§ 375b. Extensions of credit to executive officers, directors, and principal shareholders of member banks

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1913

   Financial Institutions Regulatory and Interest Rate Control Act of 1978

   Pub. L. 95–630 title I § 104 · 92 Stat. 3641

   Enacted · 12 U.S.C. § 375b

   Dec. 23, 1913, ch. 6, § 22(h), as added Pub. L. 95–630, title I, § 104, Nov. 10, 1978, 92 Stat. 3644

   Source evidence

   Code source credit
   Dec. 23, 1913, ch. 6, § 22(h), as added Pub. L. 95–630, title I, § 104, Nov. 10, 1978, 92 Stat. 3644

   Enacted provision · exact public law section
   Sec. 104. Section 22 of the Federal Reserve Act is amended by adding at the end thereof the following new subsection: “(h) (1) No member bank shall make any loan or extension of credit in any manner to any of its executive officers, 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 member bank, except in the case of such a bank located in a city, town, or village with less than thirty thousand in population, in which case such per centum shall be 18 per centum, or to any company controlled by such an executive officer or person, or to any political or campaign committee the funds or services of which will benefit such an executive officer or person or which is controlled by such an executive officer or person, where the amount of such loan or extension of credit, when aggregated with the amount of all other loans or extensions of credit then outstanding by such bank to such executive officer or person and to all companies controlled by such executive officer or person and to all political or campaign committees the funds or services of which will benefit such executive officer or person or which are controlled by such executive officer or person, would exceed the limits on loans to a single borrower 12 USC 84. established by section 5200 of the Revised Statutes, as amended. For purposes of this paragraph, the provisions of section 5200 of the Revised Statutes, as amended, shall be deemed to apply to a State member bank as if such State member bank were a national banking association. “(2) No member bank shall make any loan or extension of credit in any manner to any of its executive officers or directors, 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 member bank, or to any company controlled by such an executive officer, director, or person, or to any political or campaign committee the funds or services of which will benefit such executive, director, or person or which is controlled by such executive officer, director, or person, where the amount of such loan or extension of credit, when aggregated with the amount of all other loans or extensions of credit then outstanding by such bank to such executive officer, director, or person and to all companies controlled by such executive officer, director, or person and to all political or campaign committees the funds or services of which will benefit such executive officer, director, or person or which are controlled by such executive officer, director, or person, would exceed $25,000, unless such loan, line of credit, or extension of credit is approved in advance by a majority of the entire board of directors with the interested party abstaining from participating directly or indirectly in the voting. “(3) No member bank shall make any loan or extension of credit in any manner to any of its executive officers or directors, or to any person who directly 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 member bank, or to any company controlled by such executive officer, director, or person, or to any political or campaign committee the funds or services of which will benefit such executive officer, director, or person or which is controlled by such executive officer, director, or person, unless such loan or extension of credit is 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. “(4) No member bank may pay an overdraft on an account at such Overdrafts. bank of an executive officer or director. “(5) For purposes of this subsection, an executive officer, director, or person shall be considered to have control of a company if such executive officer, director, or person, directly or indirectly or acting through or in concert with one or more other persons— “(A) owns, controls, or has power to vote 25 per centum or more of any class of voting securities of the company: “(B) controls in any manner the election of a majority of the directors of the company; or “(C) has the power to exercise a controlling influence over the management or policies of such company. “(6) For the purposes of this subsection— Definitions. “(A) the term ‘person’ means an individual or company; “(B) the term ‘company’ means any corporation, partnership, business trust, association, joint venture, pool syndicate, sole proprietorship, unincorporated organization, any other form of business entity not specifically listed herein, or any other trust, but shall not include any insured bank or any corporation the majority of shares of which is owned by the United States or by any State; “(C) the term ‘extension of credit’ has the same meaning assigned such term in the fourth paragraph of section 23A of this Act; 12 USC 371c. “(D) a person shall be deemed to be a ‘director’ of a member bank or a ‘person who directly or indirectly or acting through or in concert with one or more persons owns, controls, or has power to vote more than 10 per centum of any class of voting securities of a member bank’ if such person has such relationship with any bank holding company of which such member is a subsidiary, as defined by the Bank Holding Company Act (12 U.S.C. 1841), or with any other subsidiary of such bank holding company; “(E) a person shall be deemed to be an ‘officer of a member bank if such person is an officer of any bank holding company of which such member bank is a subsidiary, as defined by the Bank Holding Company Act (12 U.S.C. 1841), or with any other subsidiary of such bank holding company; “(F) the term ‘executive officer’ has the same meaning assigned such term under section 22(g) of this Act; and 12 USC 375a. “(G) the term ‘pay an overdraft on an account’ means the payment by a member bank of an amount for an account holder in excess of the funds on deposit in the account and does not include a payment of funds by the member bank in accordance with either a written preauthorized, interest-bearing extension of credit specifying a method of repayment or a written preauthorized transfer of funds from another account of the account holder at that bank. “(7) The Board of Governors of the Federal Reserve System may Rules and regulations. prescribe such rules and regulations, including definitions of terms, as it deems necessary to effectuate the purposes and to prevent evasions of Rules. this subsection. The Board may further prescribe rules providing a reasonable period of time after the date of enactment of this subsection within which the amount of outstanding loans or extensions of credit made prior to such date of enactment shall be reduced so as to conform to the limitations of this subsection.”.

