, 2, 2, 2, 7, 2, 2, 2, 2, 1992 1992 1992 1992 1992 1992 1992 1992 1992 1992 1992 1992 These rates apply for the first 30 days of bor rowing. For credit outstanding for more than 30 days, a flexible rate will be charged that takes into account rates on market sources of funds, but in no case will the rate charged be less than the rate for short-term adjustment credit, as set out in section 201.51, plus onehalf percentage point. Where extended credit provided to a particular depository institution is anticipated to be outstanding for an unusu ally prolonged period and in relatively large amounts, the 30-day time period may be shortened. Federal Reserve Act SECTION 10B*— Advances to Individual Member Banks (a) Any Federal Reserve Bank, under rules and regulations prescribed by the Board of Governors of the Federal Reserve System, may make advances to any member bank on its time or demand notes having maturities of not more than four months and which are se cured to the satisfaction of such Federal Re serve Bank. Notwithstanding the foregoing, any Federal Reserve Bank, under rules and regulations prescribed by the Board of Gover nors of the Federal Reserve System, may make advances to any member bank on its time notes having such maturities as the Board may prescribe and which are secured by mortgage loans covering a one-to-four family residence. Such advances shall bear in terest at a rate equal to the lowest discount rate in effect at such Federal Reserve Bank on the date of such note. [12 USC 347b(a). As added by act of Feb. 27, 1932 (47 Stat. 56); and amended by acts of Feb. 3, 1933 (47 Stat. 794); March 9, 1933 (48 Stat.7); Aug. 23, 1935 (49 Stat. 705); Oct. 18, 1974 (88 Stat.1368); March 31,1980 (94 Stat. 140); and Dec. 19, 1991(105 Stat. 2279).] (b) Limitations on advances. (1) Except as provided in paragraph (2), no advances to any undercapitalized depository institution by any Federal Reserve bank under this section may be outstanding for more than 60 days in any 120-day period. (2) (A) If— (i) the head of the appropriate Federal banking agency certifies in advance in writing to the Federal Reserve bank that any depository institution is via ble; or (ii) the Board conducts an examination of any depository institution and the Chairman of the Board certifies in writing to the Federal Reserve bank that the institution is viable, the limitation contained in paragraph (1) shall not apply during the 60-day period * Previously section 10(b), this section was redesignated by act of Dec. 19, 1991 (105 Stat. 2279). beginning on the date such certification is received. (B) The 60-day period may be extended for additional 60-day periods upon re ceipt by the Federal Reserve bank of ad ditional written certifications under subparagraph (A) with respect to each such additional period. (C) The authority of the head of any agency to issue a written certification of viability under this paragraph may not be delegated to any other person. (D) Notwithstanding paragraph (1), an undercapitalized depository institution which does not have a certificate of via bility in effect under this paragraph may have advances outstanding for more than 60 days in any 120-day period if the Board elects to treat— (i) such institution as critically under capitalized under paragraph (3); and (ii) any such advance as an advance described in subparagraph (A)(i) of paragraph (3). (3) (A) Notwithstanding any other provision of this section, if— (i) in the case of any critically under capitalized depository institution— (I) any advance under this section to such institution is outstanding with out payment having been demanded as of the end of the 5-day period beginning on the date the institution becomes a critically undercapitalized institution; or (II) any new advance is made to such institution under this section af ter the end of such period; and (ii) after the end of that 5-day period, any deposit insurance fund in the Fed eral Deposit Insurance Corporation in curs a loss exceeding the loss that the Corporation would have incurred if it had liquidated that institution as of the end of that period, the Board shall, subject to the limitations in subparagraph (B), be liable to the Fed eral Deposit Insurance Corporation for 7 § 10B the excess loss, without regard to the terms of the advance or any collateral pledged to secure the advance. (B) The liability of the Board under subparagraph (A) shall not exceed the lesser of the following: (i) The amount of the loss the Board or any Federal Reserve bank would have incurred on the increases in the amount of advances made after the 5day period referred to in subparagraph (A)if those increased advances had been unsecured. (ii) The interest received on the in creases in the amount of advances made after the 5-day period referred to in subparagraph (A). (C) The Board shall pay the Federal De posit Insurance Corporation the amount of any liability of the Board under subparagraph (A). (D) The Board shall report to the Con gress on any excess loss liability it incurs under subparagraph (A), as limited by subparagraph (B)(i), and the reasons therefore, not later than 6 months after incurring the liability. (4) A Federal Reserve bank shall have no obligation to make, increase, renew, or ex tend any advance or discount under this Act to any depository institution. (5) (A) The term “ appropriate Federal banking agency" has the same meaning as in section 3 of the Federal Deposit In surance Act. (B) The term “ critically undercapital ized” has the same meaning as in section 38 of the Federal Deposit Insurance Act. (C) The term “depository institution” has the same meaning as in section 3 of the Federal Deposit Insurance Act. (D) The term “undercapitalized deposi tory institution” means any depository in stitution which— (i) is undercapitalized, as defined in section 38 of the Federal Deposit In surance Act; or (ii) has a composite CAMEL rating of 5 under the Uniform Financial Institu tions Rating System (or an equivalent rating by any such agency under a comparable rating system) as of the Federal Reserve Act most recent examination of such institution. (E) A depository institution is “viable” if the Board or the appropriate Federal banking agency determines, giving due regard to the economic conditions and circumstances in the market in which the institution operates, that the institution— (i) is not critically undercapitalized; (ii) is not expected to become criti cally undercapitalized; and (iii) is not expected to be placed in conservatorship or receivership. [12 USC 347b(b). As added by act of Dec. 19, 1991 (105 Stat. 2279).] SECTION 13— Powers o f Federal Reserve Banks * * * * * 3. Discounts fo r Individuals, Partnerships, and Corporations In unusual and exigent circumstances, the Board of Governors of the Federal Reserve System, by the affirmative vote of not less than five members, may authorize any Federal Reserve Bank, during such periods as the said Board may determine, at rates established in accordance with the provisions of section 14, subdivision (d), of this Act, to discount for any individual, partnership, or corporation, notes, drafts, and bills of exchange when such notes, drafts, and bills of exchange are in dorsed or otherwise secured to the satisfaction of the Federal Reserve Bank: Provided, That before discounting any such note, draft, or bill of exchange for an individual or a partnership or corporation the Federal Reserve Bank shall obtain evidence that such individual, partner ship, or corporation is unable to secure ade quate credit accommodations from other bank ing institutions. All such discounts for individuals, partnerships, or corporations shall be subject to such limitations, restrictions, and regulations as the Board of Governors of the Federal Reserve System may prescribe. [12 USC 343. As added by act of July 21, 1932 (47 Stat. 715) and amended by acts of Aug. 23, 1935 (49 Stat. 714) and Dec. 19, 1991 (105 Stat. 2386).] Federal Reserve Act * * * * * 13. Advances to Individuals, Partnerships, and Corporations on Obligations o f United States Subject to such limitations, restrictions and regulations as the Board of Governors of the Federal Reserve System may prescribe, any Federal Reserve Bank may make advances to any individual, partnership or corporation on the promissory notes of such individual, part nership or corporation secured by direct obli gations of the United States or by any obliga tion which is a direct obligation of, or fully guaranteed as to principal and interest by, any agency of the United States. Such advances shall be made for periods not exceeding 90 days and shall bear interest at rates fixed from time to time by the Federal Reserve Bank, subject to the review and determination of the Board of Governors of the Federal Reserve System. [12 USC 347c. As added by act of March 9, 1933 (48 Stat. 7) and amended by act of Sept. 21, 1968 (82 Stat. 856).] 14. Receipt o f Deposits from, Discount Paper Endorsed by, and Advances to Foreign Banks • Subject to such restrictions, limitations, and regulations as may be imposed by the Board of Governors of the Federal Reserve System, each Federal Reserve Bank may receive de posits from, discount paper endorsed by, and make advances to any branch or agency of a foreign bank in the same manner and to the same extent that it may exercise such powers with respect to a member bank if such branch or agency is maintaining reserves with such Reserve Bank pursuant to section 7 of the In ternational Banking Act of 1978. In exercising any such powers with respect to any such branch or agency, each Federal Reserve Bank shall give due regard to account balances be ing maintained by such branch or agency with such Reserve Bank and the proportion of the assets of such branch or agency being held as reserves under section 7 of the International Banking Act of 1978. [12 USC 347d. As added by act of Sept. 17, 1978 (92 Stat. 621).] SECTION 19— Bank Reserves (b) Reserve requirements * * * * * (7) Discount and borrowing. Any depository institution in which transaction accounts or nonpersonal time deposits are held shall be entitled to the same discount and borrowing privileges as member banks. In the adminis tration of discount and borrowing privileges, the Board and the Federal Reserve banks shall take into consideration the special needs of savings and other depository institutions for access to discount and borrowing facilities consistent with their long-term asset portfolios and the sensitivity of such institutions to trends in the national money markets. [12 USC 461(b)(7). As amended by acts of Sept. 21, 1966 (80 Stat. 823) and March 31, 1980 (94 Stat. 133).] 9 Board o f Governors o f the Federal Reserve System Regulation O Loans to Executive Officers Directors and Principal Shareholders of Member Banks 12 CFR 215; as amended effective May 18, 1992 Any inquiry relating to this regulation should be addressed to the Federal Reserve Bank of the Federal Reserve District in which the inquiry arises. July 1992 Contents Page Page Section 215.12—Reporting requirement for credit secured by certain bank stock...................................................... Section 215.13—Civil Penalties.............. Subpart A—Loans by Member Banks to Their Executive Officers, Directors, and Principal Shareholders Section 215.1—Authority, purpose, and scope...................................................... (a) A uthority...................................... (b) Purpose and scope ...................... Section 215.2—Definitions...................... Section 215.3—Extension of c re d it........ Section 215.4— General prohibitions . . . . (a) Terms and creditworthiness........ (b) Prior approval.............................. (c) Lending lim it................................ (d) Aggregate lending lim it.............. (e) O verdrafts.................................... Section 215.5—Additional restrictions on loans to executive officers of member b a n k s .................................................... Section 215.6—Prohibition on knowingly receiving unauthorized extension of c re d it...................................... •............. Section 215.7—Extension of credit outstanding on March 10, 1979 .......... Section 215.8—Records of member b a n k s .................................................... Section 215.9—Reports by executive officers.................................................. Section 215.10—Report on credit to executive officers.................................. Section 215.11—Disclosure of credit from member banks to executive officers and principal shareholders . . . (a) Definitions.................................... (b) Public disclosure.......................... (c) Maintaining records.................... 