Full text of Federal Reserve Bank of New York Circulars : Rules Regarding Delegation of Authority of the Board of Governors of the Federal Reserve System

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0_t

C jO\j£xJU)U^

October 2 k , 1975

To the Addressee:
Enclosed is a copy of the Rules Regarding Delegation of Authority
of the Board of Governors of the Federal Reserve System, as amended effective
September 30, 1975*

The reprinted Rules replace the April k t 197^ printing of

the Rules, together with all amendments thereto.




Circulars Division
Federal Reserve Bank of New York

BOARD OF GOVERNORS
o f th e

FED ER A L R ESERV E SYSTEM

RULES REGARDING DELEGATION OF AUTHORITY

(1 2 C F R 2 65)

As amended effective September 30, 1975

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




CONTENTS

S e c . 265.1— D

e l e g a t io n

of

G enerally

Sec.

265.1a— S p e c i f i c
g a ted

to

F

u n c t io n s

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

3

F u n c tio n s
D e le ­
B oard M em b ers

3

(a) The Committee on Federal Reserve
Bank A c tiv itie s....................................

3

(b) Any Board Member designated by
the Chairman ......................................

4

Sec.

265.2— S p e c i f i c

F u n c tio n s
D e le ­
g a te d t o B oard E m p lo y e e s
and t o F e d e r a l R eserv e
B a n k s .........................................

(a) The Secretary of the B o a r d .................
(b) The General Counsel of the Board . .
(c) The Director of the Division of Super­
vision and R egu lation ........................
(d) The Director of the Division of Fed­
eral Reserve Bank Operations . . . .
(e) The Director of the Division of Per­
sonnel Administration .....................
(f) Each Federal Reserve B a n k ...............
(g) The Director of the Division of Inter­
national F in a n c e .................................
(h) The Director of the Office of Saver
and Consumer Affairs ......................
S e c . 265.3 — R e v ie w

4

gated

of

A c t io n

at

4
7
8
9
10
10
18
18

D ele­

L e v e l ..............................

19

STATUTORY AUTHORITY

This regulation is issued under authority of
section 11 (k) of the Federal Reserve Act (12
U.S.C. 2 4 8 ( k ) ), which reads as follows:
Sec. 11. The Board of Governors of the Fed­
eral Reserve System shall be authorized and em­
powered:
*

*

*

*

*

(k) To delegate, by published order or rule
and subject to the Administrative Procedure Act,




any of its functions, other than those relating to
rulemaking or pertaining principally to monetary
and credit policies, to one or more hearing exam­
iners, members or employees of the Board, or
Federal Reserve Banks. The assignment of re­
sponsibility for the performance of any function
that the Board determines to delegate shall be a
function of the Chairman. The Board shall, upon
the vote of one member, review action taken at a
delegated level within such time and in such
manner as the Board shall by rule prescribe.

RULES REGARDING DELEGATION OF AUTHORITY*
(12 CFR 265)

As amended effective September 30, 1975

(ii)
in connection with year-end salary re­
views, the salary of any officer of a Federal Re­
serve Bank at the level of Senior Vice President
(Salary Group A ), excluding the Manager of the
System Open Market Account and the Special
Manager for Foreign Currency Operations for such
Account, and the salary of any General Auditor
of a Federal Reserve Bank.

SECTION 265.1— DELEGATION OF
FUNCTIONS GENERALLY
Pursuant to the provisions of section 11 (k) of
the Federal Reserve Act (12 U.S.C. 2 4 8 ( k ) ) , the
Board of Governors of the Federal Reserve Sys­
tem delegates authority to exercise those of its
functions described in this Part, subject to the
limitations and guidelines herein prescribed. The
Chairman of the Board of Governors assigns the
responsibility for the performance of such dele­
gated functions to the persons herein specified. A
delegee may submit any matter to the Board for
determination if he considers such submission ap­
propriate because of the importance or complexity
of the matter.

(2 ) To approve or disapprove:
(i) changes in maximum and minimum
salaries for the respective grades o f the salary
structure for nonofficial employees of each Fed­
eral Reserve Bank and branch thereof,
(ii) an increase in the special maximum
salary for Grade 16 of such salary structure for
each Reserve Bank or branch, and

SECTION 265.1a— SPECIFIC FUNCTIONS
DELEGATED TO BOARD MEMBERS
(a)

(iii) the payment of salary to any such
employee in excess of the maximum or below the

T he C om m ittee on Federal Reserve Bank minimum for the grade in which the employee’s

A ctivities, consisting of at least three members of
the Board designated by the Chairman, is author­
ized, to act upon matters as set forth in this section
pursuant to the twenty-second paragraph of sec­
tions 4 and 11 (j ) of the Federal Reserve Act
(12 U.S.C. §§307 and 2 4 8 ( j ) ) and subject to such
general guidelines as may be prescribed by the
Board. With respect to any approval action taken
by the Committee pursuant to authority delegated
herein involving a controversial matter, a policy
consideration, or an expenditure of funds exceed­
ing $500,000, the Committee will inform the
Board by memo before giving notice of its ap­
proval to the Reserve Bank. For a period of three
days, any member of the Board may request that
the matter be scheduled for review by the Board.
The Committee is authorized:

position is classified.
(3 ) To approve or disapprove:
(i) amendments to the authorization from
the Board of Governors to the Federal Reserve
Banks for the payment of separation allowances
upon the involuntary termination of employment
of any officer or employee of a Federal Reserve
Bank or branch, and
(ii) payment of such a separation allow­
ance to any officer of a Reserve Bank or branch.
(4 ) To approve or disapprove: the payment
of salary to any officer (other than the President
or First Vice President) or employee of a Federal
Reserve Bank whose services are retained for more
than 90 days after attainment of normal retire­
ment age.

(1 ) To approve or disapprove:
(i)
changes in the salary structure
officers, other than the President and First Vice
President, of each Federal Reserve Bank and
branch thereof, and
♦This text corresponds to the C ode o f Federal R egula­
tions, Title 12, Chapter II, Part 265, cited as 12 C F R
265. The w ords “ this Part,” as used herein, mean Rules
Regarding Delegation o f Authority.




3

(5 ) To approve or disapprove: amendments
forthe Guidelines and Objectives for Health Insur­
to
ance prescribed by the Board of Governors for
officers and employees of Federal Reserve Banks
and their branches. In the exercise of any author­
ity delegated under this paragraph (a ), the Com­
mittee shall be guided by the objectives of pro­
moting the efficiency of Reserve Bank operations
and of maintaining the morale of Reserve Bank

DELEGATION OF AUTHORITY

§§ 2 6 5 . l a - 2 6 5 . 2

personnel and shall give appropriate attention to
salary levels and employment practices in the
relevant community but with due regard to the
public character of the Federal Reserve System.

(9 ) To approve or disapprove specific proj­
ects proposed in accordance with ongoing System
programs previously approved by the Board, such
as the automated clearing house program, pro­
vided the Committee adheres to the Board’s bud­
getary constraints.

(6 ) To approve or disapprove specific Re­
serve Bank proposals to acquire land for current
or future building purposes, provided that the
Board has previously authorized the general R e­
serve Bank expansion or building program for
which the land is sought and provided that each
proposed land acquisition requires commitment
of no more than one million dollars ($1,000,0 0 0 ).

(1 0 ) To approve Reserve Bank purchases of
computers and other major automation equip­
ment, provided that the staff of the Division of
Federal Reserve Bank Operations indicates the
return on the investment is adequate to recapture
the investment within 5 years and provided the
total capital commitment in the System for such
purchases does not exceed ten million dollars
($10,000,000) annually.

(7 ) To approve or disapprove:
(i) Reserve Bank studies, analyses and
similar commitments for a Reserve Bank building
or expansion program at a stage after the general
Reserve Bank building or expansion program has
been approved by the Board and prior to the
Board decision to permit the Reserve Bank to
accept bids and award contracts,

(1 1 ) To review and approve reports on Fed­
eral Reserve Bank examinations and Federal Re­
serve Bank operations reviews provided that
issues of unusual import be presented to the
Board and provided that the Committee present
an annual summary of Reserve Bank operations
and problems to the Board.

(ii) additional construction costs of a new
Bank or Branch building in excess of costs orig­
inally approved by the Board provided such addi­
tional costs do not exceed the 5 per cent con­
tingency portion of the Board-approved budget,

(b )
A n y Board m em ber
Chairman is authorized:

by

the

(1 ) Under section ( a ) ( 6 ) of the Freedom
of Information Act (5 U.S.C. § 552) and Part
261 of this Chapter (Rules Regarding Availabil­
ity of Information) to review and make a deter­
mination with respect to an appeal of denial of
access to records of the Board made in accord­
ance with the procedures prescribed by the Board.