2. 1982

   Garn-St Germain Depository Institutions Act of 1982

   Pub. L. 97–320 § 422 · 96 Stat. 1469

   Substituted · 12 U.S.C. § 375b(2)

   Pub. L. 97–320, § 422, substituted “an amount prescribed in a regulation of the appropriate Federal banking agency” for “$25,000”

   Source evidence

   Code amendment note
   Par. (2). Pub. L. 97–320, § 422, substituted “an amount prescribed in a regulation of the appropriate Federal banking agency” for “$25,000”.

   Enacted provision · exact public law section
   Sec. 422. approval of certain loans Paragraph (2) of section 22(h) of the Federal Reserve Act (12 U.S.C. 375b(2)) is amended by striking out “$25,000” and inserting in lieu thereof “an amount prescribed in a regulation of the appropriate Federal banking agency”.

3. 1982

   Garn-St Germain Depository Institutions Act of 1982

   Pub. L. 97–320 § 410(e) · 96 Stat. 1469

   Redesignated · 12 U.S.C. § 375b(6)(C)(F)

   Pub. L. 97–320, § 410(e), redesignated subpars. (D) to (G) as (C) to (F), respectively. Former subpar. (C), relating to definition of term “extension of credit”, was struck out

   Source evidence

   Code amendment note
   Par. (6)(C) to (F). Pub. L. 97–320, § 410(e), redesignated subpars. (D) to (G) as (C) to (F), respectively. Former subpar. (C), relating to definition of term “extension of credit”, was struck out.