1 1 1 1 3 4 4 4 5 5 5 6 6 6 7 7 7 7 7 7 8 8 8 Subpart B—Reports on Indebtedness of Executive Officers and Principal Shareholders to Correspondent Banks Section 215.20—Authority, purpose, and scope...................................................... (a) Authority...................................... (b) Purpose and scope ...................... Section 215.21—Definitions.................... Section 215.22—Report by executive officers and principal shareholders . . . (a) Annual re p o rt.............................. (b) Contents of report........................ (c) Definitions.................................... (d) Retention of reports at member b a n k s............................................ (e) Member bank’s responsibility . . . Section 215.23—Disclosure of credit from correspondent banks to executive officers and principal shareholders . . . (a) Public disclosure.......................... (b) Maintaining records.................... 8 8 8 8 9 9 9 9 9 10 10 10 10 STATUTORY PROVISIONS Revised Statutes section 5200.................. Federal Reserve Act section 22(g) and (h ) Bank Holding Company Act Amendments of 1970 section 1 0 6 ---Federal Deposit Insurance Act of 1950 section 7 ............................................... 11 12 15 18 Regulation O Loans to Executive Officers, Directors, and Principal Shareholders of Member Banks 12 CFR 215; as amended effective May 18, 1992 SUBPART A — LOANS BY MEM BER B A N K S TO TH EIR EXECUTIVE OFFICERS, DIRECTORS, A N D PRIN C IPA L SHAREHOLDERS SECTION 215.1— Authority, Purpose, and Scope (a) Authority. This subpart is issued pursuant to sections 11 (i), 22(g), and 22(h) of the Federal Reserve Act (12 USC 248(i), 375a, and 375b), 12 USC 1817(k)(3), and section 306 of the Federal Deposit Insurance Corpo ration Improvement Act of 1991 (Pub. L. No. 102-242, 105 Stat. 2236 (1991). • (b) Purpose and scope. This subpart governs any extension of credit by a member bank to an executive officer, director, or principal shareholder of (1) the member bank, (2) a bank holding company of which the member bank is a subsidiary, and (3) any other sub sidiary of that bank holding company. It also applies to any extension of credit by a member bank to (1) a company controlled by such a person and (2) a political or campaign committee that benefits or is controlled by such a person. This subpart also implements the re porting requirements of 12 USC 375a con cerning extensions of credit by a member bank to its executive officers and of 12 USC 1817(k) concerning extensions of credit by a member bank to its executive officers and principal shareholders. SECTION 215.2— Definitions For the purpose of this subpart, the following definitions apply unless otherwise specified: (a) Company means any corporation, part nership, trust (business or otherwise), associ ation, joint venture, pool syndicate, sole pro prietorship, unincorporated organization, or any other form of business entity not specifi cally listed herein. However, the term does not include— (1) a depository institution (as defined in 12 USC 1813) or (2) a corporation the majority of the shares of which are owned by the United States or by any state. (b )(1 ) Control o f a company or bank means that a person directly or indirectly, or act ing through or in concert with one or more persons— (i) owns, controls, or has the power to vote 25 percent or more of any class of voting securities of the company or bank; (ii) controls in any manner the election of a majority of the directors of the com pany or bank; or (iii) has the power to exercise a control ling influence over the management or policies of the company or bank. (2) A person is presumed to have control, including the power to exercise a control ling influence over the management or poli cies, of a company or bank if— (i) the person is (A) an executive officer or director of the company or bank and (B) directly or indirectly owns, controls, or has the power to vote more than 10 percent of any class of voting securities of the company or bank; or (ii) (A ) the person directly or indirectly owns, controls, or has the power to vote more than 10 percent of any class of vot ing securities of the company or bank, and (B) no other person owns, controls, or has the power to vote a greater per centage of that class of voting securities. (3) An individual is not considered to have control, including the power to exercise a controlling influence over the management or policies, of a company or bank solely by virtue of the individual’s position as an offi cer or director of the company or bank. (4) A person may rebut a presumption es tablished by paragraph (b) (2) of this sec tion by submitting to the appropriate feder al banking agency (as defined in 12 USC 1813(q)) written materials that, in the 1 §215.2 agency’s judgment, demonstrate an absence of control. (c) Director o f a member bank includes— (1) any director of a member bank, wheth er or not receiving compensation, (2) any director of a company of which the member bank is a subsidiary, and (3) any director of any other subsidiary of that company. An advisory director is not considered a director if the advisory director— (i) is not elected by the shareholders of the company or bank, (ii) is not authorized to vote on matters before the board of directors, and (iii) provides solely general policy advice to the board of directors. (d)(1 ) Executive officer of a company or bank means a person who participates or has authority to participate (other than in the capacity of a director) in major policy making functions of the company or bank, whether or not the officer has an official ti tle, the title designates the officer an assist ant, or the officer is serving without salary or other compensation.1 The chairman of the board, the president, every vice presi dent, the cashier, the secretary, and the treasurer of a company or bank are consid ered executive officers, unless the officer is excluded, by resolution of the board of di rectors or by the bylaws of the bank or company, from participation (other than in the capacity of a director) in major policy making functions of the bank or company, and the officer does not actually participate therein. (2) For the purpose of sections 215.4 and 215.7 of this part, an executive officer of a member bank includes an executive officer of a company of which the member bank is a subsidiary, and any other subsidiary of 1 The term is not intended to include persons who may have official titles and may exercise a certain measure of discretion in the performance of their duties, including dis cretion in the making of loans, but who do not participate in the determination of major policies of the bank or com pany and whose decisions are limited by policy standards fixed by the senior management of the bank or company. For example, the term does not include a manager or assist ant manager of a branch of a bank unless that individual participates, or is authorized to participate, in major policy making functions of the bank or company. 2 Regulation O that company, unless the executive officer of the subsidiary is excluded (by name or by title) from participation in major policy making functions of the member bank b y ^ ^ resolutions of the boards of directors both the subsidiary and the member bank and does not actually participate in such major policymaking functions. (e) Foreign bank has the meaning given in 12 USC 3101(7). (f) Insider means an executive officer, direc tor, or principal shareholder, and includes any related interest of such a person. (g) Immediate fam ily means the spouse of an individual, the individual’s minor children, and any of the individual’s children (includ ing adults) residing in the individual’s home. (h) The lending limit for a member bank is an amount equal to the limit on loans to a single borrower established by section 5200 of the Revised Statutes,2 12 USC 84. This amount is 15 percent of the bank’s unimpaired capital and unimpaired surplus in the case of loans that are not fully secured, and an addi tional 10 percent of the bank’s unimpaired capital and unimpaired surplus in the case of loans that are fully secured by readily market able collateral having a market value, as de termined by reliable and continuously avail able price quotations, at least equal to the amount of the loan. The lending limit also in cludes any higher amounts that are permitted by section 5200 of the Revised Statutes for the types of obligations listed therein as excep tions to the limit. A member bank’s unim paired capital and unimpaired surplus equals the sum of— (1) the “total equity capital” of the mem ber bank reported on its most recent consol idated report of condition filed under 12 USC 1817(a)(3), (2) any subordinated notes and debentures approved as an addition to the member bank’s capital struction by the appropriate federal banking agency, and 2 Where state law establishes a lending limit for a state member bank that is lower than the amount permitted in section 5200 of the Revised Statutes, the lending limit es tablished by applicable state laws shall be the lending limit for the state member bank. Regulation O • • §215.3 newal of any loan, a granting of a line of cred it or an extending of credit in any manner whatsoever, and includes— (1) a purchase under repurchase agree ment of securities, other assets, or obligations; (i) Member bank means any banking institu (2) an advance by means of an overdraft, tion that is a member of the Federal Reserve cash item, or otherwise; System, including any subsidiary of a member (3) issuance of a standby letter of credit bank. The term does not include any foreign (or other similar arrangement regardless of bank that maintains a branch in the United name or description) or an ineligible ac States, whether or not the branch is insured ceptance, as those terms are defined in sec (within the meaning of 12 USC 1813(s)) and tion 208.8(d) of this chapter; regardless of the operation of 12 USC (4) an acquisition by discount, purchase, 1813(h) and 12 USC 1828(j)(2). exchange, or otherwise of any note, draft, (j) Pay an overdraft on an account means to bill of exchange, or other evidence of in pay an amount upon the order of an ac count debtedness upon which an insider may be holder in excess of funds on deposit in the liable as maker, drawer, endorser, guaran account. tor, or surety; (5) a discount of promissory notes, bills of (k) Person means an individual or a exchange, conditional sales contracts, or company. similar paper, whether with or without re (/) Principal shareholder means a person course; but the acquisition of such paper by (other than an insured bank) that directly or a member bank from another bank, without indirectly, or acting through or in concert recourse, shall not be considered a discount with one or more persons, owns, controls, or by the member bank for the other bank; has the power to vote more than 10 percent of (6) an increase of an existing indebtedness, any class of voting securities of a member but not if the additional funds are advanced bank or company. Shares owned or contolled by the bank for its own protection for (i) by a member of an individual’s immedite fam accrued interest or (ii) taxes, insurance, or ily are considered to be held by the individual. other expenses incidental to the existing A principal shareholder of a member bank indebtedness; includes— (7) an advance of unearned salary or other (1) a principal shareholder of a company unearned compensation for a period in ex of which the member bank is a subsidiary, cess of 30 days; and and (8) any other similar transaction as a re (2) a principal shareholder of any other sult of which a person becomes obligated to subsidiary of that company. pay money (or its equivalent) to a bank, whether the obligation arises directly or in (m ) Related interest of a person means— directly, or because of an endorsement on (1) a company that is controlled by that an obligation or otherwise, or by any means person, or whatsoever. (2) a political or campaign committee that is controlled by that person or the funds or (b) An extension of credit does not include— services of which will benefit that person. (1) an advance against accrued salary or (3) any valuation reserves created by charges to the member bank’s income re ported on its most recent consolidated report of condition filed under 12 USC 1817(a)(3). (n) Subsidiary has the meaning given in 12 USC 1841(d), but does not include a subsidi ary of a member bank. SECTION 215.3— Extension o f Credit (a) An extension of credit is a making or re- other accrued compensation, or an advance for the payment of authorized travel or oth er expenses incurred or to be incurred on behalf of the bank; (2) a receipt by a bank of a check deposit