(iii) proposed remodeling or renovation
of existing Bank or Branch buildings or additions
to such buildings where the total cost of such
renovation, remodeling or additions is in excess
of two hundred and fifty thousand dollars ($250,000) but not in excess of one million two
hundred fifty thousand dollars ($1,250,0 0 0 ).
(The initial two hundred fifty thousand dollars
($250,000) may be committed solely by the D i­
rector of the Division of Federal Reserve Bank
Operations pursuant to section 2 6 5 .2 ( d ) ( 5 ) ) .

SECTION 265.2— SPECIFIC FUNCTIONS
D ELEG ATED TO BOARD EMPLOYEES A N D
TO FEDERAL RESERVE BANKS
(a)
The Secretary o f the Board (or, in his
absence, the Acting Secretary) is authorized:

(8 ) To approve or disapprove supplemen­
tary budget requests and special incentive pro­
grams to improve operations or reduce costs, pro­
vided that the Board has previously approved the
requesting Reserve Bank’s budget and provided
the supplemental request adheres to the Board’s
expense guidelines and provided the amounts ap­
proved for the System in a fiscal year do not
exceed one per cent of the total budget of all the
Reserve Banks in the System, as approved by the
Board. (The amount which the Committee may
approve is in addition to any amounts approved
by the Director of Federal Reserve Bank Oper­
ations pursuant to section 2 6 5 .2 (d )(6 ) of these
Rules.)




designated

(1 ) Under the provisions o f Part 261 o f this
chapter, to make available, upon request, infor­
mation in the records of the Board.
(2 ) Under the provisions of section 3 ( a ) ( 1 )
of the Bank Holding Company Act (12 U.S.C.
1842), to approve the formation of a bank hold­
ing company through the acquisition by a com ­
pany of a controlling interest in the voting shares
of one or more banks, if all of the following con­
ditions are met:
(i)
the Reserve Bank could approve such
formation under subparagraph (2 2 ) of paragraph
(f) of this section, except for the fact that condi-

4

DELEGATION OF AUTHORITY

265.2

tion (iv) of that subparagraph has not been met
because one of the following policy issues has
been raised with respect to such formation:

but nevertheless makes it inappropriate for a Re­
serve Bank to approve the proposal.
(ii)
all relevant divisions of the Board’s
staff recommend approval.

(a) a director or senior officer of a
bank which would become a subsidiary of the
holding company proposed to be formed or a
director or senior officer of the holding company
proposed to be formed, is a director of a Federal
Reserve Bank or branch.

(4 ) Under the provisions of section 18(c)
of the Federal Deposit Insurance A ct (12 U.S.C.
1 8 2 8 (c )), to approve a merger, consolidation,
acquisition of assets or assumption of liabilities,
where the resulting bank is a State member bank,
if all of the following conditions are met:

(b) a director or senior officer of a
bank which would become a subsidiary of the
holding company proposed to be formed, or a
director or senior officer of the holding company
proposed to be formed, is a member o f the Fed­
eral Advisory Council.

(i) the Reserve Bank could approve such
merger, consolidation, acquisition of assets or as­
sumption of liabilities under subparagraph (28)
of paragraph (f) of this section, except for the
fact that condition (iv) of that subparagraph has
not been met because one of the following policy
issues has been raised with respect to such trans­
action:

(c) an individual (or group of individ­
uals) who is a principal in the holding company
proposed to be formed is already a principal in
another bank holding company.

(a) a director or senior officer of any
bank involved in such transaction is a director of
a Federal Reserve Bank or branch.

(d) the Board has made a general de­
termination that another policy issue raised by the
proposal does not require Board consideration,
but nevertheless makes it inappropriate for a Re­
serve Bank to approve the proposal.

(b) a director or senior officer of any
bank involved in such transaction is a member of
the Federal Advisory Council.
(ii)
all relevant divisions of the Board’s
(c) the Board has made a general de­
staff recommend approval.
termination that another policy issue raised by
(3 )
Under the provisions of section 3 ( a ) ( 3 ) the proposal does not require Board considera­
of the Bank Holding Company Act (12 U.S.C.
tion, but nevertheless makes it inappropriate for
1842), to approve the acquisition by a bank hold­
a Reserve Bank to approve the proposal.
ing company of a controlling interest in the voting
(ii) all relevant divisions of the Board’s
shares of an additional bank, if all of the follow ­
staff recommend approval.
ing conditions are met:
(5 ) Under the provisions of section 3 (a ) (5)
(i)
the Reserve Bank could approve such
of the Bank Holding Company Act (12 U.S.C.
acquisition under subparagraph (24) of para­
1842), to approve the merger or consolidation of
graph (f) of this section, except for the fact that
a bank holding company with any other bank
condition (iv) of that subparagraph has not been
holding company, if all of the following condi­
met because one of the following policy issues
tions are met:
has been raised with respect to such acquisition:
(i)
the Reserve Bank could approve such
merger or consolidation under subparagraph (30)
(a) a director or senior officer of the
of paragraph (f) of this section, except for the
holding company, of any subsidiary bank o f the
fact that condition (iv) of that subparagraph has
holding company or of any bank sought to be
not been met because one of the following policy
acquired, is a director of a Federal Reserve Bank
issues has been raised with respect to such merger
or branch.
or consolidation:
(b) a director or senior officer of the
holding company, of any subsidiary bank of the
(a) a director or senior officer of any
of the holding companies or of any of the sub­
holding company or of any bank sought to be
sidiary banks o f the holding companies involved
acquired, is a member of the Federal Advisory
in such merger or consolidation is a director o f a
Council.
Federal Reserve Bank or branch.
(c) the Board has made a general de­
(b) a director or senior officer of any
termination that another policy issue raised by the
of the holding companies or of any of the subproposal does not require Board consideration,




5

§265.2

DELEGATION OF AUTHORITY

sidiary banks of the holding companies involved
that acts as insurance agent or broker in offices at
in such merger or consolidation is a member of
which the holding company or its subsidiaries are
the Federal Advisory Council.
otherwise engaged in business (or in an office
adjacent
thereto) with respect to any insurance
(c)
the Board has made a general
de­
sold in a community that has a population not
termination that another policy issue raised by the
exceeding 5,000, if all of the following conditions
proposal does not require Board consideration,
are met:
but nevertheless makes it inappropriate for a Re­
(i) the Reserve Bank could approve such
serve Bank to approve the proposal.
acquisition or retention under subparagraph (32)
(ii)
all relevant divisions of the Board’s
of paragraph (f) of this section, except for the
staff recommend approval.
fact that condition (iv) of that subparagraph has
(6 ) Under the provisions of section 4 ( c ) ( 8 )
not been met because one of the following policy
of the Bank Holding Company A ct (12 U.S.C.
issues has been raised with respect to such ac­
1 8 4 3 ( c ) ( 8 ) ) and sections 2 2 5 .4 (a ) (1 ) , ( 2 ) , (3 )
quisition or retention:
and (9 ) (ii) of Regulation Y (12 CFR 225.4 (a )
(a) a director or senior officer of the
( 1 ) , ( 2 ), (3 ) and (9 ) ( i i ) ) to approve the ac­
holding company, of any subsidiary bank of the
quisition by a bank holding company of an inter­
holding company or of the company to be ac­
est in a finance company or an industrial bank, as
quired or retained, is a director of a Federal
such terms are respectively defined in subpara­
Reserve Bank or branch.
graph (3 1 ) of paragraph (f) of this section,
(b) a director or senior officer of the
whether by acquisition of shares or assets, if all
holding
company,
of any subsidiary bank of the
of the following conditions are met:
holding
company
or
of the company to be ac­
(i) the Reserve Bank could approve such
quired
or
retained,
is
a member of the Federal
acquisition under subparagraph (3 1 ) of para­
Advisory Council.
graph (f) of this section, except for the fact that
(c) the Board has made a general de­
condition (v) of that subparagraph has not been
termination that another policy issue raised by
met because one of the following policy issues has
the proposal does not require Board considera­
been raised with respect to such acquisition:
tion, but nevertheless makes it inappropriate for
(a) a director or senior officer of the
a
Reserve Bank to approve the proposal.
holding company, of any subsidiary bank of the
(ii) all relevant divisions of the Board’s
holding company or of the finance company or
staff recommend approval.
industrial bank to be acquired is a director of a
(8 ) Under the provisions of sections 25 and
Federal Reserve Bank or branch.
2 5 (a ) of the Federal Reserve Act and Parts 211
(b) a director or senior officer of the
and 213 of this chapter (Regulations K and M ),
holding company, of any subsidiary bank of the
to
approve the establishment, directly or indi­
holding company or of the finance company or
rectly,
of a foreign branch or agency by a mem­
industrial bank to be acquired is a member of the
ber
bank
or corporation organized under section
Federal Advisory Council.
2
5
(a
)
(an
“Edge” corporation) or operating un­
(c) the Board has made a general de­
der an agreement with the Board pursuant to sec­
termination that another policy issue raised by the
tion 25 (an “Agreement” corporation) which has
proposal does not require Board consideration,
already established, or has been authorized to
but nevertheless makes it inappropriate for a Re­
establish, branches in two or more foreign coun­
serve Bank to approve the proposal.
tries, if all of the following conditions are met:
(ii) all relevant divisions of the Board’s
(i) the appropriate Reserve Bank recom­
staff recommend approval.
mends
approval.
(7 ) Under the provisions of section 4 (c ) (8 )
(ii) all relevant divisions of the Board’s
of the Bank Holding Company Act (12 U.S.C.
staff recommend approval.
1 8 4 3 ( c ) ( 8 ) ) and section 2 25.4(a) (9 ) (iii) (a) of
(iii) no significant policy issue is raised by
Regulation Y (12 CFR 225 .4 (a ) (9 ) (iii) ( a ) ) to
the proposal as to which the Board has not ex­
approve the acquisition or, as an incident to a
pressed its view.
bank holding company formation pursuant to sec­
(9 ) Under the provisions of sections 25 and
tion 3 ( a ) ( 1 ) of the Act, the retention by a bank
2 5 (a ) of the Federal Reserve Act and Parts 211
holding company of shares or assets of a company