   Enacted provision · exact public law section
   Sec. 410. banking affiliates (a) This section may be cited as the “Banking Affiliates Banking Affiliates Act of 1982. 12 USC 226 note. Act of 1982”. (b) Section 23A of the Federal Reserve Act (12 U.S.C. 3710 is amended to read as follows: “Sec. 23A. (a) Restrictions on Transactions with Affiliates.— “(1) A member bank and its subsidiaries may engage in a covered transaction with an affiliate only if— “(A) in the case of any affiliate, the aggregate amount of covered transactions of the member bank and its subsidiaries will not exceed 10 per centum of the capital stock and surplus of the member bank; and “(B) in the case of all affiliates, the aggregate amount of covered transactions of the member bank and its subsidiaries will not exceed 20 per centum of the capital stock and surplus of the member bank. “(2) For the purpose of this section, any transaction by a member bank with any person shall be deemed to be a transaction with an affiliate to the extent that the proceeds of the transaction are used for the benefit of, or transferred to, that affiliate. “(3) A member bank and its subsidiaries may not purchase a low-quality asset from an affiliate unless the bank or such subsidiary, pursuant to an independent credit evaluation, committed itself to purchase such asset prior to the time such asset was acquired by the affiliate. “(4) Any covered transactions and any transactions exempt under subsection (d) between a member bank and an affiliate shall be on terms and conditions that are consistent with safe and sound banking practices. “(b) Definitions.— For the purpose of this section— “(1) the term ‘affiliate’ with respect to a member bank means— “(A) any company that controls the member bank and any other company that is controlled by the company that controls the member bank; “(B) a bank subsidiary of the member bank; “(C) any company— “(i) that is controlled directly or indirectly, by a trust or otherwise, by or for the benefit of shareholders who beneficially or otherwise control, directly or indirectly, by trust or otherwise, the member bank or any company that controls the member bank; or “(ii) in which a majority of its directors or trustees constitute a majority of the persons holding any such office with the member bank or any company that controls the member bank; “(D) (i) any company, including a real estate investment trust, that is sponsored and advised on a contractual basis by the member bank or any subsidiary or affiliate of the member bank; or “(ii) any investment company with respect to which a member bank or any affiliate thereof is an investment advisor as defined in section 2(a)(20) of the Investment 15 USC 80a–2. Company Act of 1940; and “(E) any company that the Board determines by regulation or order to have a relationship with the member bank or any subsidiary or affiliate of the member bank, such that covered transactions by the member bank or its subsidiary with that company may be affected by the relationship to the detriment of the member bank or its subsidiary; and “(2) the following shall not be considered to be an affiliate: “(A) any company, other than a bank, that is a subsidiary of a member bank, unless a determination is made under paragraph (1)(E) not to exclude such subsidiary company from the definition of affiliate; “(B) any company engaged solely in holding the premises of the member bank; “(C) any company engaged solely in conducting a safe deposit business; “(D) any company engaged solely in holding obligations of the United States or its agencies or obligations fully guaranteed by the United States or its agencies as to principal and interest; and “(E) any company where control results from the exercise of rights arising out of a bona fide debt previously contracted, but only for the period of time specifically authorized under applicable State or Federal law or regulation or, in the absence of such law or regulation, for a period of two years from the date of the exercise of such rights or the effective date of this Act, whichever date is later, subject, upon application, to authorization by the Board for good cause shown of extensions of time for not more than one year at a time, but such extensions in the aggregate shall not exceed three years; “(3) (A) a company or shareholder shall be deemed to have control over another company if— “(i) such company or shareholder, directly or indirectly, or acting through one or more other persons owns, controls, or has power to vote 25 per centum or more of any class of voting securities of the other company; “(ii) such company or shareholder controls in any manner the election of a majority of the directors or trustees of the other company; or “(iii) the Board determines, after notice and opportunity for hearing, that such company or shareholder, directly or indirectly, exercises a controlling influence over the management or policies of the other company; and “(B) notwithstanding any other provision of this section, no company shall be deemed to own or control another company by virtue of its ownership or control of shares in a fiduciary capacity, except as provided in paragraph (1)(C) of this subsection or if the company owning or controlling such shares is a business trust; “(4) the term ‘subsidiary’ with respect to a specified company means a company that is controlled by such specified company; “(5) the term ‘bank’ includes a State bank, national bank, banking association, and trust company; “(6) the term ‘company’ means a corporation, partnership, business trust, association, or similar organization and, unless specifically excluded, the term ‘company’ includes a ‘member bank’ and a ‘bank’; “(7) the term ‘covered transaction’ means with respect to an affiliate of a member bank— “(A) a loan or extension of credit to the affiliate; “(B) a purchase of or an investment in securities issued by the affiliate; “(C) a purchase of assets, including assets subject to an agreement to repurchase, from the affiliate, except such purchase of real and personal property as may be specifically exempted by the Board by order or regulation; “(D) the acceptance of securities issued by the affiliate as collateral security for a loan or extension of credit to any person or company; or “(E) the issuance of a guarantee, acceptance, or letter of credit, including an endorsement or standby letter of credit, on behalf of an affiliate; “(8) the term ‘aggregate amount of covered transactions’ means the amount of the covered transactions about to be engaged in added to the current amount of all outstanding covered transactions; “(9) the term ‘securities’ means stocks, bonds, debentures, notes, or other similar obligations; and “(10) the term ‘low-quality asset’ means an asset that falls in any one or more of the following categories: “(A) an asset classified as ‘substandard’, ‘doubtful’, or ‘loss’ or treated as ‘other loans especially mentioned’ in the most recent report of examination or inspection of an affiliate prepared by either a Federal or State supervisory agency; “(B) an asset in a nonaccrual status; “(C) an asset on which principal or interest payments are more than thirty days past due; or “(D) an asset whose terms have been renegotiated or compromised due to the deteriorating financial condition of the obligor. “(c) Collateral for Certain Transactions With Affiliates.