ed in or delivered to the bank in the usual course of business unless it results in the 3 §215.3 carrying of a cash item for or the granting of an overdraft (other than an inadvertent overdraft in a limited amount that is promptly repaid, as described in section 215.4(e) of this part; (3) an acquisition of a note, draft, bill of exchange, or other evidence of indebtedness through (i) a merger or consolidation of banks or a similar transaction by which a bank acquires assets and assumes liabilities of another bank or similar organization or (ii) foreclosure on collateral or similar pro ceeding for the protection of the bank, pro vided that such indebtedness is not held for a period of more than three years from the date of the acquisition, subject to extension by the appropriate federal banking agency for good cause; (4) (i) an endorsement or guarantee for the protection of a bank of any loan or oth er asset previously acquired by the bank in good faith or (ii) any indebtedness to a bank for the purpose of protecting the bank against loss or of giving financial assistance to it; or (5) indebtedness of $5,000 or less arising by reason of any general arrangement by which a bank— (i) acquires charge or time credit ac counts or (ii) makes payments to or on behalf of participants in a bank credit card plan, check credit plan, interest-bearing over draft credit plan of the type specified in section 215.4(e) of this part, or similar open-end credit plan, provided— (A ) the indebtedness does not involve prior individual clearance or approval by the bank other than for the purpos es of determining authority to partici pate in the arrangement and compli ance with any dollar limit under the arrangement, and (B) the indebtedness is incurred under terms that are not more favorable than those offered to the general public. (c) Non-interest-bearing deposits to the cred it of a bank are not considered loans, ad vances, or extensions of credit to the bank of deposit; nor is the giving of immediate credit to a bank upon uncollected items received in Regulation O the ordinary course of business considered to be a loan, advance, or extension of credit to the depositing bank. (d) For purposes of sections 215.4(b) and (c) below, an extension of credit by a member bank is considered to have been made at the time the bank enters into a binding commit ment to make the extension of credit. (e) A participation without recourse is con sidered to be an extension of credit by the par ticipating bank, not by the originating bank. (f) An extension of credit is considered made to a person covered by this part to the extent that the proceeds of the extension of credit are used for the tangible economic benefit of, or are transferred to, such a person. SECTION 215.4— General Prohibitions (a) Terms and creditworthiness. No member bank may extend credit to any of its executive officers, directors, or principal shareholders or to any related interest of that person unless the extension of credit— (1) is made on substantially the same terms (including interest rates and collateral) as, and following credit-underwriting proce dures that are not less stringent than, those prevailing at the time for comparable trans actions by the bank with other persons that are not covered by this part and who are not employed by the bank, and (2) does not involve more than the normal risk of repayment or present other unfavor able features. (b) Prior approval. (1) No member bank may extend credit (which term includes granting a line of credit) to any of its execu tive officers, directors, or principal share holders or to any related interest of that person in an amount that, when aggregated with the amount of all other extensions of credit to that person and to all related inter ests of that person, exceeds the higher of $25,000 or 5 percent of the member bank’s unimpaired capital and unimpaired surplus, unless— (i) the extension of credit has been ap proved in advance by a majority of the Regulation O entire board of directors of that bank, and (ii) the interested party has abstained from participating directly or indirectly in the voting. (2) In no event may a member bank ex tend credit to any one of its executive offi cers, directors, or principal shareholders, or to any related interest of that person, in an amount that, when aggregated with all oth er extensions of credit to that person, and all related interests of that person, exceeds $500,000, except by complying with the re quirements of this paragraph. (3) Approval by the board of directors un der paragraph (b)(1 ) of this section is not required for an extension of credit that is made pursuant to a line of credit that was approved under paragraph (b)(1 ) of this section within 14 months of the date of the extension of credit. The extension of credit must also be in compliance with the re quirements of section 215.4(a) above. (4) Participation in the discussion, or any attempt to influence the voting, by the board of directors regarding an extension of credit constitutes indirect participation in the voting by the board of directors on an extension of credit. (c) Lending limit. No member bank may ex tend credit to any of its executive officers, di rectors, or principal shareholders or to any re lated interest of that person in an amount that, when aggregated with the amount of all other extensions of credit by the member bank to that person and to all related interests of that person, exceeds the lending limit of the member bank specified in secton 215.2(h) of this part. This prohibition does not apply to an extension of credit by a member bank to a company of which the member bank is a subsidi ary or to any other subsidiary of that company. (d) Aggregate lending limit. (1) General limit. A member bank may not extend credit to any insider unless the extension of credit is in an amount that, when aggregated with the amount of all outstanding extensions of credit by that bank to all of its insiders, does not exceed the bank’s unimpaired capital and unim §215.4 paired surplus (as defined in section 215.2(h) of this part). (2) Member banks with deposits o f less than $100,000,000. A member bank with deposits of less than $100,000,000 may by resolution of its board of directors increase the general limit specified in paragraph (d) (1) of this section for the one-year peri od ending May 18, 1993, to a level not to exceed two times the bank’s unimpaired capital and unimpaired surplus, if— (i) the board of directors determines that such higher limit is consistent with prudent, safe, and sound banking prac tices in light of the bank’s experience in lending to its insiders and is necessary to attract or retain directors or to prevent restricting the availability of credit in small communities; (ii) the resolution sets forth the facts and reasoning on which the board of di rectors bases the finding, including the amount of the bank’s lending to its insid ers as a percentage of the bank’s unim paired capital and unimpaired surplus as of the date of the resolution; (iii) the bank has submitted the resolu tion to the appropriate federal banking agency (as defined in 12 USC 1813(q)) with a copy to the Board of Governors; and (iv) the bank meets or exceeds, on a ful ly phased-in basis, all applicable capital requirements established by the appropri ate federal banking agency. (e) Overdrafts. No member bank may pay an overdraft of an executive officer or director of the bank3 on an account at the bank, unless the payment of funds is made in accordance with (1) a written, preauthorized, interestbearing extension of credit plan that specifies a method of repayment or (2) a written, preauthorized transfer of funds from another account of the account holder at the bank. This prohibition does not apply to payment of inadvertent overdrafts on an account in an ag 3 This prohibition does not apply to the payment by a member bank of an overdraft of a principal shareholder of the member bank , unless the principal shareholder is also an executive officer or director. This prohibition also does not apply to the payment by a member bank of an overdraft of a related interest of an executive officer, director, or prin cipal shareholder of the member bank. 5 §215.4 gregate amount of $1,000 or less, provided (1) the account is not overdrawn for more than five business days, and (2) the member bank charges the executive officer or director the same fee charged any other customer of the bank in similar circumstances. SECTION 215.5— Additional Restrictions on Loans to Executive Officers o f Member Banks (a) No member bank may extend credit to any of its executive officers,4 and no executive officer of a member bank shall borrow from or otherwise become indebted to the bank, ex cept in the amounts, for the purposes, and upon the conditions specified in paragraphs (c) and (d) of this section. (b) No member bank may extend credit in an aggregate amount greater than the amount permitted in paragraph (c)(3 ) of this section to a partnership in which one or more of the bank’s executive officers are partners and, ei ther individually or together, hold a majority interest. For the purposes of paragraph (c)(3 ) below, the total amount of credit ex tended by a member bank to such partnership is considered to be extended to each executive officer of the member bank who is a member of the partnership. (c) A member bank is authorized to extend credit to any executive officer of the bank— (1) in any amount to finance the education of the executive officer’s children; (2) in any amount to finance the purchase, construction, maintenance, or improvement of a residence of the executive officer, if the extension of credit is secured by a first lien on the residence and the residence is owned (or expected to be owned after the exten sion of credit) by the executive officer; and (3) for any other purpose not specified in section 215.5(c)(1) and (2), if the aggre gate amount of loans to that officer under this paragraph does not exceed at any one 4 Sections 215.5, 215.9, and 215.10 of this part imple ment section 22(g) of the Federal Reserve Act. For the purposes of those sections, an executive officer of a member bank does not include an executive officer of a bank holding company of which the member bank is a subsidiary or any other subsidiary of that bank holding company. 6 Regulation O time the higher of 2.5 percent of the bank’s capital and unimpaired surplus or $25,000, but in no event more than $100,000. (d) Any extension of credit by a member bank to any of its executive officers shall be— (1) promptly reported to the member bank’s board of directors; (2) in compliance with the requirements of section 215.4(a) of this part; (3) preceded by the submission of a de tailed current financial statement of the ex ecutive officer; and (4) made subject to the condition in writ ing that the extension of credit will, at the option of the member bank, become due and payable at any time that the officer is indebted to any other bank or banks in an aggregate amount greater than the amount specified for a category of credit in para graph (c) of this section. SECTION 215.6— Prohibition on Knowingly Receiving Unauthorized Extension o f Credit No executive officer, director, or principal shareholder of a member bank shall knowing ly receive (or knowingly permit any of that person’s related interests to receive) from a member bank, directly or indirectly, any ex tension of credit not authorized under this part. SECTION 215.7— Extensions o f Credit Outstanding on March 10, 1979 (a) Any extension of credit that was out standing on March 10, 1979, and that would, if made on or after March 10, 1979, violate section 215.4(c) above, shall be reduced in amount by March 10, 1980, to be in compli ance with the lending limit in section 215.4(c). Any renewal or extension of such an extension of credit on or after March 10, 1979, shall be made only on terms that will bring the extension of credit into compliance with the lending limit of section 215.4(c) by March 10, 1980. However, any extension of credit made before March 10, 1979, that bears a specific maturity date of March 10, 1980, or later, shall be repaid in accordance with its Regulation O • repayment schedule in existence on or before March 10, 1979. (b) If a member bank is unable to bring all extensions of credit outstanding on March 10, 1979, into compliance as required by para graph (a) of this section, the member bank shall promptly report that fact to the Comp troller of the Currency, in the case of a nation al bank, or to the appropriate Federal Reserve Bank, in the case of a state member bank, and explain the reasons why all the extensions of credit cannot be brought into compliance. The Comptroller or the Reserve