6

DELEGATION OF AUTHORITY

§ 265.2

following conditions are met:
(i) the appropriate Reserve Bank recom­
mends approval.
(ii) all relevant divisions of the Board’s
staff recommend approval.
(iii) no significant policy issue is raised by
the proposal as to which the Board has not ex­
pressed its view.
(1 2 ) Under the provisions of section
4 (c ) (1 3 ) of the Bank Holding Company Act (12
U.S.C. 1843), and section 2 2 5 .4 (f) of Part 225
of this chapter (Regulation Y ), to grant specific
consent to the ownership or control, either di­
rectly or indirectly, by a bank holding company
of voting shares of a company chartered under
the laws of a foreign country, if all o f the follow ­
ing conditions are met:
(i) the appropriate Reserve Bank recom­
mends approval.
(ii) all relevant divisions of the Board’s
staff recommend approval.
(iii) no significant policy issue is raised by
the proposal as to which the Board has not ex­
pressed its view.
(iv) such acquisition does not result,
either directly or indirectly, in the acquisition by
such bank holding company of control of any
such company (other than a company performing
nominee, fiduciary, or other banking services in­
cidental to the activities of a direct or indirect
foreign subsidiary of such corporation).
(1 3 ) Under the provisions of sections
2 6 2 .2 (a ) and (b) o f the Board’s Rules of Pro­
cedure, to extend, when appropriate, the time
period provided for public participation with re­
spect to proposed regulations of the Board of
Governors.
(1 4 ) Under the provisions of section 6621
o f the Internal Revenue Code (26 U.S.C. 6 6 2 1 ),
to determine and report to the Secretary of
Treasury or his delegate, the average predominant
prime rate quoted by commercial banks to large
businesses.
(b)
T he G eneral C ounsel o f the Board (or, in
his absence, the Acting General Counsel) is
authorized:

and 213 of this chapter (Regulations K and M ),
to grant specific consent to the acquisition, either
directly or indirectly, by a member bank or an
Edge or Agreement corporation of stock of (i)
a company chartered under the laws of a foreign
country or (ii) a company chartered under the
laws of a State of the United States that is orga­
nized and operated for the purpose of financing
exports from the United States, and to approve
any such acquisition that may exceed the limita­
tions in section 25 (a ) of the Federal Reserve Act
based on such a corporation’s capital and surplus,
if all of the following conditions are met:
(a) the appropriate Reserve Bank recom­
mends approval.
(b) all relevant divisions of the Board’s
staff recommend approval.
(c) no significant policy issue is raised by
the proposal as to which the Board has not ex­
pressed its view.
(d) such acquisition does not result, either
directly or indirectly, in the acquisition by such
bank or corporation of effective control of any
such company (other than a company performing
nominee, fiduciary, or other banking services inci­
dental to the activities of a foreign branch or
affiliate of such bank or corporation).
(10) Under the provisions o f sections 25
and 2 5 (a ) of the Federal Reserve Act and Parts
211 and 213 of this chapter (Regulations K and
M ), to permit an Edge or Agreement corporation
to exceed the limitations in § 211.9(b ) and (c)
of this chapter (Regulation K ) ,1 if all o f the fol­
lowing conditions are met:
(i) the appropriate Reserve Bank recom­
mends approval.
(ii) all relevant divisions of the Board’s
staff recommend approval.
(iii) no significant policy issue is raised
by the proposal as to which the Board has not
expressed its view.
(1 1 ) Under sections 25 and 2 5 (a ) of the
Federal Reserve Act and Parts 211 and 213 of
this chapter (Regulations K and M ), to approve,
under section 211.4 of this chapter (Regulation
K ), the issuance by an Edge or Agreement cor­
poration or a subsidiary thereof of debentures,
bonds, promissory notes (with a maturity of more
than one year), or similar obligations, if all of the

(1 )
Under the provisions o f section 2 (g ) of
the Bank Holding Company Act (12 U.S.C.
1 8 4 1 (g )), to determine whether a company that
transfers shares to any of the types of transferees
specified therein is incapable of controlling the
transferee.

S u b je c t , o f course, to the lim itations in section 2 5 (a )
relating to aggregate liabilities outstanding on debentures,
bonds, and prom issory notes.




7

DELEGATION OF AUTHORITY

§ 265.2

(2 ) Under the provisions of section 4 ( c ) ( 8 )
of the Bank Holding Company Act (12 U.S.C.
1 8 4 3 (c )), to determine that a company engaged
in activities of a financial, fiduciary, or insurance
nature falls within the exemption described
therein permitting retention or acquisition of con­
trol thereof by a bank holding company.
(3 ) Under the provisions of sections
1101-1103 of the Internal Revenue Code (26
U.S.C. 1 1 0 1 -1 1 0 3 ), to make certifications (prior
and final) for Federal tax purposes with respect
to distributions pursuant to the Bank Holding
Company Act.
(4 ) Under the provisions of section 4 ( c ) ( 8 )
of the Bank Holding Company Act (12 U.S.C.
1 8 4 3 ( c ) ( 8 ) ) and § 222 .4 (a ) of this chapter
(Regulation Y ), to issue an order for a hearing
to be conducted for the purpose of determining
whether a company engaged in activities of a fi­
nancial, fiduciary, or insurance nature falls within
the exemption described therein permitting reten­
tion or acquisition of control thereof by a bank
holding company.
(5 ) Pursuant to the provisions of Part 261
of this chapter, to make .available information of
the Board of the nature and in the circumstances
described in § 2 6 1.6(b ) and § 261.7 of that Part.
(6 ) Pursuant to Part 263.6(d ) of this Chap­
ter, to designate Board staff attorneys as Board
counsel in any proceeding ordered by the Board
to be conducted in accordance with Part 263 of
this Chapter.
(c)
T he D irector o f the D ivision o f Supervi­
sion and R egulation (or, in his absence, the A ct­
ing Director) is authorized:
(1 ) Under the provisions of the seventh
paragraph of section 9 of the Federal Reserve
Act (12 U.S.C. 3 2 5 ), to select or to approve the
appointment of Federal Reserve Bank examiners,
assistant examiners, and special examiners.
(2 ) Under the provisions of the nineteenth
paragraph of section 2 5 (a ) of the Federal Re­
serve Act (12 U.S.C. 625) and § 2 1 1 .9 (e ) of
this chapter (Regulation K ), to require submis­
sion and publication of reports by an “Edge Act”
corporation.
(3 ) Under the provisions of section 5 o f the
Bank Holding Company Act (12 U.S.C. 1844),
after having received clearance from the Bureau
of the Budget (where necessary) and in accord­
ance with the law of Administrative Procedure (5
U.S.C. 5 5 3 ), to promulgate registration, annual