— “(1) Each loan or extension of credit to, or guarantee, acceptance, or letter of credit issued on behalf of, an affiliate by a member bank or its subsidiary shall be secured at the time of the transaction by collateral having a market value equal to— “(A) 100 per centum of the amount of such loan or extension of credit, guarantee, acceptance, or letter of credit, if the collateral is composed of— “(i) obligations of the United States or its agencies; “(ii) obligations fully guaranteed by the United States or its agencies as to principal and interest; “(iii) notes, drafts, bills of exchange or bankers’ acceptances that are eligible for rediscount or purchase by a Federal Reserve Bank; or “(iv) a segregated, earmarked deposit account with the member bank; “(B) 110 per centum of the amount of such loan or extension of credit, guarantee, acceptance, or letter of credit if the collateral is composed of obligations of any State or political subdivision of any State; “(C) 120 per centum of the amount of such loan or extension of credit, guarantee, acceptance, or letter of credit if the collateral is composed of other debt instruments, including receivables; or “(D) 130 per centum of the amount of such loan or extension of credit, guarantee, acceptance, or letter of credit if the collateral is composed of stock, leases, or other real or personal property. “(2) Any such collateral that is subsequently retired or amortized shall be replaced by additional eligible collateral where needed to keep the percentage of the collateral value relative to the amount of the outstanding loan or extension of credit, guarantee, acceptance, or letter of credit equal to the minimum percentage required at the inception of the transaction. “(3) A low-quality asset shall not be acceptable as collateral for a loan or extension of credit to, or guarantee, acceptance, or letter of credit issued on behalf of, an affiliate. “(4) The securities issued by an affiliate of the member bank shall not be acceptable as collateral for a loan or extension of credit to, or guarantee, acceptance, or letter of credit issued on behalf of, that affiliate or any other affiliate of the member bank. “(5) The collateral requirements of this paragraph shall not be applicable to an acceptance that is already fully secured either by attached documents or by other property having an ascertainable market value that is involved in the transaction. “(d) Exemptions.— The provisions of this section, except paragraph (a)(4), shall not be applicable to— “(1) any transaction, except for the purchase of a low-quality asset which is prohibited, with a bank— “(A) which controls 80 per centum or more of the voting shares of the member bank; “(B) in which the member bank controls 80 per centum or more of the voting shares; or “(C) in which 80 per centum or more of the voting shares are controlled by the company that controls 80 per centum or more of the voting shares of the member bank; “(2) making deposits in an affiliated bank or affiliated foreign bank in the ordinary course of correspondent business, subject to any restrictions that the Board may prescribe by regulation or order; “(3) giving immediate credit to an affiliate for uncollected items received in the ordinary course of business; “(4) making a loan or extension of credit to, or issuing a guarantee, acceptance, or letter of credit on behalf of, an affiliate that is fully secured by— “(A) obligations of the United States or its agencies; “(B) obligations fully guaranteed by the United States or its agencies as to principal and interest; or “(C) a segregated, earmarked deposit account with the member bank; “(5) purchasing securities issued by any company of the kinds described in section 4(c)(1) of the Bank Holding Company Act of 1956; 12 USC 1843. “(6) purchasing assets having a readily identifiable and publicly available market quotation and purchased at that market quotation or purchasing loans on a non-recourse basis from affiliated banks; and “(7) purchasing from an affiliate a loan or extension of credit that was originated by the member bank and sold to the affiliate subject to a repurchase agreement or with recourse. “(e) Rulemaking and Additional Exemptions.— “(1) The Board may issue such further regulations and orders, including definitions consistent with this section, as may be necessary to administer and carry out the purposes of this section and to prevent evasions thereof. “(2) The Board may, at its discretion, by regulation or order exempt transactions or relationships from the requirements of this section if it finds such exemptions to be in the public interest and consistent with the purposes of this section.”. (c) Section 23A of the Federal Reserve Act, as amended by this section, shall apply to any transaction entered into after the date of enactment of this Act, except for transactions which are the subject of a binding written contract or commitment entered into on or before July 28, 1982, and except that any renewal of a participation in a loan outstanding on July 28, 1982, to a company that becomes an affiliate as a result of the enactment of this Act, or any participation in a loan to such an affiliate emanating from the renewal of a binding written contract or commitment outstanding on July 28, 1982, shall not be subject to the collateral requirements of this Act. (d) Section 18(j) of the Federal Deposit Insurance Act (12 U.S.C. 1828(j)) is amended by striking out “, within the meaning of section 2 12 USC 221a. of the Banking Act of 1933, and”. (e) Section 22(h)(6)(C) of the Federal Reserve Act (12 U.S.C. 375b–(6)(C)) is repealed and subparagraphs (D) through (G) of such section are redesignated as subparagraphs (C) through (F), respectively. (f) Section 106(b)(2)(E) of the Bank Holding Company Amendments of 1970 (12 U.S.C. 1972(2)(E)) is amended by striking out “the same meaning given it in section 23A of the Federal Reserve Act” and inserting in lieu thereof “the meaning prescribed by the Board pursuant to section 22(h) of the Federal Reserve Act (12 U.S.C. 375b),”. (g) Section 10(d) of the Federal Deposit Insurance Act (12 U.S.C. 1820(d)) is amended by inserting “as in section 2(b) of the Banking Act of 1933 (12 U.S.C. 221a(b)) and” after “shall have the same meaning”.