Bank, as the case may be, is authorized, on the basis of good cause shown, to extend the March 10, 1980, date for compliance for any extension of cred it for not more than two additional one-year periods. SECTION 215.8— Records o f Member Banks • Each member bank shall maintain records necessary for compliance with the require ments of this part. These records shall (a) identify all executive officers, directors, and principal shareholders of the member bank and the related interests of these persons and (b) specify the amount and terms of each ex tension of credit by the member bank to these persons and to their related interests. Each member bank shall request at least annually that each executive officer, director, or princi pal shareholder of the member bank identify the related interests of that person. SECTION 215.9— Reports by Executive Officers Each executive officer5 of a member bank who becomes indebted to any other bank or banks in an aggregate amount greater than the amount specified for a category of credit in section 215.5(c) above, shall, within 10 days of the date the indebtedness reaches such a level, make a written report to the board of directors of the officer’s bank. The report shall state the lender’s name, the date and amount of each extension of credit, any security for it, 5 See note 4. §215.11 and the purposes for which the proceeds have been or are to be used. SECTION 215.10— Report on Credit to Executive Officers Each member bank shall include with (but not as part of) each report of condition (and copy thereof) filed pursuant to 12 USC 1817(a)(3) a report of all extensions of credit made by the member bank to its executive officers6 since the date of the bank’s previous report of condition. SECTION 215.11— Disclosure of Credit from Member Banks to Executive Officers and Principal Shareholders (a) Definitions. For the purposes of this sec tion, the following definitions apply: (1) “Principal shareholder of a member bank” means any person7 (other than an insured bank, or a foreign bank as defined in 12 USC 3101(7)) that, directly or indi rectly, owns, controls, or has power to vote more than 10 percent of any class of voting securities of the member bank. The term in cludes a person that controls a principal shareholder (e.g., a person that controls a bank holding company). Shares of a bank (including a foreign bank), bank holding company, or other company owned or con trolled by a member of an individual’s im mediate family are presumed to be owned or controlled by the individual for the pur poses of determining principal shareholder status. (2) “Related interest” means (A ) any company controlled by a person or (B) any political or campaign committee the funds or services of which will benefit a person or that is controlled by a person. For the pur pose of this section and subpart B, a related interest does not include a bank or a foreign bank (as defined in 12 USC 3101(7)). (b) Public disclosure, (i) Upon receipt of a written request from the public, a member bank shall make available the names of 6 See note 4. 7 The term “stockholder of record” appearing in 12 USC 1972(2) (G ) is synonymous with the term “person.” 7 §215.11 each of its executive officers8 and each of its principal shareholders to whom, or to whose related interests, the member bank had outstanding as of the end of the latest previous quarter of the year, an extension of credit that, when aggregated with all other outstanding extensions of credit at such time from the member bank to such person and to all related interests of such person, equaled or exceeded 5 percent of the mem ber bank’s capital and unimpaired surplus or $500,000, whichever amount is less. No disclosure under this paragraph is required if the aggregate amount of all extensions of credit outstanding at such time from the member bank to the executive officer or principal shareholder of the member bank and to all related interests of such a person does not exceed $25,000. (ii) A member bank is not required to dis close the specific amounts of individual ex tensions of credit. (c) Maintaining records. Each member bank shall maintain records of all requests for the information described in paragraph (b) of this section and the disposition of such re quests. These records may be disposed of after two years from the date of the request. SECTION 215.12— Reporting Requirement for Credit Secured by Certain Bank Stock Each executive officer or director of a member bank the shares of which are not publicly traded shall report annually to the board of directors of the member bank the outstanding amount of any credit that was extended to the executive officer or director and that is se cured by shares of the member bank. SECTION 215.13— Civil Penalties Any member bank, or any officer, director, employee, agent, or other person participating 8 For purposes of this section and subpart B, an executive officer of a member bank does not include an executive officer of a bank holding company of which the member bank is a subsidiary or of any other subsidiary of that bank holding company unless the executive officer is also an ex ecutive officer of the member bank. 8 Regulation O in the conduct of the affairs of the bank, that violates any provision of this subpart (other than section 215.11) is subject to civil penal ties as specified in section 29 of the Federal Reserve Act (12 USC 504). SUBPART B— REPORTS O N IN D EBTED NESS OF EXECUTIVE OFFICERS A N D PRINCIPAL SHAREHOLDERS TO CORRESPONDENT BA NK S SECTION 215.20— Authority, Purpose, and Scope (a) Authority. This subpart is issued pursuant to section 11 (i) of the Federal Reserve Act (12 USC 248(i) and 12 USC 1972(2) (F) (vi). (b) Purpose and scope. This subpart imple ments the reporting requirements of title VIII of the Financial Institutions Regulatory and Interest Rate Control Act of 1978 (FIRA) (Pub. L. 95-630), as amended by the Gam-St Germain Depository Institutions Act of 1982 (Pub. L. 97-320), 12 USC 1972(2) (G ). Title VIII prohibits (1) preferential lending by a bank to executive officers, directors, and princi pal shareholders of another bank when there is a correspondent account relationship between the banks, and (2) the opening of a correspondent account relationship between banks when there is a preferential extension of credit by one of the banks to an executive officer, director, or princi pal shareholder of the other bank. SECTION 215.21— Definitions For the purposes of this subpart, the following definitions apply unless otherwise specified: (a) “Bank” has the meaning given in 12 USC 1841 (c), and includes a branch or agency of a foreign bank, or a commercial lending compa ny controlled by a foreign bank or by a com pany that controls a foreign bank, where the branch or agency is maintained in a state of the United States or in the District of Colum bia or the commerical lending company is or ganized under state law. Regulation O (b) “Company,” “control o f a company or bank,” “executive officer,”9 “extension o f credit, ” “immediate family, ” and “person ” have the meanings provided in subpart A. (c) “Correspondent account” is an account that is maintained by a bank with another bank for the deposit or placement of funds. A correspondent account does not include— (1) time deposits at prevailing market rates, and (2) an account maintained in the ordinary course of business solely for the purpose of effecting federal funds transactions at pre vailing market rates or making Eurodollar placements at prevailing market rates. (d) “Correspondent bank” means a bank that maintains one or more correspondent ac counts for a member bank during a calendar year that in the aggregate exceed an average daily balance during that year of $100,000 or 0.5 percent of such member bank’s total de posits (as reported in its first consolidated re port of condition during that calendar year), whichever amount is smaller. (e) “Principal shareholder” and “related in terest” have the meanings provided in section 215.10 of subpart A. SECTION 215.22— Report by Executive Officers and Principal Shareholders (a) Annual report. If during any calendar year an executive officer or principal share holder of a member bank or a related interest of such a person has outstanding an extension of credit from a correspondent bank of the member bank, the executive officer or princi pal shareholder shall, on or before January 31 of the following year, make a written report to the board of directors of the member bank.10 (b) Contents o f report. The report required by this section shall include the following information: (1) the maximum amount of indebtedness 9 See note 8. 10 Persons reporting under this section are not required to include information on extensions of credit that are fully described in a report by a person they control or a person that controls them, provided they identify their relation ships with such other person. §215.22 of the executive officer or principal share holder and of each of that person’s related interests to each of the member banks’s cor respondent banks during the calendar year; (2) the amount of indebtedness of the ex ecutive officer or principal shareholder and of each of that person’s related interests outstanding to each of the member bank’s correspondent banks as of ten business days before the report required by this section is filed;11 and (3) a description of the terms and condi tions (including the range of interest rates, the original amount and date, maturity date, payment terms, security, if any, and any other unusual terms or conditions) of each extension of credit included in the in debtedness reported under paragraph (b)(1 ) of this section. (c) Definitions. For the purposes of this sec tion— (1) “Indebtedness” means an extension of credit, but does not include: (i) commercial paper, bonds, and deben tures issued in the ordinary course of business; and (ii) consumer credit (as defined in 12 CFR 226.2 (p )) in an aggregate amount of $5,000 or less from each of the mem ber bank’s correspondent banks, provid ed the indebtedness is incurred under terms that are not more favorable than those offered to the general public. (2) “Maximum amount of indebtedness” means, at the option of the reporting per son, either (i) the highest outstanding in debtedness during the calendar year for which the report is made, or (ii) the high est end of the month indebtedness outstand ing during the calendar year for which the report is made. (d) Retention o f reports at member banks. The reports required by this section shall be retained at the member bank for a period of three years. The Reserve Bank or the Comp11 If the amount of indebtedness outstanding to a corre spondent bank 10 days before the filing of the report is not available or cannot be readily ascertained, an estimate of the amount of indebtedness may be filed with the report, provided that the report is supplemented within the next 30 days with the actual amount of indebtedness. 