8

report, and other forms for use in connection
with the administration of such Act.
(4 ) Under the provisions of section 12(g)
of the Securities Exchange Act (15 U.S.C.
78/( g ) ) :
(i) to accelerate the effective date of a
registration statement filed by a member State
bank with respect to its securities;
(ii) to accelerate termination of the reg­
istration of such a security that is no longer held
of record by 300 persons; and
(iii) to extend the time for filing a reg­
istration statement by a member State bank.
(5 ) Under the provisions of section 12(d)
of the Securities Exchange Act (15 U.S.C.
7 8 /( d ) ) , to accelerate the effective date of an
application by a member State bank for registra­
tion of a security on a national securities ex­
change.
(6 ) Under the provisions of section 1 2 (f) of
the Securities Exchange Act (15 U.S.C. 7 8 7 (f)),
to issue notices with respect to an application by
a national securities exchange for unlisted trading
privileges in a security of a member State bank.
(7 ) Under the provisions of section 12(h)
of the Securities Exchange Act (15 U.S.C.
7 8 /( h ) ) , to issue notices with respect to an appli­
cation by a member State bank for exemption
from registration.
(8 ) Under the provisions of § 2 0 6 .5 (f) and
(i) of this chapter (Regulation F ), to permit the
mailing of proxy and other soliciting materials by
a member State bank before the expiration of the
time prescribed therein.
(9 ) Under the provisions of §§ 206.41,
206.42, and 206.43 (Instructions as to Financial
Statements 9, 4, and 3, respectively) of this chap­
ter (Regulation F ), to permit the omission of
financial statements from reports by a member
State bank and/or to require other financial state­
ments in addition to, or in substitution for, the
statements require therein.
(1 0 ) To exercise the functions described in
subparagraph (4 ) of paragraph (f) of this section
in cases in which the conditions specified therein
as prerequisites to exercise of such functions by
the Federal Reserve Banks are not present or in
which, even though such conditions are present,
the appropriate Federal Reserve Bank considers
that nevertheless it should not take action o n the
member bank’s request, and to exercise the func­
tions described in subparagraphs ( 1 ) , ( 2 ) , and
(7 ) of paragraph (f) of this section in cases in

DELEGATION OF AUTHORITY

265.2

which the appropriate Federal Reserve Bank con­
siders that it should not take action to approve
the member bank’s request.
(1 1 ) Under sections 25 and 2 5 (a ) of the
Federal Reserve Act and Parts 211 and 213 of
this chapter (Regulations K and M ), to approve
increases and reductions in the capital stock and
amendments to the articles of association of a
corporation organized under section 2 5 (a ) and
additional investments by a member bank in the
stock of a corporation operating under an agree­
ment with the Board pursuant to section 25.
(12) To exercise the functions described in
subparagraphs (15) (i) and (ii) of paragraph ( f);
and to exercise the functions described in subparagraph (15) (iii) of paragraph (f) in those
cases in which the appropriate Federal Reserve
Bank concludes that, because of unusual consid­
erations, or for other good cause, it should not
take action.
(13) Under the provisions of the seventh
paragraph of section 25 of the Federal Reserve
Act (12 U.S.C. 6 0 2 ), to require submission of a
report of condition respecting any foreign bank
in which a member bank holds stock acquired
under the provisions of § 213.4 of this chapter
(Regulation M ).
(1 4 ) Under the twelfth paragraph of section
13 of the Federal Reserve Act (39 Stat. 754)
and § 203.2 of this chapter (Regulation C ), to
permit any member bank to accept drafts or bills
of exchange drawn upon it for the purpose of
furnishing dollar exchange.
(15) Under the provisions of section 4 (b )
of the Federal Deposit Insurance Act (12 U.S.C.
1 8 1 4 (b )), to certify to the Federal Deposit Insur­
ance Corporation that, with respect to the admis­
sion of a State-chartered bank to Federal Reserve
membership, the factors specified in section 6 of
that Act (12 U.S.C. 1816) were considered.
(16) Under section 1 8 (c )(4 ) of the Federal
Deposit Insurance Act (12 U.S.C. 1 8 2 8 ( c ) ( 4 ) ) ,
to furnish to the Comptroller o f the Currency
and the Federal Deposit Insurance Corporation
reports on competitive factors involved in a bank
merger required to be approved by one of those
agencies if each of the appropriate departments
or divisions of the appropriate Federal Reserve
Bank and the Board of Governors is o f the view
that the proposed merger either would have no
adverse competitive effects or would have only
slightly adverse competitive effects, and if no
member of the Board has indicated an objection




prior to the forwarding of the report to the ap­
propriate agency.
(d)
The D irector o f the D ivision o f Federal
R eserve Bank O perations (or, in his absence, the
Acting Director) is authorized:
(1 ) Under the provisions o f the sixteenth
paragraph of section 4 of the Federal Reserve Act
(12 U.S.C. 3 0 4 ), to classify member banks for
the purposes of electing Federal Reserve Bank
class A and class B directors, giving consideration
to
(i) the statutory requirement that each of
the three groups shall consist as nearly as may be
of banks of similar capitalization and
(ii) the desirability that every member
bank have the opportunity to vote for a class A
or a class B director at least once every three
years.
(2 ) Under the provisions o f the third para­
graph of section 16 of the Federal Reserve Act
(12 U.S.C. 4 1 3 ), to apportion credit among the
Reserve Banks for unfit notes that are destroyed,
giving consideration to the net number of notes
of each denomination that were issued by each
Reserve Bank during the preceding calendar year.
(3 ) Under the provisions of section 19(b)
of the Federal Reserve Act (12 U.S.C. 4 6 1 ) and
§ 2 0 4 .2 (a )(2 ) of this chapter (Regulation D ), to
permit a member bank in a reserve city to main­
tain reserves at the ratios prescribed for banks
not in reserve cities, provided such bank holds
demand deposits of not more than $25 million,
or, demand deposits less than the amount of de­
mand deposits of the largest bank in the city that
is permitted to maintain reserves at such lower
ratio, whichever is larger, giving consideration to
factors such as the amount of the bank’s re­
sources, total deposits, demand deposits, demand
deposits owing to banks, types of depositors and
borrowers, turnover of demand deposits, geo­
graphical location within the city, and competitive
position with relation to other banks in the city.
(4 ) Under the provisions of §§ 2 1 6 .5 (b ),
2 1 6 .5 (d ), and 216.6 of this chapter (Regulation
P ), with respect to Federal Reserve Banks and
branches:
(i) to require reports on security devices;
(ii) to require special reports; and
(iii) to determine, in view of the provi­
sions of §§ 216.3 and 216.4, whether security de­
vices and procedures are deficient in meeting the
requirements of Part 216, to determine whether
such requirements should be varied in the cir-

9

§ 265.2

DELEGATION OF AUTHORITY

cumstances of a particular banking office, and to
sidered in relation to the strength of its manage­
require corrective action.
ment;
(5 ) To approve or disapprove proposed re­
(ii) the ability of bank’s management to
modeling or renovation of existing Reserve Bank
cope successfully with existing or foreseeable
or Branch buildings or additions to such buildings
problems, and to staff the proposed branch with­
where the cost of such remodeling, renovation or
out any significant deterioration in the overall
addition will be in excess of one hundred thou­
management situation;
sand dollars ($ 1 0 0 ,0 0 0 ), provided that the cost
(iii) the convenience and needs of the
of each project approved by the Director may
community;
not be in excess of two hundred and fifty thou­
(iv) the competitive situation (either ac­
sand dollars ($ 250,000).
tual or potential);
(6 ) To approve or disapprove supple­
(v ) the prospects for profitable operations
mentary budget requests and special incentive
of the proposed branch within a reasonable time,
programs to improve operations or reduce costs,
and the ability of the bank to sustain the opera­
provided that the Board has previously approved
tional losses of the proposed branch until it be­
the budget of the requesting Reserve Bank and
comes profitable; and
provided that the supplemental request adheres to
(vi) the reasonableness of bank’s invest­
the Board’s general expense guidelines and such
ment
in
bank premises after the expenditure for
guidelines as the Board may have imposed in ap­
the
proposed
branch.
proving the Reserve Bank’s budget and provided
(2
)
Under
the provisions of the sixth para­
that the amount approved by the Director may
graph of section 9 of the Federal Reserve Act
not exceed in any budgetary year one hundred
(12 U.S.C. 324) and the provisions of section
thousand dollars ($100,000) for each Reserve
5199 of the Revised Statutes (12 U.S.C. 6 0 ), to
Bank and seven hundred and fifty thousand dol­
permit a State member bank to declare dividends
lars ($750,000) for all Reserve Banks in the
in
excess o f net profits for the calendar year
System.
combined
with the retained net profits of the pre­
(e) The D irector o f the D ivision o f Personnel
ceding two years, less any required transfers to
A dm inistration (or, in his absence, the Acting
surplus or a fund for the retirement of any pre­
Director) is authorized, under the provisions of
ferred stock, if the Reserve Bank is satisfied that
the twenty-first paragraph of section 4 of the
approval is warranted after giving consideration
Federal Reserve Act (12 U.S.C. 3 0 6 ), to approve
to:
the appointment of assistant Federal Reserve
(i) the bank’s capitalization in relation to
agents (including representatives and alternate
the character and condition of its assets and to its
representatives of such agents).
deposit liabilities and other corporate responsibil­
(f) E ach Federal R eserve Bank is authorized,
ities, including the volume of its risk assets and
as to member banks or other indicated organiza­
of its marginal and inferior quality assets, all
tions headquartered in its district:
(1 )
Under the provisions of the third para­considered in relation to the strength of its man­
agement; and
graph of section 9 of the Federal Reserve Act
(ii) the bank’s capitalization after pay­
(12 U.S.C. 3 2 1 ), section 5155 of the Revised
ment o f the proposed dividend.
Statutes (12 U.S.C. 3 6 ), and § 208.8 of this
(3 ) Under the provisions of the tenth para­
chapter (Regulation H ), to approve the establish­
graph of section 9 of the Federal Reserve Act
ment by a State member bank of a domestic
(12 U.S.C. 3 2 8 ), to approve or deny applications
branch if the proposed branch has been approved
by State banks for waiver of the required six
by the appropriate State authority and if the Re­
months’ notice of intention to withdraw from
serve Bank is satisfied that approval is warranted
Federal Reserve membership.
after giving consideration to:
(i)
the bank’s capitalization in relation to (4 ) Under the provisions of the eleventh
paragraph o f section 9 of the Federal Reserve Act
the character and condition of its assets and to
(12 U.S.C. 3 2 9 ), to permit a State member bank
its deposit liabilities and other corporate responsi­
to reduce its capital stock if its capitalization
bilities, including the volume of its risk assets and
thereafter will be:
of its marginal and inferior quality assets, all con­