4. 1991

   Federal Deposit Insurance Corporation Improvement Act of 1991

   Pub. L. 102–242 § 306(a) · 105 Stat. 2236

   1. Amended · 12 U.S.C. § 375b

      Pub. L. 102–242, § 306(a), amended section generally

   2. Substituted · 12 U.S.C. § 375b

      Pub. L. 102–242, § 306(a), substituting provisions relating to extensions of credit to executive officers, directors, and principal shareholders of member banks for provisions relating to prohibitions respecting loans and extensions of credit to executive officers and directors of banks, political or campaign committees, etc

   Source evidence

   Code amendment note
   Pub. L. 102–242, § 306(a), amended section generally, substituting provisions relating to extensions of credit to executive officers, directors, and principal shareholders of member banks for provisions relating to prohibitions respecting loans and extensions of credit to executive officers and directors of banks, political or campaign committees, etc.

   Enacted provision · exact public law section
   (a) Recodification of Current Law Restricting Extensions of Credit to Insiders.— Section 22(h) of the Federal Reserve Act (12 U.S.C. 375b) is amended to read as follows: “(h) Extensions of Credit to Executive Officers, Directors, and Principal Shareholders of Member Banks.— “(1) In general.— No member bank may extend credit to any of its executive officers, directors, or principal shareholders, or to any related interest of such a person, except to the extent permitted under paragraphs (2), (3), (4), and (6). “(2) Preferential terms prohibited.— 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 credit— “(A) is made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions by the bank with persons who are not executive officers, directors, principal shareholders, or employees of the bank; and “(B) does not involve more than the normal risk of repayment or present other unfavorable features. “(3) Prior approval required.— 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 Deposit Insurance Act) only if— “(A) the extension of credit has been approved 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 extension of credit. “(4) Aggregate limit on extensions of credit to any executive officer or principal shareholder.— A member bank may extend credit to any executive officer 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 established by section 5200 of the Revised Statutes. For purposes of this paragraph, section 5200 of the Revised Statutes snail be deemed to apply to a State member bank as if the State member bank were a national banking association. “(5) [Reserved.] “(6) Overdrafts by executive officers and directors prohibited.— “(A) In general.— If any executive officer or director has an account at the member bank, the bank may not pay on behalf of that person an amount exceeding the funds on deposit in the account. “(B) Exceptions.— Subparagraph (A) does not prohibit a member bank from paying funds in accordance with— “(i) a written preauthorized, interest-bearing 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) [Reserved.] “(8) Executive officer, director, or principal shareholder of certain affiliates treated as executive officer, director, or principal shareholder of member bank.— For purposes of this subsection, any executive officer, director, or principal shareholder (as the case may be) of any bank holding company of which the member bank is a subsidiary, or of any other subsidiary of that company, shall be deemed to be an executive officer, director, or principal shareholder (as the case may be) of the member bank. “(9) Definitions.— For purposes of this subsection: “(A) Company.— “(i) In general.— Except as provided in clause (ii), the term ‘company’ means any corporation, partnership, business or other trust, association, joint venture, pool syndicate, sole proprietorship, unincorporated organization, or other business entity. “(ii) Exceptions.— The term ‘company’ does not include— “(I) an insured depository institution (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) Control.— 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 election of a majority of the company’s directors; or “(iii) has the power to exercise a controlling influence over the company’s management or policies. “(C) Executive officer.— A person is an ‘executive officer’ of a company or bank if that person participates or has authority to participate (other than as a director) in major policymaking functions of the company or bank. “(D) Extension of credit.— 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) [Reserved.] “(F) Principal shareholder.— The term ‘principal share-holder’ means any person that 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 percent of any class of voting securities of a member bank or company. For purposes of paragraph (4), if a member bank has its main banking office in a city, town, or village with a population of less than 30,000, the preceding sentence shall apply with ‘18 percent’ substituted for TO percent’. “(G) Related interest.— A ‘related interest’ of a person is— “(i) any company controlled by that person; and “(ii) any political or campaign committee that is controlled by that person or the funds or services of which will benefit that person. “(H) Subsidiary.— The term ‘subsidiary’ has the same meaning as in section 2 of the Bank Holding Company Act of 1956. “(10) Board’s rulemaking authority.— The Board of Governors of the Federal Reserve System may prescribe such regulations, including definitions of terms, as it determines to be necessary to effectuate the purposes and prevent evasions of this subsection.”.

5. 1991

   Federal Deposit Insurance Corporation Improvement Act of 1991

   Pub. L. 102–242 § 306(d)(2) · 105 Stat. 2236

   Inserted · 12 U.S.C. § 375b(1)

   Pub. L. 102–242, § 306(d)(2), inserted “(5),” after “(4),”

   Source evidence

   Code amendment note
   Par. (1). Pub. L. 102–242, § 306(d)(2), inserted “(5),” after “(4),”.

   Enacted provision · exact public law section
   (2) Conforming amendment.— Section 22(h)(1) of the Federal Reserve Act (12 U.S.C. 375b(1)), as amended by subsection (a), is amended by inserting “(5),” after “(4),”.

6. 1991

   Federal Deposit Insurance Corporation Improvement Act of 1991

   Pub. L. 102–242 § 306(b) · 105 Stat. 2236

   Added · 12 U.S.C. § 375b(2)(C)

   Pub. L. 102–242, § 306(b), added subpar. (C)

   Source evidence

   Code amendment note
   Par. (2)(C). Pub. L. 102–242, § 306(b), added subpar. (C).

   Enacted provision · exact public law section
   (b) Requiring Depository Institutions To Follow Normal Credit Underwriting Procedures When Extending Credit to Insiders.— Section 22(h)(2) of the Federal Reserve Act (12 U.S.C. 375b(2)), as amended by subsection (a), is amended— (1) by striking “and” at the end of subparagraph (A); (2) by striking the period at the end of subparagraph (B) and inserting “; and”; and (3) by inserting after subparagraph (B) the following new subparagraph: “(C) the bank follows credit underwriting procedures that are not less stringent than those applicable to comparable transactions by the bank with persons who are not executive officers, directors, principal shareholders, or employees of the bank.”.

7. 1991

   Federal Deposit Insurance Corporation Improvement Act of 1991

   Pub. L. 102–242 § 306(c) · 105 Stat. 2236

   Inserted · 12 U.S.C. § 375b(4)

   Pub. L. 102–242, § 306(c), inserted “, director,” after “executive officer” in heading and text

   Source evidence

   Code amendment note
   Par. (4). Pub. L. 102–242, § 306(c), inserted “, director,” after “executive officer” in heading and text.

   Enacted provision · exact public law section
   (c) Applying to Directors the Limit on Loans to One Borrower.— Section 22(h)(4) of the Federal Reserve Act (12 U.S.C. 375b(4)), as amended by subsection (a), is amended— (1) by inserting “, director,” after “Aggregate limit on extensions of credit to any executive officer”; and (2) by inserting “, director,” after “A member bank may extend credit to any executive officer”.