9 §215.22 troller, as the case may be, may require these reports to be retained by the bank for an addi tional period of time. The reports filed under this section are not required by this regulation to be made available to the public and shall not be filed with the Reserve Bank or the Comptroller unless specifically requested. (e) Member bank’s responsibility. Each mem ber bank shall advise each of its executive offi cers and each of its principal shareholders (to the extent known by the bank) of the reports required by this section and make available to each of these persons a list of the names and addresses of the member bank’s correspon dent banks. SECTION 215.23— Disclosure o f Credit from Correspondent Banks to Executive Officers and Principal Shareholders (a) Public disclosure, (i) Upon receipt of a written request from the public, a member bank shall make available the names of each of its executive officers and each of its principal shareholders to whom, or to whose related interests, any correspondent bank of the member bank had outstanding, 10 Regulation O at any time during the previous calendar year, an extension of credit that, when ag gregated with all other outstanding exten sions of credit at such time from all corre spondent banks of the member bank to such person and to all related interests of such person, equaled or exceeded 5 percent of the member bank’s capital and unimpaired surplus or $500,000, whichever amount is less. No disclosure under this paragraph is required if the aggregate amount of all ex tensions of credit outstanding from all cor respondent banks of the member bank to the executive officer or principal sharehold er of the member bank and to all related interests of such a person does not exceed $25,000 at any time during the previous cal endar year. (ii) A member bank is not required to dis close the specific amounts of individual ex tensions of credit. (b) Maintaining records. Each member bank shall maintain records of all requests for the information described in paragraph (a) of this section and the disposition of such requests. These records may be disposed of after two years from the date of the request. Statutory Provisions Revised Statutes SECTION 5200 (a )(1 ) The total loans and extensions of credit by a national banking association to a person outstanding at one time and not ful ly secured, as determined in a manner con sistent with paragraph (2) of this subsec tion, by collateral having a market value at least equal to the amount of the loan or ex tension of credit shall not exceed 15 per centum of the unimpaired capital and un impaired surplus of the association. (2) The total loans and extensions of credit by a national banking association to a per son outstanding at one time and fully se cured by readily marketable collateral hav ing a market value, as determined by reli able and continuously available price quota tions, at least equal to the amount of the funds outstanding shall not exceed 10 per centum of the unimpaired capital and un impaired surplus of the association. This limitation shall be separate from and in ad dition to the limitation contained in para graph (1) of this subsection. (b) For the purposes of this section— (1) the term “loans and extensions of cred it” shall include all direct or indirect ad vances of funds to a person made on the basis of any obligation of that person to re pay the funds or repayable from specific property pledged by or on behalf of the per son and, to the extent specified by the Comptroller of the Currency, such term shall also include any liability of a national banking association to advance funds to or on behalf of a person pursuant to a contrac tual commitment; and (2) the term “person” shall include an in dividual, sole proprietorship, partnership, joint venture, association, trust, estate, busi ness trust, corporation, sovereign govern ment or agency, instrumentality, or politi cal subdivision thereof, or any similar entity or organization. (c) The limitations contained in subsection (a) shall be subject to the following exceptions: (1) Loans or extensions of credit arising from the discount of commercial or busi ness paper evidencing an obligation to the person negotiating it with recourse shall not be subject to any limitation based on capital and surplus. (2) The purchase of bankers’ acceptances of the kind described in section 13 of the Federal Reserve Act and issued by other banks shall not be subject to any limitation based on capital and surplus. (3) Loans and extensions of credit secured by bills of lading, warehouse receipts, or similar documents transferring or securing title to readily marketable staples shall be subject to a limitation of 35 per centum of capital and surplus in addition to the gener al limitations if the market value of the sta ples securing each additional loan or exten sion of credit at all times equals or exceeds 115 per centum of the outstanding amount of such loan or extension of credit. The sta ples shall be fully covered by insurance whenever it is customary to insure such staples. (4) Loans or extensions of credit secured by bonds, notes, certificates of indebtedness, or Treasury bills of the United States or by other such obligations fully guaranteed as to principal and interest by the United States shall not be subject to any limitation based on capital and surplus. (5) Loans or extensions of credit to or se cured by unconditional takeout commit ments or guarantees of any department, agency, bureau, board, commission, or establishment of the United States or any corporation wholly owned directly or indi rectly by the United States shall not be sub ject to any limitation based on capital and surplus. (6) Loans or extensions of credit secured by a segregated deposit account in the lend ing bank shall not be subject to any limita tion based on capital and surplus. (7) Loans or extensions of credit to any 11 Statutory Provisions financial institution or to any receiver, con servator, superintendent of banks, or other agent in charge of the business and property of such financial institution, when such loans or extensions of credit are approved by the Comptroller of the Currency, shall not be subject to any limitation based on capital and surplus. (8) (A ) Loans and extensions of credit arising from the discount of negotiable or nonnegotiable installment consumer pa per which carries a full recourse endorse ment or unconditional guarantee by the person transferring the paper shall be subject under this section to a maximum limitation equal to 25 per centum of such capital and surplus, notwithstanding the collateral requirements set forth in sub section (a)(2). (B) If the bank’s files or the knowledge of its officers of the financial condition of each maker of such consumer paper is reasonably adequate, and an officer of the bank designated for that purpose by the board of directors of the bank certifies in writing that the bank is relying primarily upon the responsibility of each maker for payment of such loans or extensions of credit and not upon any full or partial recourse endorsement or guarantee by the transferor, the limitations of this sec tion as to the loans or extensions of credit of each such maker shall be the sole ap plicable loan limitations. (9) (A ) Loans and extensions of credit se cured by shipping documents or instru ments transferring or securing title cover ing livestock or giving a lien on livestock when the market value of the livestock securing the obligation is not at any time less than 115 per centum of the face amount of the note covered, shall be sub ject under this section, notwithstanding the collateral requirements set forth in subsection (a)(2 ), to a maximum limita tion equal to 25 per centum of such capi tal and surplus. (B) Loans and extensions of credit which arise from the discount by dealers in dairy cattle of paper given in payment for dairy cattle, which paper carries a full recourse endorsement or unconditional 12 Regulation O guarantee of the seller, and which are se cured by the cattle being sold, shall be subject under this section, notwithstand ing the collateral requirements set forth in subsection (a)(2 ), to a limitation of 25 per centum of such capital and surplus. (10) Loans or extensions of credit to the Student Loan Marketing Association shall not be subject to any limitation based on capital and surplus. (d )(1 ) The Comptroller of the Currency may prescribe rules and regulations to ad minister and carry out the purposes of this section, including rules or regulations to de fine or further define terms used in this sec tion and to establish limits or requirements other than those specified in this section for particular classes or categories of loans or extensions of credit. (2) The Comptroller of the Currency also shall have authority to determine when a loan putatively made to a person shall for purposes of this section be attributed to an other person. [12 USC 84. As amended by acts of June 22, 1906 (34 Stat. 451); Sept. 24, 1918 (40 Stat. 967); Oct. 22, 1919 (41 Stat. 296); Feb. 25, 1927 (44 Stat. 1229); May 20, 1933 (48 Stat. 72); June 16, 1933 (48 Stat. 191); Aug. 23, 1935 (49 Stat. 713); June 11, 1942 (56 Stat. 356); July 15, 1949 (63 Stat. 440); Aug. 25, 1958 (72 Stat. 841); Sept. 9, 1959 (72 Stat. 488); Sept. 28, 1962 (76 Stat. 672); Joint Resolution of May 25, 1967 (81 Stat. 29); June 23, 1972 (86 Stat. 270); Oct. 15, 1982 (96 Stat. 1508); and Jan. 12, 1983 (96 Stat. 2509).] FED E R A L RESERVE ACT SECTION 22— Offenses o f Examiners, Member Banks, Officers, and Directors * * * * * (g) Loans to executive officers by members banks. (1) Except as authorized under this subsection, no member bank may extend credit in any manner to any of its own exec utive officers. No executive officer of any member bank may become indebted to that member bank except by means of an exten sion of credit which the bank is authorized Regulation O to make under this subsection. Any exten sion of credit under this subsection shall be promptly reported to the board of directors of the bank, and may be made only if— (A) the bank would be authorized to make it to borrowers other than its officers; (B) it is on terms not more favorable than those afforded other borrowers; (C) the officer has submitted a detailed current financial statement; and (D ) it is on condition that it shall be come due and payable on demand of the bank at any time when the officer is in debted to any other bank or banks on ac count of extensions of credit of any one of the three categories respectively re ferred to in paragraphs (2), (3), and (4) in an aggregate amount greater than the amount of credit of the same category that could be extended to him by the bank of which he is an officer. (2) With the specific prior approval of its board of directors, a member bank may make a loan to any executive officer of the bank if, at the time the loan is made— (A ) it is secured by a first lien on a dwell ing which is expected, after the making of the loan, to be owned by the officer and used by him as his residence, and (B) no other loan by the bank to the of ficer under authority of this paragraph is outstanding. (3) A member bank may make extensions of credit to any executive officer of the bank, to finance the education of the chil dren of the officer. (4) A member bank may make extensions of credit not otherwise specifically autho rized under this subsection to any executive officer of the bank, in an amount prescribed in a regulation of the member bank’s appro priate Federal banking agency. (5) Except to the extent permitted under paragraph (4), a member bank may not ex tend credit to a partnership in which one or more of its executive officers are partners having either individually or together a ma jority interest. For the purposes of para graph (4), the full amount of any credit so extended shall be considered to have been Statutory Provisions extended to each officer of the bank who is a member of the partnership. (6) Whenever an executive officer of a member bank becomes indebted to any bank or banks (other than the one of which he is an officer) on account of extensions of credit of any one of the three categories re spectively referred to in paragraphs (2), (3), and (4) in an aggregate amount great er than the aggregate amount of credit of the same category that could lawfully be ex tended to him by the bank, he shall make a written report to the board of directors of the bank, stating the date and amount of each such extension of credit, the security therefor, and the purposes for which the proceeds have been or are to be used. (7) This subsection does not prohibit any executive officer of a member bank from en dorsing or guaranteeing for the protection of the bank any loan or other asset previ ously acquired by the bank in good faith or from incurring any indebtedness to the bank for the purpose of protecting the bank against loss or giving financial assistance to it. (8) Each day that any extension of credit in violation of this subsection exists is a continuation of the violation for the purpos es of section 8 of the Federal Deposit Insur ance Act. (9) Each member bank shall include with (but not as part of) each report of condi tion and copy thereof filed under section 7(a)(3 ) of the Federal Deposit Insurance Act a report of all loans under authority of this subsection made by the bank since its previous report of condition. (10) The Board of Governors of the Fed eral Reserve System may prescribe such rules and regulations, including definitions of terms as it deems necessary to effectuate the purposes and to prevent evasions of this subsection. [12 USC 375a. As added by act of June 16, 1933 (48 Stat. 182); amended by Public Resolution approved June 14, 1935 (49 Stat. 375); and by acts of Aug. 23, 1935 (49 Stat. 716); April 25, 1938 (52 Stat. 223); June 20, 1939 (53 Stat. 842); July 3, 1967 (81 Stat. 109) and Nov. 10, 1978 (92 Stat. 3665).] (h) Extensions o f credit to executive officers, directors, and principal shareholders o f mem ber banks. (1) No member bank may extend 13 Statutory Provisions credit to any of its executive officers, direc tors, or principal shareholders, or to any re lated interest of such a person, except to the extent permitted under paragraphs (2), (3), (4), and (6). (2) A member bank may extend credit to its executive officers, directors, or principal shareholders, or to any related interest of such a person, only if the extension of cred it— (A ) is made on substantially the same terms, including