10

DELEGATION OF AUTHORITY

(i) in conformity with the requirements
of Federal law, and
(ii) adequate in relation to the character
and condition of its assets and to its deposit liabil­
ities and other corporate responsibilities, including
the volume of its risk assets and of its marginal
and inferior quality assets, all considered in rela­
tion to the strength of its management.
(5) Under the provisions of the seventeenth
paragraph of section 9 of the Federal Reserve
Act (12 U.S.C. 3 3 4 ), to extend the time, for
good cause shown, within which an affiliate of a
State member bank must file reports.
(6 ) Under the provisions of the seventh
paragraph of section 13 of the Federal Reserve
Act (12 U.S.C. 3 7 2 ), to permit a member bank
to accept commercial drafts in an aggregate
amount at any one time up to 100 per cent o f its
capital and surplus.
(7 ) Under the provisions of section 24A of
the Federal Reserve Act (12 U.S.C. 3 7 Id ), to
permit a State member bank to invest in bank
premises in an amount in excess of its capital
stock, if the Reserve Bank is satisfied that ap­
proval is warranted after giving consideration to:
(i) the bank’s capitalization in relation to
the character and condition of its assets and to its
deposit liabilities and other corporate responsibil­
ities, including the volume of its risk assets and
of its marginal and inferior quality assets, all
considered in relation to the strength of its man­
agement: A n d provided, That
(ii) upon completion of the proposed in­
vestment, the bank’s aggregate investment (direct
and indirect) in bank premises plus the indebted­
ness of any wholly-ownea bank premises subsid­
iary will not exceed 40 per cent o f its total capital
funds (including capital notes and debentures)
plus reserves other than valuation reserves.
(8 ) Under the provisions of the ninth para­
graph of section 2 5 (a ) of the Federal Reserve
Act (12 U.S.C. 6 1 5 ), to extend the time in which
an “Edge A ct” corporation must divest itself of
stock acquired in satisfaction of a debt previously
contracted.
(9 ) Under the provisions o f the twenty-second paragraph of section 2 5 (a ) of the Federal
Reserve Act (12 U.S.C. 6 2 8 ), to extend the
period of corporate existence of an “Edge A ct”
corporation.
(10) Under the provisions of section 5 (a )
of the Bank Holding Company A ct (12 U.S.C.




§ 265.2

1 8 4 4 (a )), to extend the time within which a
bank holding company must file a registration
statement.
(1 1 ) Under the provisions of section 4 (a )
of the Bank Holding Company A ct (12 U.S.C.
1 8 4 3 (a )), to extend the time within which a bank
holding company must divest itself of interests
in nonbanking organizations.
(1 2 ) Under the provisions of section
4 ( c ) ( 2 ) of the Bank Holding Company Act (12
U.S.C. 1 8 4 3 (c )), to extend the time within which
a bank holding company must divest itself of
interests in a nonbanking organization acquired in
satisfaction of a debt previously contracted.
(13) Under the provisions of section 5 (c )
of the Bank Holding Company Act (12 U.S.C.
1 8 4 4 (c )), to require reports under oath to deter­
mine whether a company is complying with the
provisions of such Act and the Board’s regula­
tions promulgated thereunder.
(1 4 ) Under the provisions of § 2 0 8 .1 0 (c)
of this chapter (Regulation H ), to extend the
time within which a member bank that has given
notice of intention to withdraw from membership
must surrender its Federal Reserve Bank stock
and its certificate of membership.
(15) Under the provisions of §§ 2 1 6 .5 (b ),
2 1 6 .5 (d ), and 216.6 of this chapter (Regulation
P ), with respect to State member banks only:
(i) to require reports on security devices;
(ii) to require special reports; and
(iii) to determine, in view o f the provi­
sions of §§ 216.3 and 216.4, whether security
devices and procedures are deficient in meeting
the requirements of Part 216, to determine
whether such requirements should be varied in
the circumstances of a particular banking office,
and to require corrective action.
(1 6 ) Under § 2 0 8 .9 (a ) of this chapter
(Regulation H ), for good cause shown, to extend
the time for publication of reports of condition,
such extensions not ordinarily to be for more
than 10 days except in very unusual circum­
stances beyond control of the reporting bank.
(1 7 ) Under the provisions of § 2 0 7 .1 (b ) of
this chapter (Regulation G ), to approve applica­
tions for termination of registration by persons
who are registered pursuant to § 2 0 7 .1 (a ).
(18) Under the provisions o f the second
paragraph of section 2 5 (a ) of the Federal Re­
serve Act (12 U.S.C. 612) and § 211.3 of this

DELEGATION OF AUTHORITY

§ 265.2

chapter (Regulation K ), to approve amendments
to the Articles of Association of any “Edge A ct”
corporation to reflect the following:
(i) any increase in the capital stock of
such corporation where all additional shares are
to be acquired by existing shareholders;
(ii) any change in the location of the
home office of such corporation within the city
where such corporation is presently located; and
(iii) any change in the number of mem­
bers of the Board of Directors of such corpora­
tion.
(1 9 ) Under
(Regulation Y ),

§ 225.4 (d )

of

this

chapter

(i) to notify a bank holding company
that has informed it of a proposed acquisition of
a going concern that, because the circumstances
surrounding the application indicate that addi­
tional information is required or that the acquisiton should be considered by the Board, the ac­
quisition should not be consummated until spe­
cifically authorized by the Reserve Bank or by
the Board.
(ii) to permit a bank holding company
that has informed it of a proposed acquisition of
a going concern to make the acquisition before
the expiration of the 45-day period referred to in
that paragraph, because exigent circumstances
justify consummation of the acquisition at an
earlier time.
(2 0 ) Under § 2 2 5 .4 (b )(1 ) of this chapter
(Regulation Y ), and subject to § 265.3 if a per­
son submitting adverse comments that the Re­
serve Bank has decided are not substantive files a
petition for review by the Board of that decision,
(i) to permit a bank holding company
that has furnished it with a copy of a duly pub­
lished notice of a proposal to engage de novo in
activities specified in § 225 .4 (a ) (or retain shares
in a company established de novo and engaging in
such activities) if its evaluation of the considera­
tions specified in section 4 ( c ) ( 8 ) of the Bank
Holding Company Act leads it to conclude that
the proposal can reasonably be expected to pro­
duce benefits to the public.
(ii) to notify a bank holding company
that has furnished it with a duly published notice
of the kind described in subdivision (i) of this
subparagiaph that the proposal should not be con­
summated untl specifically authorized by the Re­
serve Bank or by the Board or that the proposal




should be processed in accordance with the pro­
cedures of § 2 2 5 .4 (b )(2 ).
(iii)
to permit a bank holding company
that has furnished it with a duly published notice
of the kind described in subdivision (i) of this
subparagraph to consummate the proposal before
the expiration of the 45-day period referred to in
§ 2 2 5 .4 (b )(1 ), because exigent circumstances
justify consummation at an earlier time.
(2 1 ) Under § 2 2 5 .4 (c )(2 ) o f this chapter
(Regulation Y ) to permit or stay a proposed de
n ovo modification or relocation of activities en­
gaged in by a bank holding company on the same
basis as de novo proposals under subparagraph
(2 0 ) of this paragraph.
(2 2 ) Under the provisions o f section
3 ( a ) ( 1 ) of the Bank Holding Company Act (12
U.S.C. 1842), to approve the formation of a bank
holding company through the acquisition by a
company of a controlling interest in the voting
shares of one or more banks, if all of the follow ­
ing conditions are met:
(i) no member of the Board has indicated
an objection prior to the Reserve Bank’s action.
(ii) all relevant departments of the Re­
serve Bank recommended approval.
(iii) no substantive objection to the pro­
posal has been made by a bank supervisory
authority, the United States Department of Jus­
tice, or a member of the public.
(iv) no significant policy issue is raised by
the proposal as to which the Board has not ex­
pressed its view.
(v) considerations relating to the con­
venience and needs o f the communities to be
served are consistent with or lend weight toward
approval of the application.
(vi) in the event any debt incurred by the
holding company to purchase shares of any bank
involved in the proposal:
(a) an agreed plan for amortization of
the debt within a reasonable time exists, such
period normally not exceeding 12 years.
(b ) the interest rate on any loan to
purchase the bank shares will be comparable with
other stock collateral loans by the lender to per­
sons of comparable credit standing.
(c ) no compensating balances, spe­
cifically attributable to the loan, will be deposited
in the lending institution and the amount of any
correspondent account which the proposed sub­