8. 1991

   Federal Deposit Insurance Corporation Improvement Act of 1991

   Pub. L. 102–242 § 306(d)(1) · 105 Stat. 2236

   Added · 12 U.S.C. § 375b(5)

   Pub. L. 102–242, § 306(d)(1), added par. (5)

   Source evidence

   Code amendment note
   Par. (5). Pub. L. 102–242, § 306(d)(1), added par. (5).

   Enacted provision · exact public law section
   (1) In general.— Section 22(h)(5) of the Federal Reserve Act (12 U.S.C. 375b(5)), as amended by subsection (a), is amended to read as follows: “(5) Aggregate limit on extensions of credit to all executive officers, directors, and principal shareholders.— “(A) In general.— A member bank may extend credit to any executive officer, director, or principal shareholder, or to any related interest of such a person, 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 its executive officers, directors, principal shareholders, and those persons’ related interests would not exceed the bank’s unimpaired capital and unimpaired surplus. “(B) More stringent limit authorized.— The Board may, by regulation, prescribe a limit that is more stringent than that contained in subparagraph (A). “(C) Board may make exceptions for certain banks.— 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 important to avoid constricting the availability of credit in small communities or to attract directors to such banks. In no case may the aggregate amount of all outstanding 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.”.

9. 1991

   Federal Deposit Insurance Corporation Improvement Act of 1991

   Pub. L. 102–242 § 306(e) · 105 Stat. 2236

   Added · 12 U.S.C. § 375b(7)

   Pub. L. 102–242, § 306(e), added par. (7)

   Source evidence

   Code amendment note
   Par. (7). Pub. L. 102–242, § 306(e), added par. (7).

   Enacted provision · exact public law section
   (e) Prohibiting Insiders From Accepting Unauthorized Extensions of Credit.— Section 22(h)(7) of the Federal Reserve Act (12 U.S.C. 375b(7)), as amended by subsection (a), is amended to read as follows: “(7) Prohibition on knowingly receiving unauthorized extension of credit.— 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.”.

10. 1991

    Federal Deposit Insurance Corporation Improvement Act of 1991

    Pub. L. 102–242 § 306(f) · 105 Stat. 2236

    Struck · 12 U.S.C. § 375b(8)

    Pub. L. 102–242, § 306(f), struck out “bank holding” before “company of which the member”

    Source evidence

    Code amendment note
    Par. (8). Pub. L. 102–242, § 306(f), struck out “bank holding” before “company of which the member”.

    Enacted provision · exact public law section
    (f) Applying Uniform Rules to All Companies Controlling Depository Institutions.— Section 22(h)(8) of the Federal Reserve Act (12 U.S.C. 375b(8)), as amended by subsection (a), is amended by striking “bank holding”.

11. 1991

    Federal Deposit Insurance Corporation Improvement Act of 1991

    Pub. L. 102–242 § 306(g) · 105 Stat. 2236

    Added · 12 U.S.C. § 375b(9)(E)

    Pub. L. 102–242, § 306(g), added subpar. (E)

    Source evidence

    Code amendment note
    Par. (9)(E). Pub. L. 102–242, § 306(g), added subpar. (E).

    Enacted provision · exact public law section
    (g) Applying Safeguards to Insider Transactions With Depository Institution’s Subsidiaries.— Section 22(h)(9)(E) of the Federal Reserve Act (12 U.S.C. 375b(9)(E)), as amended by subsection (a), is amended to read as follows: “(E) Member bank.— The term ‘member bank’ includes any subsidiary of a member bank.”.

12. 1991

    Federal Deposit Insurance Corporation Improvement Act of 1991

    Pub. L. 102–242 § 306(h) · 105 Stat. 2236

    Substituted · 12 U.S.C. § 375b(9)(F)

    Pub. L. 102–242, § 306(h), struck out last sentence of subpar. (F) which read as follows: “For purposes of paragraph (4), if a member bank has its main banking office in a city, town, or village with a population of less than 30,000, the preceding sentence shall apply with ‘18 percent’ substituted for ‘10 percent’.”

    Source evidence

    Code amendment note
    Par. (9)(F). Pub. L. 102–242, § 306(h), struck out last sentence of subpar. (F) which read as follows: “For purposes of paragraph (4), if a member bank has its main banking office in a city, town, or village with a population of less than 30,000, the preceding sentence shall apply with ‘18 percent’ substituted for ‘10 percent’.”

    Enacted provision · exact public law section
    (h) Applying Uniform Rules to All Principal Shareholders.— Section 22(h)(9)(F) of the Federal Reserve Act (12 U.S.C. 375b(9)(F)), as amended by subsection (a), is amended by striking the last sentence.