interest rates and collat eral, as those prevailing at the time for comparable transactions by the bank with persons who are not executive offi cers, directors, principal shareholders, or employees of the bank; and (3) A member bank may extend credit to a person, described in paragraph (1) in an amount that, when aggregated with the amount of all other outstanding extensions of credit by that bank to each such person and that person’s related interests, would exceed an amount prescribed by regulation of the appropriate Federal banking agency (as defined in section 3 of the Federal De posit Insurance Act) only if— (A) the extension of credit has been ap proved in advance by a majority vote of that bank’s entire board of directors; and (B) the interested party has abstained from participating, directly or indirectly, in the deliberations or voting on the ex tension of credit. (4) A member bank may extend credit to any executive officer, director, or principal shareholder, or to any related interest of such a person, only if the extension of credit is in an amount that, when aggregated with the amount of all outstanding extensions of credit by that bank to that person and that person’s related interests, would not exceed the limits on loans to a single borrower es tablished by section 5200 of the Revised Statutes. For purposes of this paragraph, section 5200 of the Revised Statutes shall be deemed to apply to a State member bank as if the State member bank were a national banking association. (5) (A) A member bank may extend credit to any executive officer, director, or prin cipal shareholder, or to any related inter 14 Regulation O est of such a person, if the extension of credit is in an amount that, when aggre gated with the amount of all outstanding extensions of credit by that bank to its executive officers, directors, principal shareholders, and those persons’ related interests would not exceed the bank’s un impaired capital and unimpaired surplus. (B) The Board may, by regulation, pre scribe a limit that is more stringent than that contained in subparagraph (A ). (C) The Board may, by regulation, make exceptions to subparagraph (A) for member banks with less than $100,000,000 in deposits if the Board determines that the exceptions are impor tant to avoid constricting the availability of credit in small communities or to at tract directors to such banks. In no case may the aggregate amount of all out standing extensions of credit to a bank’s executive officers, directors, principal shareholders, and those persons’ related interests be more than 2 times the bank’s unimpaired capital and unimpaired surplus. (6) (A) If any executive officer or director has an account at the member bank, the bank may not pay on behalf of that per son an amount exceeding the funds on deposit in the account. (B) Subparagraph (A ) does not prohib it a member bank from paying funds in accordance with— (i) a written preauthorized, interestbearing extension of credit specifying a method of repayment; and (ii) a written preauthorized transfer of funds from another account of the executive officer or director at that bank. (7) No executive officer, director, or prin cipal shareholder shall knowingly receive (or knowingly permit any of that person’s related interests to receive) from a member bank, directly or indirectly, any extension of credit not authorized under this subsection. (8) For purposes of this subsection, any executive officer, director, or principal shareholder (as the case may be) of any company of which the member bank is a Statutory Provisions Regulation O subsidiary, or of any other subsidiary of that company, shall be deemed to be an ex ecutive officer, director, or principal share holder (as the case may be) of the member bank. (9) For purposes of this subsection: (A )(i) Except as provided in clause (ii), the term “company” means any corporation, partnership, business or other trust, association, joint venture, pool syndicate, sole proprietorship, un incorporated organization, or other business entity. (ii) The term “company” does not in clude— (I) an insured depository institu tion (as defined in section 3 of the Federal Deposit Insurance Act); or (II) a corporation the majority of the shares of which are owned by the United States or by any State. (B) A person controls a company or bank if that person, directly or indirectly, or acting through or in concert with 1 or more persons— (i) owns, controls, or has the power to vote 25 percent or more of any class of the company’s voting securities; (ii) controls in any manner the elec tion of a majority of the company’s di rectors; or (iii) has the power to exercise a con trolling influence over the company’s management or policies. (C) A person is an “executive officer” of a company or bank if that person partici pates or has authority to participate (other than as a director) in major poli cymaking functions of the company or bank. (D ) A member bank extends credit by making or renewing any loan, granting a line of credit, or entering into any similar transaction as a result of which a person becomes obligated (directly or indirectly, or by any means whatsoever) to pay money or its equivalent to the bank. (E) The term “member bank” includes any subsidiary of a member bank. (F ) The term “principal shareholder’' means any person that directly or indi rectly, or acting through or in concert with one or more persons, owns, con trols, or has the power to vote more than 10 percent of any class of voting securi ties of a member bank or company. (G ) A “related interest” of a person is— (i) any company controlled by that person; and (ii) any political or campaign com mittee that is controlled by that person or the funds or services of which will benefit that person. (H ) The term “subsidiary” has the same meaning as in section 2 of the Bank Holding Company Act of 1956. (10) The Board of Governors of the Fed eral Reserve System may prescribed such regulations, including definitions of terms, as it determines to be necessary to effectuate the purposes and prevent evasions of this subsection. [12 USC 375b. As added by act of Nov. 10, 1978 (92 Stat. 3644) and amended by acts of Oct. 15, 1982 (96 Stat. 1520, 1522) and Dec. 19, 1991 (105 Stat. 2355).] B A N K H O L D IN G CO M PANY ACT A M EN D M EN TS OF 1970 SECTION 106— Tie-In Arrangements * * * * * (b )(1 ) A bank shall not in any manner ex tend credit, lease or sell property of any kind, or furnish any service, or fix or vary the consideration for any of the foregoing, on the condition or requirement— (A ) that the customer shall obtain some additional credit, property, or service from such bank other than a loan, dis count, deposit, or trust service; (B) that the customer shall obtain some additional credit, property, or service from a bank holding company of such bank, or from any other subsidiary of such bank holding company; (C) that the customer provide some ad ditional credit, property, or service to such bank, other than those related to and usually provided in connection with a loan, discount, deposit, or trust service; (D ) that the customer provide some ad15 Statutory Provisions ditional credit, property, or service to a bank holding company of such bank, or to any other subsidiary of such bank holding company; or (E) that the customer shall not obtain some other credit, property, or service from a competitor of such bank, a bank holding company of such bank, or any subsidiary of such bank holding compa ny, other than a condition or requirement that such bank shall reasonably impose in a credit transaction to assure the soundness of the credit. The Board may by regulation or order permit such excep tions to the foregoing prohibition as it considers will not be contrary to the pur poses of this section. (2) (A) No bank which maintains a corre spondent account in the name of another bank shall make an extension of credit to an executive officer or director of, or to any person who directly or indirectly or acting through or in concert with one or more persons owns, controls, or has the power to vote more than 10 per centum of any class of voting securities of, such other bank, or to any related interest of such person, unless such extension of credit is made on substantially the same terms, including interest rates and collat eral as those prevailing at the time for comparable transactions with other per sons and does not involve more than the normal risk of repayment or present oth er unfavorable features. (B) No bank shall open a correspondent account at another bank while such bank has outstanding an extension of credit to an executive officer or director of, or oth er person who directly or indirectly or acting through or in concert with one or more persons owns, controls, or has the power to vote more than 10 per centum of any class of voting securities of, the bank desiring to open the account, or to any related interest of such person, unless such extension of credit was made on substantially the same terms, including interest rates and collateral as those pre vailing at the time for comparable trans actions with other persons and does not involve more than the normal risk of re Regulation O payment or present other unfavorable features. (C) No bank which maintains a corre spondent account at another bank shall make an extension of credit to an execu tive officer or director of, or to any per son who directly or indirectly acting through or in concert with one or more persons owns, controls, or has the power to vote more than 10 per centum of any class of voting securities of, such other bank, or to any related interest of such person, unless such extension of credit is made on substantially the same terms, in cluding interest rates and collateral as those prevailing at the time for compara ble transactions with other persons and does not involve more than the normal risk of repayment or present other unfa vorable features. (D ) No bank which has outstanding an extension of credit to an executive officer or director of, or to any person who di rectly or indirectly or acting through or in concert with one or more persons owns, controls, or has the power to vote more than 10 per centum of any class of voting securities of, another bank, or to any related interest of such person shall open a correspondent account at such other bank, unless such extension of credit was made on substantially the same terms, including interest rates and collateral as those prevailing at the time for comparable transactions with other persons and does not involve more than the normal risk of repayment or present other unfavorable features. (E) For purposes of this paragraph, the term “extension of credit” shall have the same meaning given it in section 23A of the Federal Reserve Act and the term “executive officer” shall have the same meaning given it under section 22(g) of the Federal Reserve Act. (F) (i) Any bank which violates or any officer, director, employee, agent, or other person participating in the con duct of the affairs of such bank who violates any provision of section 106(b)(2) shall forfeit and pay a civil penalty of not more than $1,000 per Regulation O day for each day during which such violation continues: Provided, That the agency having authority to impose a civil money penalty may, in its discre tion, compromise, modify, or remit any civil money penalty which is sub ject to imposition or has been imposed under such authority. The penalty may be assessed and collected by the Comp troller of the Currency in the case of a national bank, the Board in the case of a State member bank, or the Federal Deposit Insurance Corporation in the case of an insured nonmember State bank, by written notice. As used in this section, the term “violates” includes without any limitation any action (alone or with another or others) for or toward causing, bringing about, participating in, counselling, or aiding or abetting a violation. (ii) In determining the amount of the penalty the Comptroller of the Curren cy, the Board or the Federal Deposit Insurance Corporation, as the case may be, shall take into account the ap propriateness of the penalty with re spect to the size of the financial re sources and good faith of the bank or person charged, the gravity of the vio lation, the history of previous viola tions, and such other matters as justice may require. (iii) The bank or person assessed shall be afforded an opportunity for agency hearing, upon request made within ten days after issuance of the notice of as sessment. In such hearing, all issues shall be determined on the record pur suant to section 554 of title 5, United States Code. The agency determination shall be made by final order which may be reviewed only as provided