DELEGATION OF AUTHORITY

§ 265.2

(xiii)
neither Applicant nor the bank(s)
to be acquired has entered into or proposes to
enter into any agreement with any director, of­
ficer, employee or shareholder of the bank(s)
that contains any condition that limits or restricts
in any manner the right of such persons to com ­
pete with Applicant or any of Applicant’s existing
or proposed subsidiaries.

sidiary bank will maintain with the lending insti­
tution should not exceed the amount necessary to
compensate the lending bank for correspondent
services rendered by it to the proposed subsidiary
bank(s).
(vii) the Reserve Bank determines that
the managerial and financial resources, including
the equity to debt relationships, of Applicant, it’s
existing subsidiaries, and any proposed subsidiary
bank, are adequate, or will be adequate within a
reasonable period of time after consummation of
the proposal, and any debt service requirements
to which the holding company may be subject
are such as to enable it to maintain the capital
adequacy of any proposed subsidiary bank in the
foreseeable future.

(2 3 ) Under the provisions of section
3 ( a ) ( 3 ) of the Bank Holding Company Act (12
U.S.C. 1842), to approve the acquisition by a
bank holding company of additional shares in a
bank that are to be acquired through exercise of
rights received, on a pro rata basis, by the bank’s
shareholders.
(2 4 ) Under the provisions of section
3 ( a ) ( 3 ) of the Bank Holding Company Act (12
U.S.C. 1842), to approve the acquisition by a
bank holding company of a controlling interest in
the voting shares of an additional bank, if all of
the following conditions are met:

(viii) if Applicant or any of Applicant’s
existing or proposed nonbanking subsidiaries com ­
pete in the same geographic and product market
as any proposed subsidiary bank, the resulting
organization will "control no more than 10 per
cent of that product or service line after consum­
mation of the proposal.

(i) no member of the Board has indicated
an objection prior to the Reserve Bank’s action.

(ix) total nonbank gross revenues of A p­
plicant and its subsidiaries do not exceed 20 per
cent of total operating income of the proposed
banking subsidiaries.

(ii) all relevant departments of the Re­
serve Bank recommend approval.
(iii) no substantive objection to the pro­
posal has been made by a bank supervisory
authority, the United States Department of Jus­
tice, or a member of the public.

(x) if Applicant engages, or is to engage,
in nonbanking activities requiring the Board’s ap­
proval under section 4 ( c ) ( 8 ) of the Act, the Re­
serve Bank must also have delegated authority to
approve the section 4 ( c ) ( 8 ) activities.

(iv) no significant policy issue is raised
by the proposal as to which the Board has not
expressed its view.

(xi) if the proposal involves the acquisi­
tion of the controlling stock of only one bank,
and any debt is incurred by the holding company
to purchase shares of the bank, the amount of
the loan does not exceed 75 per cent of the pur­
chase price of the shares of the proposed sub­
sidiary bank.

(v ) considerations relating to the con­
venience and needs of the communities to be
served are consistent with or lend weight toward
approval of the application.
(vi) in the event any debt is incurred by
the holding company to purchase shares of any
bank involved in the proposal:

(xii) if the proposal involves the acquisi­
tion of the controlling stock of more than one
bank, the following additional conditions must be

(a) an agreed plan for amortization of
the debt within a reasonable time exists, such
period normally not exceeding 12 years.

met:
(a) in the event any debt is incurred by
the holding company to purchase shares of any
proposed subsidiary bank(s), the total amount of
the debt does not exceed 20 per cent of the equity
capital accounts of the holding company.

(b) the interest rate on any loan to
purchase the bank shares will be comparable with
other stock collateral loans by the lender to per­
sons of comparable credit standing.
(c) no compensating balances, spe­
cifically attributable to the loan, will be deposited
in the lending institution and the amount o f any
correspondent account which the proposed sub­

(b ) the Applicant will control no more
than 15 per cent of total deposits in commercial
banks in the State.




13

DELEGATION OF AUTHORITY

§ 265.2

sidiary bank will maintain with the lending insti­
tution should not exceed the amount necessary
to compensate the lending bank for correspondent
services rendered by it to the proposed subsidiary
bank.
(vii) the Reserve Bank determines that
the managerial and financial resources, including
the equity to debt relationships, of Applicant, its
existing subsidiaries, and any proposed subsidiary
bank, are adequate, or will be adequate within a
reasonable period of time after consummation of
the proposal, and any debt service requirements
to which the holding company may be subject
are such as to enable it to maintain the capital
adequacy of any existing or proposed subsidiary
bank in the foreseeable future.
(viii) if Applicant or any of Applicant’s
existing or proposed nonbanking subsidiaries com ­
pete in the same geographic and product market
as any proposed subsidiary, the resulting organiza­
tion will not control more than 10 per cent of
that product or service line after consummation
of the proposal.
(ix) total nonbank gross revenues of A p­
plicant and its subsidiaries do not exceed 20 per
cent of total operating income of the company’s
existing or proposed bank subsidiaries.
(x ) if Applicant engages, or is to engage,
in nonbanking activities requiring the Board’s ap­
proval under section 4 ( c ) ( 8 ) of the Act, the Re­
serve Bank must also have delegated authority to
approve the section 4 ( c ) ( 8 ) activities.
(xi) in the event any debt is incurred by
Applicant to purchase shares of the bank, the re­
sulting total acquisition debt of the holding com ­
pany will not exceed 20 per cent of the company’s
equity capital accounts after consummation of the
proposal.
(xii) Applicant is not one of the dominant
banking organizations in the State, and, unless
the proposed subsidiary is a proposed new bank,
Applicant will control no more than 15 per cent
of the total deposits in commercial banks in the
State after consummation of the proposal.
(xiii) if the bank to be acquired is an ex­
isting bank and if no banking offices of Appli­
cant’s existing subsidiary bank are located in the
same market as the proposed subsidiary, the pro­
posed subsidiary has no more than $25 million in
total deposits or controls no more than 15 per
cent of deposits in commerical banks in the mar­

(xiv) if the bank to be acquired is an
existing bank and if any of Applicant’s existing
subsidiary banks compete in the same market as
the proposed subsidiary, Applicant will control no
more than 10 per cent of total deposits in com ­
mercial banks in the market after consummation.
(xv) if the bank to be acquired is a pro­
posed new bank, bank subsidiaries of Applicant
will not hold in the aggregate more than 20 per
cent of the total deposits in commercial banks in
the relevant market area and Applicant will not
be one of the dominant banking organizations in
the State.
(xvi) Applicant has a proven record of
furnishing to its subsidiaries, when needed, special
services, management, capital funds and general
guidance.
(xvii) neither Applicant nor the bank to
be acquired has entered into or proposes to enter
into any agreement with any director, officer,
employee or shareholder of the bank that contains
any condition that limits or restricts in any man­
ner the right of such persons to compete with
Applicant or any of Applicant’s existing or pro­
posed subsidiaries.
(2 5 ) To set the salaries of its officers below
the level of Senior Vice Presidents (Salary Group
A ), excluding the General Auditor, within officer
salary ranges approved and guidelines subse­
quently issued by the Board of Governors.
(2 6 ) Under the provisions of the first para­
graph of section 9 of the Federal Reserve Act
(12 U.S.C. 325) to approve applications for
membership in the Federal Reserve System if the
Reserve Bank is satisfied with respect to each of
the following criteria:
(i) the financial history and condition of
the applying bank and the general character of its
management;
(ii) the adequacy of its capital structure
in relation to the character and condition of its
assets and to its existing and prospective deposit
liabilities and other corporate responsibilities; and
its future earnings prospects;
(iii) the convenience and needs of the
community to be served by the bank; and
(iv) whether its corporate powers are con­
sistent with the purposes of the Federal Reserve
Act and the Federal Deposit Insurance Act.
(2 7 ) Under the provisions of section 5 (c)
of the Bank Holding Company Act, as amended

ket.