13. 1992

    Housing and Community Development Act of 1992

    Pub. L. 102–550 § 1605(a)(10) · 106 Stat. 3672

    Substituted · 12 U.S.C. § 375b(6)(B)(i)

    Pub. L. 102–550, § 1605(a)(10), substituted “or” for “and” at end

    Source evidence

    Code amendment note
    Par. (6)(B)(i). Pub. L. 102–550, § 1605(a)(10), substituted “or” for “and” at end.

14. 1992

    Housing and Community Development Act of 1992

    Pub. L. 102–550 § 955(a) · 106 Stat. 3672

    1. Amended · 12 U.S.C. § 375b(9)(D)

       Pub. L. 102–550, § 955(a), designated existing provisions as cl. (i)

    2. Inserted · 12 U.S.C. § 375b(9)(D)

       Pub. L. 102–550, § 955(a), inserted heading

    3. Added · 12 U.S.C. § 375b(9)(D)

       Pub. L. 102–550, § 955(a), added cl. (ii)

    Source evidence

    Code amendment note
    Par. (9)(D). Pub. L. 102–550, § 955(a), designated existing provisions as cl. (i), inserted heading, and added cl. (ii).

15. 1992

    Housing and Community Development Act of 1992

    Pub. L. 102–550 § 955(b) · 106 Stat. 3672

    1. Amended · 12 U.S.C. § 375b(9)(F)

       Pub. L. 102–550, § 955(b), designated portion of existing provisions as cl. (i), realigned margin

    2. Substituted · 12 U.S.C. § 375b(9)(F)

       Pub. L. 102–550, § 955(b), substituted “; and” for period at end

    3. Added · 12 U.S.C. § 375b(9)(F)

       Pub. L. 102–550, § 955(b), added cl. (ii)

    Source evidence

    Code amendment note
    Par. (9)(F). Pub. L. 102–550, § 955(b), designated portion of existing provisions as cl. (i), realigned margin, substituted “; and” for period at end, and added cl. (ii).

16. 1994

    Riegle Community Development and Regulatory Improvement Act of 1994

    Pub. L. 103–325 title III § 334(b) · 108 Stat. 2160

    1. Amended · 12 U.S.C. § 375b(8)

       Pub. L. 103–325 designated existing provisions as subpar. (A)

    2. Inserted · 12 U.S.C. § 375b(8)

       Pub. L. 103–325 inserted heading

    3. Added · 12 U.S.C. § 375b(8)

       Pub. L. 103–325 added subpar. (B)

    Source evidence

    Code amendment note
    Par. (8). Pub. L. 103–325 designated existing provisions as subpar. (A), inserted heading, and added subpar. (B).

    Enacted provision · exact public law section
    (b) Extensions of Credit to Executive Officers, Directors, and Principal Shareholders of Member Banks.— Section 22(h)(8) of the Federal Reserve Act (12 U.S.C. 375b(8)) is amended— (1) by striking “member bank.—For” and inserting the following: “ member bank .— “(A) In general.— For”; and (2) by adding at the end the following: “(B) Exception.— The Board may, by regulation, make exceptions to subparagraph (A), except as that subparagraph makes applicable paragraph (2), for an executive officer or director of a subsidiary of a company that controls the member bank, if that executive officer or director does not have authority to participate, and does not participate, in major policymaking functions of the member bank.”.

17. 1996

    Department of Commerce and Related Agencies Appropriations Act, 1997

    Pub. L. 104–208 § 2211(a)(1) · 110 Stat. 3009

    1. Amended · 12 U.S.C. § 375b(2)(A)

       Pub. L. 104–208, § 2211(a)(1), (2), designated existing provisions as subpar. (A)

    2. Inserted · 12 U.S.C. § 375b(2)(A)

       Pub. L. 104–208, § 2211(a)(1), (2), inserted heading

    3. Redesignated · 12 U.S.C. § 375b(2)(A)

       Pub. L. 104–208, § 2211(a)(1), (2), redesignated former subpars. (A) to (C) as cls. (i) to (iii), respectively, and adjusted margins

    Source evidence

    Code amendment note
    Par. (2)(A). Pub. L. 104–208, § 2211(a)(1), (2), designated existing provisions as subpar. (A), inserted heading, redesignated former subpars. (A) to (C) as cls. (i) to (iii), respectively, and adjusted margins.

    Enacted provision · exact public law section
    (1) by redesignating subparagraphs (A) through (C) as clauses (i) through (iii), respectively, and indenting appropriately;

18. 1996

    Department of Commerce and Related Agencies Appropriations Act, 1997

    Pub. L. 104–208 § 2211(a)(3) · 110 Stat. 3009

    Redesignated · 12 U.S.C. § 375b(2)(B)

    Pub. L. 104–208, § 2211(a)(3), added subpar. (B). Former subpar. (B) redesignated cl. (ii) of subpar. (A)

    Source evidence

    Code amendment note
    Par. (2)(B). Pub. L. 104–208, § 2211(a)(3), added subpar. (B). Former subpar. (B) redesignated cl. (ii) of subpar. (A).