in sub section (iv). If no hearing is requested as herein provided, the assessment shall constitute a final and unappeala ble order. (iv) Any bank or person against whom an order imposing a civil money penalty has been entered after agency hearing under this section may obtain review by the United States court of Statutory Provisions appeals for the circuit in which the home office of the bank is located, or the United States Court of Appeals for the District of Columbia Circuit, by fil ing a notice of appeal in such court within twenty days from the service of such order, and simultaneously send ing a copy of such notice by registered or certified mail to the Comptroller of the Currency, the Board or the Federal Deposit Insurance Corporation, as the case may be. The Comptroller of the Currency, the Board or the Federal Deposit Insurance Corporation, as the case may be, shall promptly certify and file in such court the record upon which the penalty was imposed, as provided in section 2112 of title 28, United States Code. The findings of the Comptroller of the Currency, the Board or the Federal Deposit Insur ance Corporation, as the case may be, shall be set aside if found to be unsup ported by substantial evidence as pro vided by section 706(2) (E) of title 5, United States Code. (v) If any bank or person fails to pay an assessment after it has become a fi nal and unappealable order, or after the court of appeals has entered final judgment in favor of the agency, the Comptroller of the Currency, the Board or the Federal Deposit Insur ance Corporation, as the case may be, shall refer the matter to the Attorney General, who shall recover the amount assessed by action in the appropriate United States district court. In such action the validity and appropriateness of the final order imposing the penalty shall not be subject to review. (vi) The Comptroller of the Curren cy, the Board and the Federal Deposit Insurance Corporation shall promul gate regulations establishing proce dures necessary to implement this section. (vii) All penalties collected under au thority of this section shall be covered into the Treasury of the United States. (viii) All penalties collected under au17 Statutory Provisions thority of this section shall be covered into the Treasury of the United States. (G )(i) Each executive officer and each stockholder of record who directly or indirectly owns, controls, or has the power to vote more than 10 per cen tum of any class of voting securities of an insured bank shall make a written report to the board of directors of such bank for any year during which such executive officer or shareholder has outstanding an extension of credit from a bank which maintain a corre sponding account in the name of such bank. Such report shall include the fol lowing information: (1) the maximum amount of in debtedness to the bank maintaining the correspondent account during such year of (a) such executive offi cer or stockholder of record, (b) each company controlled by such executive officer or stockholder, or (c) each political campaign commit tee the funds or services of which will benefit such executive officer or stockholder, or which is controlled by such executive officer or stockholder; (2) the amount of indebtedness to the bank maintaining the correspon dent account outstanding as of a date not more than ten days prior to the date of filing of such report of (a) such executive officer or stock holder of record, (b) each company controlled by such executive officer or stockholder, or (c) each political campaign committee the funds or services of which will benefit such executive officer or stockholder; (3) the range of interest rates charged on such indebtedness of such executive officer or stockholder of record; and (4) the terms and conditions of such indebtedness of such executive officer or stockholder of record. (ii) The appropriate Federal banking agencies are authorized to issue rules and regulations, including definitions Regulation O of terms, to require the reporting and public disclosure of information by any bank or executive officer or principal shareholder thereof concerning any ex tension of credit by a correspondent bank to the reporting bank’s executive officers or principal shareholders, or the related interests of such persons. (H ) For the purpose of this para graph— (i) the term “bank” includes a mutual savings bank; (ii) the term “related interests of such persons” includes any company con trolled by such executive officer, direc tor, or person, or any political or cam paign committee the funds or services of which will benefit such executive of ficer, director, or person or which is controlled by such executive officer, di rector, or person; and (iii) the terms “control of a compa ny” and “company” have the same meaning as under section 22 (h) of the Federal Reserve Act (12 U.S.C. 375b). [12 USC 1972. As amended by acts of Nov. 10, 1978 (92 Stat. 3690) and Oct. 15, 1982 (96 Stat. 1520, 1523, 1526).] FED ER A L DEPOSIT IN SU R A N C E ACT SECTION 7— Change in Control of Banks * * * * * (k) Annual report to Federal banking agency. The appropriate Federal banking agencies are authorized to issue rules and regulations, in cluding definitions of terms, to require the re porting and public disclosure of information by a bank or any executive officer or principal shareholder thereof concerning extensions of credit by the bank to any of its executive offi cers or principal shareholders, or the related interests of such persons. [12 u s e 1817(k). As added by act of Nov. 10, 1978 (92 Stat. 3683) and amended by act of Oct. 15, 1982 (96 Stat. 1527).] Board of Governors of the Federal Reserve System Regulation AA Unfair or Deceptive Acts or Practices 12 CFR 227; as amended effective May 1, 1992 Any inquiry relating to this regulation should be addressed to the Federal Reserve Bank of the Federal Reserve District in which the inquiry arises. August 1992 Contents Subpart A—Consumer Complaints Section 227.1—Definitions.......................... 1 Section 227.2—Consumer-complaint procedure.................................................. 1 (a) Submission of com plaints............... 1 (b) Response to complaints................... 2 (c) Referrals to other agencies.............2 Subpart B—Credit Practices Rule Section 227.11—Authority, purpose, and scope.......................................................... 2 Section 227.12—Definitions........................ 2 Section 227.13—Unfair credit-contract provisions.................................................. 3 (a) Confession of judgm ent................... 3 Page (b) Waiver of exemption.......................3 (c) Assignment of wages.......................3 (d) Security interest in household goods 3 Section 227.14— Unfair or deceptive practices involving cosigners .................. 3 (a) Prohibited practices.........................3 (b) Disclosure requirement................... 3 Section 227.15—Unfair late c h arg e s.......... 4 Section 227.16—State exemptions.............. 4 (a) General ru le .....................................4 (b) Applications.....................................4 Federal Trade Commission Improvement A ct Section 1 8 ( f ) ........... 5 Regulation AA Unfair or Deceptive Acts or Practices 12 CFR 227; as amended effective May 1, 1992 COMPLAINTS SECTION 227.1— Definitions For the purposes of this part,1 unless the con text indicates otherwise, the following defini tions apply: (a) Board means the Board of Governors of the Federal Reserve System. (b) Consumer complaint means an allegation by or on behalf of an individual, group of indi viduals, or other entity that a particular act or practice of a state member bank is unfair or deceptive, or in violation of a regulation is sued by the Board pursuant to a federal stat ute, or in violation of any other act or regula tion under which the bank must operate. (c) State member bank means a bank that is chartered by a state and is a member of the Federal Reserve System. (d) Unless the context indicates otherwise, “bank” shall be construed to mean a “state member bank,” and “complaint” to mean a “consumer complaint.” ^ ^ E C T I O N 227.2— Consumer-Complaint Procedure (a) Submission o f complaints. (1) Any con sumer having a complaint regarding a state member bank is invited to submit it to the Federal Reserve System. The complaint should be submitted in writing, if possible, and should include the following information: (i) a description of the act or practice that is thought to be unfair or deceptive, or in violation of existing law or regula tion, including all relevant facts; (ii) the name and address of the bank that is the subject of the complaint; and (iii) the name and address of the complainant. 1 The words “this part,” as used herein, mean title 12, chapter II, part 227 of the Code of Federal Regulations, cited as 12 CFR 227 and designated as Regulation AA. (2) Consumer complaints should be made to: (i) the Director, Division of Consumer and Community Affairs, Board of Gover nors of the Federal Reserve System, Washington, D.C. 20551; or (ii) the Federal Reserve Bank of the District in which the bank is located. The addresses of the Federal Reserve Banks are as follows: Federal Reserve Bank of Boston 600 Atlantic Avenue Boston, Massachusetts 02106 Federal Reserve Bank of New York 33 Liberty Street New York, New York 10045 Federal Reserve Bank of Philadelphia 100 North 6th Street Philadelphia, Pennsylvania 19105 Federal Reserve Bank of Cleveland 1455 East Sixth Street Cleveland, Ohio 44101 Federal Reserve Bank of Richmond 701 E. Byrd Street Richmond, Virginia 23219 Federal Reserve Bank of Atlanta 104 Marietta Street, N.W. Atlanta, Georgia 30303 Federal Reserve Bank of Chicago 230 South LaSalle Street Chicago, Illinois 60690 Federal Reserve Bank of St. Louis 411 Locust Street St. Louis, Missouri 63166 Federal Reserve Bank of Minneapolis 250 Marquette Avenue Minneapolis, Minnesota 55480 Federal Reserve Bank of Kansas City 925 Grand Avenue Kansas City, Missouri 64198 Federal Reserve Bank of Dallas 400 South Akard Street Dallas, Texas 75222 1 § 227.2 Federal Reserve Bank of San Francisco 400 Sansome Street San Francisco, California 94120 (b) Response to complaints. Within 15 busi ness days of receipt of a written complaint by the Board or a Federal Reserve Bank, a sub stantive response or an acknowledgment set ting a reasonable time for a substantive re sponse will be sent to the individual making the complaint. (c) Referrals to other agencies. Complaints received by the Board or a Federal Reserve Bank regarding an act or practice of an insti tution other than a state member bank will be forwarded to the federal agency having juris diction over that institution. SUBPART B— CREDIT PRACTICES RULE Regulation AA (other than banks referred to in paragraph (c)(1) of this section), branches and agen cies of foreign banks (other than federaL branches, federal agencies, and insure® state branches of foreign banks), commer cial lending companies owned or controlled by foreign banks, and organizations operat ing under section 25 or 25A of the Federal Reserve Act; and (3) the Federal Deposit Insurance Corpo ration, in the case of banks insured by the Federal Deposit Insurance Corporation (other than banks referred to in paragraphs (c)(1) and (c)(2 ) of this section), and in sured state branches of foreign banks. (4) the terms used in paragraph (c) of this section that are not defined in the Federal Trade Commission Act or in section 3(s) of the Federal Deposit Insurance Act (12 USC 1813(s)) shall have the meaning giv en to them in section 1(b) of the Interna tional Banking Act of 1978 (12 USC 3101). SECTION 227.11— Authority, Purpose, and Scope (a) Authority. This subpart is issued by the Board under section 18(f) of the Federal Trade Commission Act, 15 USC 57a(f) (§ 202(a) of the Magnuson-Moss Warran ty—Federal Trade Commission Improvement Act, Pub. L. 93-637). (b) Purpose. Unfair or deceptive acts or prac tices in or affecting commerce are unlawful under section 5(a)(1) of the Federal Trade Commission Act, 15 USC 45(a)(1). This subpart defines unfair or deceptive acts or practices of banks in connection with exten sions of credit to consumers. (c) Scope. This subpart applies to all banks and their subsidiaries, except savings banks that are members of the Federal Home Loan Bank System. Compliance is to be enforced by— (1) the Comptroller of the Currency, in the case of national banks, banks operating under the code of laws for the District of Columbia, and federal branches and federal agencies of foreign banks; (2) the Board of Governors of the Federal Reserve System, in the case of banks that are members of the Federal Reserve System 2 SECTION 227.12— Definitions For the purposes