14

DELEGATION OF AUTHORITY

§ 265.2

(12 U.S.C. 1 8 4 4 (c )), to grant to a bank holding
(ix) considerations relating to the con­
company a 90-day extension of time in which to
venience and needs of the communities to be
file an annual report; and for good cause shown
served are consistent with, or lend weight toward,
approval of the application.
an additional extension of time, not to exceed 90
days, may be granted.
(x) no bank involved in this proopsal has
(2 8 )
Under the provisions o f section 18 (c) entered into or proposes to enter into any agree­
of the Federal Deposit Insurance Act (12 U.S.C.
ment with any director, officer, employee or
1 8 2 8 (c )), to approve a merger, consolidation,
shareholder of either bank that contains any con­
acquisition of assets or assumption of liabilities,
dition that limits or restricts in any manner the
where the resulting bank is a State member bank,
right of such persons to compete with the result­
if all of the following conditions are met:
ing institution.
(i) no member of the Board has indicated
(2 9 ) Under the provisions of section 3 (a )
an objection prior to the Reserve Bank’s action.
of the Bank Holding Company Act (12 U.S.C.
(ii) all relevant departments of the Re­
1842), to approve by a letter of notification with­
serve Bank recommended approval.
out compliance with section 2 6 2 .3 (h ) of the
(iii) no substantive objection to the pro­
Board’s Rules of Procedures, the retention of
posal has been made by a bank supervisory au­
shares of bank stock acquired in a fiduciary
thority, the United States Department of Justice,
capacity (with sole voting rights) for a two-year
or a member of the public.
period from the date of such acquisition, pro­
(iv) no significant policy issue is raised
vided that the Applicant undertakes uncondition­
by the proposal as to which the Board has not
ally to dispose of such shares or its sole discre­
expressed its view.
tionary voting rights with respect to such shares
(v) if the banks do not have offices in the
within two years from the date of such acquisi­
same market, the bank to be acquired has no
tion.
more than $25 million in total deposits or con­
(3 0 ) Under the provisions of section
trols no more than 15 per cent of the total de­
3 ( a ) ( 5 ) of the Bank Holding Company Act (12
posits 2 in commercial banks in the market.
U.S.C. 1842), to approve the merger or consoli­
(vi) if the banks compete in the same
dation of a bank holding company with any other
banking market, the resulting bank will control no
bank holding company, if all of the following
more than 10 per cent of total d ep osits3 in com ­
conditions are met:
mercial banks in the market.
(i) no member of the Board has indicated
(vii) neither of the merging or consolidat­
an
objection
prior to the Reserve Bank’s action.
ing banks is a dominant banking organization in
(ii) all relevant departments of the Re­
the State and the resulting institution will control
serve Bank recommended approval.
no more than 15 per cent of the total deposits in
commercial banks in the State after consumma­
(iii) no substantive objection to the pro­
tion of the proposal.4
posal has been made by a bank supervisory
(viii) the Reserve Bank determines that
authority, the United States Department of Jus­
the managerial and financial resources, including
tice, or a member of the public.
the equity capital accounts of the resulting bank,
(iv) no significant policy issue is raised
are adequate, or will be adequate within a reason­
by the proposal as to which the Board has not
able period of time after the proposal is consum­
expressed its view.
mated.
(v) considerations relating to the con­
venience and needs of the communities to be
3 If either of the proponent banks is a subsidiary of a
served are consistent with or lend weight toward
holding company and the parent company has another
bank subsidiary operating in the market of the bank to
approval of the application.
be acquired, deposits of such offices should be included
in the computation of market shares.
3 See footnote 2, above.
■* If either of the proponent banks is a subsidiary of a
holding company, the deposits of the other subsidiary
banks of the holding company should be included in
determining whether the resulting institution will control
more than 15 per cent of the total deposits in commer­
cial banks in the State.




(vi) in the event any debt is incurred by
the resulting or surviving holding company to
effect the merger or consolidation:
(a)
an agreed plan for amortization of
the debt within a reasonable time exists, such
period normally not exceeding 12 years.

15

§ 265.2

DELEGATION OF AUTHORITY

(b) the interest rate on any loan in­
volved will be comparable with other stock col­
lateral loans by the lender to borrowers of com ­
parable credit standing.
(c ) no compensating balances, spe­
cifically attributable to the loan, will be deposited
in the lending institution and the amount of any
correspondent account which the subsidiary banks
of the resulting or surviving company will main­
tain with the lending institution should not exceed
the amount necessary to compensate the lending
bank for correspondent services rendered by it to
the depositing b ank (s).
(d) the total acquisition debt of the re­
sulting or surviving company will not exceed 20
per cent of such company’s equity capital ac­
counts after consummation of the proposal.
(vii) the Reserve Bank determines that
the managerial and financial resources, including
the equity to debt relationships, of the merging or
consolidating companies, and their existing sub­
sidiaries, are adequate, or will be adequate within
a reasonable period of time after consummation
of the proposal, and any debt service require­
ments to which the resulting or surviving com ­
pany may be subject are such as to enable it to
maintain the capital adequacy of any existing or
proposed subsidiary bank in the foreseeable fu­
ture.
(viii) if either of the merging or con­
solidating companies or any of their subsidiaries
compete in the same geographic and product
market as the other merging or consolidating
company or any of its subsidiaries, the resulting
or surviving organization will not control more
than 10 per cent of that product or service line
after consummation of the proposal.
(ix) if the merging or consolidating bank
holding companies do not have subsidiary bank­
ing offices in the same market, the resulting or
surviving bank holding company will not acquire
a subsidiary bank with more than $25 million in
deposits or with more than 15 per cent of the
total deposits in commercial banks in the market.
(x ) if any subsidiary bank(s) of either of
the merging or consolidating companies com ­
petes in the same market as any subsidiary
bank(s) of the other merging or consolidating
company, the resulting or surviving company will
control no more than 10 per cent of total deposits
in commercial banks in the market after con­
summation of the proposal.




(xi) neither merging or consolidating
company is one of the dominant banking orga­
nizations in the State, and the resulting or surviv­
ing company will control no more than 15 per
cent of total deposits in commercial banks in the
State after consummation of the proposal.
(xii) total nonbank gross revenues o f the
merging or consolidating companies and their
subsidiaries do not exceed 20 per cent of the total
operating income of the merging or consolidating
companies’ bank subsidiaries.
(xiii) if either of the merging or consoli­
dating companies engages, or is to engage, in
nonbanking activities requiring the Board’s ap­
proval under section 4 ( c ) ( 8 ) of the Act, the Re­
serve Bank must also have delegated authority to
approve the section 4 ( c ) ( 8 ) activities.
(xiv) Applicant has a proven record of fur­
nishing to its subsidiaries, when needed, special
services, management, capital funds and general
guidance.
(xv) neither bank holding company in­
volved in this proposal nor any of the subsidiary
banks of either bank holding company involved in
this proposal has entered into or proposes to enter
into any agreement with any officer, director, em­
ployee or shareholder of the bank(s) involved in
this proposal that contains any condition that
limits or restricts in any manner the right of such
person to compete with the resulting or surviving
company or any of its existing or proposed sub­
sidiaries.
(3 1 )
Under the provisions of § 4 ( c ) ( 8 ) of
the Bank Holding Company Act (12 U.S.C. 1843
( c ) ( 8 ) ) and § § 2 2 5 .4 ( a ) ( 1 ) ,( 2 ) ,( 3 ) and ( 9 ) (ii)
of Regulation Y (12 CFR 2 2 5 .4 (a )(1 ), ( 2 ), (3 )
and (9 ) ( ii) to approve the acquisition by a bank
holding company of an interest in a finance com­
pany 5 or an industrial bank,6 whether by acquisi­
tion of shares or assets, provided that the following
conditions are met:
5 A finance company is defined, for purposes of this
regulation, as a concern which engages in consumer
finance, sales finance and/or second mortgage activities.
The acquisition of more than one separately incorporated
company when such companies are part of an identifiable
unit should be processed under a single acquisition
application.
6 An industrial bank is a State-chartered institution
which provides consumer credit and accepts limited types
of deposits; it does not both accept demand deposits and
make commercial loans. The term “ industrial bank” also
encompasses Morris Plan banks for purposes of this
regulation.

16

DELEGATION OF AUTHORITY

§ 265.2

(i) no member of the Board has indicated
an objection prior to the Reserve Bank’s action.

(ix) the sale of credit-related insurance by
the finance company or industrial bank to be ac­
quired is limited to the sale, under individual or
group policies, of credit life insurance,11 credit
accident and health insurance, and property damage
insurance protecting collateral.12

(ii) Applicant does not hold shares of a
subsidiary finance company or subsidiary industrial
bank or directly engage in such activities itself
pursuant to § 4 ( a ) ( 2 ) of the Act which may not
be retained or engaged in beyond December 31,
1980 without Board approval.

(x ) the activities of the firm to be ac­
quired are clearly permissible under § 4 ( c ) ( 8 ) of
the Act and § § 2 2 5 .4 U ) ( 1 ) , ( 2 ) , (3 ) and (9 )
(ii) of Regulation Y.