    Enacted provision · exact public law section
    (3) by adding at the end the following new subparagraph: “(B) Exception.— Nothing in this paragraph shall prohibit any extension of credit made pursuant to a benefit or compensation program— “(i) that is widely available to employees of the member bank; and “(ii) that does not give preference to any officer, director, or principal shareholder of the member bank, or to any related interest of such person, over other employees of the member bank.”.

19. 1996

    Department of Commerce and Related Agencies Appropriations Act, 1997

    Pub. L. 104–208 § 2211(a)(1) · 110 Stat. 3009

    Redesignated · 12 U.S.C. § 375b(2)(C)

    Pub. L. 104–208, § 2211(a)(1), redesignated subpar. (C) as cl. (iii) of subpar. (A)

    Source evidence

    Code amendment note
    Par. (2)(C). Pub. L. 104–208, § 2211(a)(1), redesignated subpar. (C) as cl. (iii) of subpar. (A).

    Enacted provision · exact public law section
    (1) by redesignating subparagraphs (A) through (C) as clauses (i) through (iii), respectively, and indenting appropriately;

20. 1996

    Department of Commerce and Related Agencies Appropriations Act, 1997

    Pub. L. 104–208 § 2211(b) · 110 Stat. 3009

    Amended · 12 U.S.C. § 375b(8)(B)

    Pub. L. 104–208, § 2211(b), amended heading and text of subpar. (B) generally. Prior to amendment, text read as follows: “The Board may, by regulation, make exceptions to subparagraph (A), except as that subparagraph makes applicable paragraph (2), for an executive officer or director of a subsidiary of a company that controls the member bank, if that executive officer or director does not have authority to participate, and does not participate, in major policymaking functions of the member bank.”

    Source evidence

    Code amendment note
    Par. (8)(B). Pub. L. 104–208, § 2211(b), amended heading and text of subpar. (B) generally. Prior to amendment, text read as follows: “The Board may, by regulation, make exceptions to subparagraph (A), except as that subparagraph makes applicable paragraph (2), for an executive officer or director of a subsidiary of a company that controls the member bank, if that executive officer or director does not have authority to participate, and does not participate, in major policymaking functions of the member bank.”

    Enacted provision · exact public law section
    (b) Exception for Extensions of Credit to Executive Officers and Directors of Affiliates.— Section 22(h)(8)(B) of the Federal Reserve Act (12 U.S.C. 375b(8)(B)) is amended to read as follows: “(B) Exception.— The Board may, by regulation, make exceptions to subparagraph (A) for any executive officer or director of a subsidiary of a company that controls the member bank if— “(i) the executive officer or director does not have authority to participate, and does not participate, in major policymaking functions of the member bank; and “(ii) the assets of such subsidiary do not exceed 10 percent of the consolidated assets of a company that controls the member bank and such subsidiary (and is not controlled by any other company).”.

21. 2010

    Bank and Savings Association Holding Company and Depository Institution Regulatory Improvements Act of 2010

    Pub. L. 111–203 title VI § 614(a) · 124 Stat. 1376

    1. Substituted · 12 U.S.C. § 375b(9)(D)(i)

       Pub. L. 111–203 substituted “extends credit to a person by—” for “extends credit by making”

    2. Inserted · 12 U.S.C. § 375b(9)(D)(i)

       Pub. L. 111–203 inserted “(I) making” before “or renewing”

    3. Substituted · 12 U.S.C. § 375b(9)(D)(i)

       Pub. L. 111–203 substituted “which the person” for “which a person”

    4. Substituted · 12 U.S.C. § 375b(9)(D)(i)

       Pub. L. 111–203 substituted “the bank; or” for “the bank.”

    5. Added · 12 U.S.C. § 375b(9)(D)(i)

       Pub. L. 111–203 added subcl. (II)

    Source evidence

    Code amendment note
    Subsec. (9)(D)(i). Pub. L. 111–203 substituted “extends credit to a person by—” for “extends credit by making”, inserted “(I) making” before “or renewing”, substituted “which the person” for “which a person” and “the bank; or” for “the bank.”, and added subcl. (II).

    Enacted provision · exact public law section
    (a) Extensions of Credit.— Section 22(h)(9)(D)(i) of the Federal Reserve Act (12 U.S.C. 375b(9)(D)(i)) is amended— (1) by striking the period at the end and inserting “; or”; (2) by striking “a person” and inserting “the person”; (3) by striking “extends credit by making” and inserting the following: “extends credit to a person by— “(I) making” ; and (4) by adding at the end the following: “(II) having credit exposure to the person arising from a derivative transaction (as defined in section 5200(b) of the Revised Statutes of the United States (12 U.S.C. 84(b))), repurchase agreement, reverse repurchase agreement, securities lending transaction, or securities borrowing transaction between the member bank and the person.” .

    Effective date note
    Pub. L. 111–203, title VI, § 614(b), July 21, 2010, 124 Stat. 1614, provided that: “The amendments made by this section [amending this section] shall take effect 1 year after the transfer date.” [For definition of “transfer date” as used in section 614(b) of Pub. L. 111–203, set out above, see section 5301 of this title.]

27 of 34 references resolved to an enrolled provision · 7 partial