of this subpart, the following definitions apply: (a) “Consumer” means a natural person who seeks or acquires goods, services, or money for personal, family, or household use other thaM for the purchase of real property. ™ (b)(1 ) “Cosigner” means a natural person who assumes liability for the obligation of a consumer without receiving goods, services, or money in return for the obligation, or, in the case of an open-end credit obligation, without receiving the contractual right to obtain extensions of credit under the account. (2) “Cosigner” includes any person whose signature is requested as a condition to grant ing credit to a consumer, or as a condition for forbearance on collection of a consumer’s obligation that is in default. The term does not include a spouse whose signature is required on a credit obligation to perfect a security interest pursuant to state law. (3) A person who meets the definition in this paragraph is a “cosigner,” whether or not the person is designated as such on the credit obligation. §227.14 Regulation AA (c) “Earnings” means compensation paid or payable to an individual or for the individual’s ^ ^ c o u n t for personal services rendered or to rendered by the individual, whether de nominated as wages, salary, commission, bo nus, or otherwise, including periodic pay ments pursuant to a pension, retirement, or disability program. (d) “Household goods” means clothing, fur niture, appliances, linens, china, crockery, kitchenware, and personal effects of the con sumer and the consumer’s dependents. The term “household goods” does not include— (1) works of art; (2) electronic entertainment equipment (other than one television and one radio); (3) items acquired as antiques; that is, items over one hundred years of age, in cluding such items that have been repaired or renovated without changing their origi nal form or character; and (4) jewelry (other than wedding rings). (e) “Obligation” means an agreement be tween a consumer and a creditor. (f) “Person” means an individual, corpora tion, or other business organization. SECTIO N 227.13— Unfair CreditContract Provisions It is an unfair act or practice for a bank to enter into a consumer credit obligation that contains, or to enforce in a consumer credit obligation purchased by the bank, any of the following provisions: (a) Confession o f judgment. A cognovit or confession of judgment (for purposes other than executory process in the state of Louisi ana), warrant of attorney, or other waiver of the right to notice and the opportunity to be heard in the event of suit or process thereon. (b) Waiver o f exemption. An executory waiv er or a limitation of exemption from attach ment, execution, or other process on real or personal property held, owned by, or due to the consumer, unless the waiver applies solely to property subject to a security interest exe cuted in connection with the obligation. (c) Assignment o f wages. An assignment of wages or other earnings unless— (1) the assignment by its terms is revoca ble at the will of the debtor; (2) the assignment is a payroll deduction plan or preauthorized-payment plan, com mencing at the time of the transaction, in which the consumer authorizes a series of wage deductions as a method of making each payment; or (3) the assignment applies only to wages or other earnings already earned at the time of the assignment. (d) Security interest in household goods. A nonpossessory security interest in household goods other than a purchase-money security interest. SECTION 227.14— Unfair or Deceptive Practices Involving Cosigners (a) Prohibited practices. In connection with the extension of credit to consumers, it is— (1) a deceptive act or practice for a bank to misrepresent the nature or extent of co signer liability to any person; and (2) an unfair act or practice for a bank to obligate a cosigner unless the cosigner is in formed prior to becoming obligated of the nature of the cosigner’s liability. (b) Disclosure requirement. (1) A clear and conspicuous disclosure statement shall be given in writing to the cosigner prior to be coming obligated. The disclosure statement shall be substantially similar to the follow ing statement and shall either be a separate document or included in the documents evi dencing the consumer credit obligation. NOTICE TO COSIGNER You are being asked to guarantee this debt. Think carefully before you do. If the borrower doesn’t pay the debt, you will have to. Be sure you can afford to pay if you have to, and that you want to accept this responsibility. You may have to pay up to the full amount of the debt if the borrower does not pay. You may also have to pay late fees or collection costs, which increase this amount. The bank can collect this debt from you without first trying to collect from the borrower. The bank can use the same collection methods against 3 §227.14 you that can be used against the borrower, such as suing you, garnishing your wages, etc. If this debt is ever in default, that fact may become a part of your credit record. This notice is not the contract that makes you liable for the debt. (2) In the case of open-end credit, the dis closure statement shall be given to the co signer prior to the time that the cosigner becomes obligated for fees or transactions on the account. (3) A bank that is in compliance with this paragraph may not be held in violation of paragraph (a) (2) of this section. SECTION 227.15— Unfair Late Charges (a) In connection with collecting a debt aris ing out of an extension of credit to a consum er, it is an unfair act or practice for a bank to levy or collect any delinquency charge on a payment, when the only delinquency is attrib utable to late fees or delinquency charges assessed on earlier installments, and the pay ment is otherwise a full payment for the appli cable period and is paid on its due date or within an applicable grace period. (b) For the purposes of this section, “collect ing a debt” means any activity, other than the use of judicial process, that is intended to 4 Regulation AA bring about or does bring about repayment of all or part of money due (or alleged to be due) from a consumer. ^ SECTION 227.16— State Exemptions (a) General rule. (1) An appropriate state agency may apply to the Board for a deter mination that— (i) there is a state requirement or prohi bition in effect that applies to any trans action to which a provision of this sub part applies; and (ii) the state requirement or prohibition affords a level of protection to consumers that is substantially equivalent to, or greater than, the protection afforded by this subpart. (2) If the Board makes such a determina tion, the provision of this subpart will not be in effect in that state to the extent speci fied by the Board in its determination, for as long as the state administers and enforces the state requirement or prohibition effectively. (b) Applications. The procedures under which a state agency may apply for an exemp tion under this, section are the same as those set forth in appendix B to Regulation Z (12 CFR 226). M Federal Trade Commission Act Section 18(f) 15 USC 57a(f); 88 Stat. 2193, 2196; Pub. L. 93-637 (January 4, 1975) ------------------------------------------------------------------- • SECTION 18 * * * * * (f)(1) In order to prevent unfair or deceptive acts or practices in or affecting commerce (including acts or practices which are un fair or deceptive to consumers) by banks or savings and loan institutions described in paragraph (3), each agency specified in paragraph (2) or (3) of this subsection shall establish a separate division of con sumer affairs which shall receive and take appropriate action upon complaints with respect to such acts or practices by banks or savings and loan institutions described in paragraph (3) subject to its jurisdiction. The Board of Governors of the Federal Re serve System (with respect to banks) and the Federal Home Loan Bank Board (with respect to savings and loan institutions de scribed in paragraph (3)) and the National Credit Union Administration Board (with respect to Federal credit unions described in paragraph (4)) shall prescribe regulations to carry out the purposes of this sec tion, including regulations defining with specificity such unfair or deceptive acts or practices, and containing requirements pre scribed for the purpose of preventing such acts or practices. Whenever the Commis sion prescribes a rule under subsection (a)(1 )(B ) of this section, then within 60 days after such rule takes effect each such Board shall promulgate substantially simi lar regulations prohibiting acts or practices of banks or savings and loan institutions de scribed in paragraph (3) as the case may be, which are substantially similar to those prohibited by rules of the Commission and which impose substantially similar require ments, unless (A) any such Board finds that such acts or practices of banks or sav ings and loan institutions described in para graph (3), or Federal credit unions de scribed in paragraph (4), as the case may be, are not unfair or deceptive, or (B) the • Board of Governors of the Federal Reserve System finds that implementation of similar regulations with respect to banks, savings and loan institutions or Federal credit un ions would seriously conflict with essential monetary and payments systems policies of such Board, and publishes any such finding, and the reasons therefor, in the Federal Register. (2) Compliance with regulations pre scribed under this subsection shall be en forced under section 8 of the Federal Depo sit Insurance Act, in the case of— (A) national banks, banks operating un der the code of law for the District of Columbia, and Federal branches and Federal agencies of foreign banks, by the division of consumer affairs established by the Comptroller of the Currency; (B) member banks of the Federal Re serve System (other than national banks and banks operating under the code of law for the District of Columbia), branches and agencies of foreign banks (other than Federal branches, Federal agencies, and insured State branches of foreign banks), commercial lending com panies owned or controlled by foreign banks, and organizations operating under section 25 or 25A of the Federal Reserve Act, by the division of consumer affairs established by the Board of Governors of the Federal Reserve System; and (C) banks insured by the Federal Depo sit Insurance Corporation (other than banks referred to in subparagraph (A) or (B )) and insured State branches of for eign banks, by the division of consumer affairs established by the Board of Direc tors of the Federal Deposit Insurance Corporation. (3) Compliance with regulations pre scribed under this subsection shall be en forced under section 8 of the Federal Depo sit Insurance Act with respect to savings associations as defined in section 3 of the Federal Deposit Insurance Act. 5 Statutory Provisions (4) Compliance with regulations pre scribed under this subsection shall be en forced with respect to Federal credit unions under sections 120 and 206 of the Federal Credit Union Act (12 U.S.C. 1766 and 1786).Statutory Provisions (5) For the purpose of the exercise by any agency referred to in paragraph (2) of its powers under any Act referred to in that paragraph, a violation of any regulation prescribed under this subsection shall be deemed to be a violation of a requirement imposed under that Act. In addition to its powers under any provision of law specifi cally referred to in paragraph (2), each of the agencies referred to in that paragraph may exercise, for the purpose of enforcing compliance with any regulation prescribed under this subsection, any other authority conferred on it by law. (6) The authority of the Board of Gover nors of the Federal Reserve System to issue 6 Regulation AA regulations under this subsection does not impair the authority of any other agency designated in this subsection to make rulgfr respecting its own procedures in enforciB compliance with regulations prescribed un der this subsection. (7) Each agency exercising authority un der this subsection shall transmit to the Congress each year a detailed report on its activities under this paragraph during the preceding calendar year. The terms used in this paragraph that are not defined in the Federal Trade Commission Act or otherwise defined in section 3(s) of the Federal Deposit Insurance Act (12 U.S.C. 1813(s)) shall have the meaning given to them in section 1(b) of the International Banking Act of 1978 (12 U.S.C. 3101). [15 USC 57a(f). As amended by acts of July 23, 1979 (93 Stat. 95); March 31, 1980 (94 Stat. 174); Aug. 10, 1987 (101 Stat. 655); Aug. 9, 1989 (103 Stat. 441); and Dec. 19, 1991 (105 Stat. 2302).]
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