(iii) all relevant departments of the Re­
serve Bank recommend approval.
(iv) no substantive objection to the pro­
posal has been made by a bank supervisory au­
thority, the United States Department of Justice,
or a member of the public.
(v) no significant policy issue is raised by
the proposal as to which the Board has not ex­
pressed its view.
(vi) each office of Applicant’s existin g7
and proposed 8 subsidiary banks, subsidiary indus­
trial banks and subsidiary finance companies and
of Applicant (if Applicant directly engages in such
activities) is 25 miles or more distant (in a straight
line) from each office of the finance company or
industrial bank to be acquired.
(v ii)(a ) the maximum in assets of finance
companies and industrial banks acquired under
delegated authority in any calendar year 9 does not
exceed $15 million; and
(b)
the maximum size in assets
finance company or industrial bank to be acquired
does not exceed $5 million. (Exception: The maxi­
mum size in assets of the finance company or
industrial bank to be acquired is $15 million if the
aggregate assets of Applicant’s existing subsidiary
finance companies and industrial banks 10 and of
the finance company or industrial bank to be
acquired do not exceed $50 million.)
(viii) total assets of the finance company
or industrial bank to be acquired will not exceed
10 per cent of the total consolidated assets of
Applicant after consummation.
7 The definition of an existing subsidiary also includes,
for purposes of this regulation, a bank or company for
which the acquisition has been approved by the Federal
Reserve System but not yet consummated.
s A proposed subsidiary is defined, for purposes of this
regulation, as a bank or company for which an applica­
tion for acquisition has been submitted to the Federal
Reserve System.
" For the year 1974, the maximum figure is $8 million.
111If Applicant itself directly engages in finance com­
pany or industrial bank activities, the assets related to
such activities should be included in a determination of
aggregate assets.




17

(xi) neither Applicant, Applicant’s sub­
sidiaries, nor the finance company or industrial
bank to be acquired has entered into or proposes to
enter into any agreement with any director, officer,
employee or shareholder of the finance company
or industrial bank that contains any condition
limiting or restricting in any manner the right of
such person to compete with Applicant or any of
Applicant’s existing or proposed subsidiaries.
(xii) the Reserve Bank determines that
consummation of the proposal can reasonably be
expected to result in benefits to the public, such
as greater convenience, increased competition, or
gains in efficiency, that outweigh possible adverse
effects, such as undue concentration of resources,
decreased or unfair competition, conflicts of in­
terests, or unsound banking practices.
(3 2 )
Under the provisions of § 4 ( c ) ( 8 ) of
the
Bank
Holding
Company Act (12 U.S.C. 1843
of the
(c) ( 8 ) ) and §225.4(a) (9 ) (iii) (a) of Regulation
Y (12 CFR 2 2 5 .4 (a ) ( 9 ) ( iii) ( a ) ) to approve the
acquisition or, as an incident to a bank holding
company formation pursuant to § 3 ( a ) ( 1 ) of the
Act, the retention by a bank holding company of
shares or assets of a company that acts as insur­
ance agent or broker in offices at which the hold­
ing company or its subsidiaries are otherwise
engaged in business (or in an office adjacent
thereto) with respect to any insurance sold in a
community that has a population not exceeding
5,000, provided that the following conditions are
met:
11 Applications involving level term credit life insurance
may not be acted upon by the Reserve Bank under dele­
gated authority.
12 If a finance company or industrial bank otherwise
falling within these guidelines has a subsidiary engaged
in the underwriting, as reinsurer, of credit life and credit
accident and health insurance in connection with exten­
sions of credit by the finance company or industrial bank
or if a finance company or industrial bank acts as agent
for the sale of types of credit-related insurance other than
designated herein, the application may not be acted upon
by the Reserve Bank under delegated authority.

§ 265.2

DELEGATION OF AUTHORITY

(i) no member of the Board has indicated
(2 ) Under the provisions of § 20 7 .4 (a ) (2 )
an objection prior to the Reserve Bank’s action.
(ii) of this chapter (Regulation G ) to approve
(ii) all relevant departments of the Re­
repayments of the “deficiency” with respect to
stock option or employee stock purchase plan credit
serve Bank recommend approval.
in lower amounts and over longer periods of time
(iii) no substantive objection to the pro­
than those specified in the regulation.
posal has been made by a bank supervisory au­
thority, the United States Department of Justice,
(3 ) Pursuant to the provisions of Part 261 of
or a member of the public.
this chapter, to make available reports and other
(iv) no significant policy issue is raised by
information of the Board acquired pursuant to
the proposal as to which the Board has not ex­
Parts 207, 220, 221, and 224 (Regulations G, T,
pressed its view.
U and X ) of the nature and in circumstances
(v) neither Applicant, Applicant’s subsid­
described in § 2 6 1 .6 (a )(2 ) and (3 ) of Part 261.
iaries, nor the company to be acquired has en­
(4 ) Pursuant to the provisions of section
tered into or proposes to enter into any agreement
11(a) of the Federal Reserve Act (12 U.S.C.
with any director, officer, employee or share­
§ 2 4 8 ( a )) , section 17(b) of the Securities Ex­
holder of the company that contains any condi­
change Act o f 1934 (15 U.S.C. § 7 8 q .), sections
tion that limits or restricts in any manner the
108(b ), 6 2 1 (c ), and 7 0 4 (b ) of the Consumer
right of such person to compete with applicant or
Credit Protection Act (15 U.S.C. § § 1 6 0 7 (b ),
any of applicant’s existing or proposed subsidi­
1681S (b ), 1691C ), and, section 1 8 ( f ) ( 3 ) of the
aries.
Federal Trade Commission Act (Pub. L. 93-637
(vi) the Reserve Bank determines that
section 2 0 2 ( a ) )
consummation of the proposal can reasonably be
(i)
to issue examination or inspection
expected to result in benefits to the public, such
manuals, registration, report, agreement, and ex­
as greater convenience, increased competition, or
amination forms, guidelines, instructions or other
gains in efficiency, that outweigh possible adverse
similar materials for use in connection with the
effects, such as undue concentration of resources,
administration of
decreased or unfair competition, conflicts of in­
(a) sections 1 through 707 (excluding
terests, or unsound banking practices.
sections
201
through 500) of the Consumer Credit
(33) Under the provisions of sections 3 and
Protection
Act
(15 U.S.C. § § 1601-1691e),
11 j of the Federal Reserve Act (12 U.S.C. § 521
and 2 4 8 ( j) ), to undertake remodeling, renovation
(b) sections 7 and 8 o f the Securities
of or addition to its existing buildings or those of
Exchange Act of 1934 (15 U.S.C. § § 78g and h ),
its branches provided the expenditure for such
(c) sections 1 8 ( f ) ( 1 ) — (3 ) of the Fed­
purpose does not exceed one hundred thousand
eral Trade Commission Act (Pub. L. 93-637
dollars ($100,000) within a single budget year.
§ 2 0 2 ( a )) , and rules and regulations issued there­
(g) The Director of the Division of Interna­
under.
tional Finance (or, in his absence, the Acting
(5 ) Pursuant to sections 123 and 171(b) of
Director) is authorized, under the provisions of
the Truth in Lending Act (15 U.S.C. § § 1633 and
the sixth paragraph of section 14 of the Federal
1666j) and the Board’s Regulation Z, 12 C.F.R.
Reserve Act (12 U.S.C. 358) to approve the
§
226.12, to grant, but not deny or revoke, exemp­
establishment of foreign accounts with the Federal
tions
to States from the requirements of Chapters
Reserve Bank of N ew York.
2
and
4 of the Truth in Lending Act (15 U.S.C.
(h) The Director of the Office of Saver and
§ § 1631-1644 and 1666), where State law im­
Consumer Affairs (or, in his absence, the Acting
poses substantially similar requirements and there
Director) is authorized:
is
(1 )
Under the provisions of § § 2 0 7 .2 (f), adequate provision for enforcement.
2 2 0 .2 (e ), and 221.3(d ) of this chapter (Regula­
(6 ) Pursuant to section 110 of the Consumer
tions G, T, and U, respectively) to approve issu­
Credit Protection Act (15 U.S.C. § 1609), to call
ance of the list of OTC margin stocks and to add,
meetings of and consult with the Advisory Com­
omit, or remove any stock in circumstances indi­
mittee established under that section, to approve
cating that such change is necessary or appropriate
the agenda for such meetings, and to accept any
resignation from Advisory Committee members.
in the public interest.




18

DELEGATION OF AUTHORITY

SECTION 265.3— REVIEW OF ACTION
AT DELEGATED LEVEL
Any action taken at a delegated level shall be
subject to review by the Board only if such re­
view is requested by a member of the Board
either on his own initiative or on the basis of a
petition for review by any person claiming to be
adversely affected by the action. Any such petition
for review must be received by the Secretary of




§ 265.3

the Board not later than the fifth day after the
date of such action. Notice of any such review
shall be given to the person with respect to
whom such action was taken and be received by
such person not later than the close of the tenth
day following the date of such action. Upon
receipt of such notice, such person shall not pro­
ceed further in reliance upon such action until he
is notified of the outcome of review thereof by
the Board.