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4000 - Advisory Opinions


Applicability of 12 U.S.C. 1972 to FDIC-Insured Federal Savings Banks

FDIC-89-8

March 17, 1989

Valerie J. Best, Attorney

I have reviewed your correspondence to Deputy General Counsel Douglas H. Jones and the relevant statutes, and have concluded that 12 U.S.C. § 1972(2)(G)(ii) does not apply to FDIC-insured federal savings banks.

Section 106(b) of the Bank Holding Company Act was amended by Title VIII of the Financial Institutions Regulatory and Interest Rate Control Act of 1978. Title VIII added a requirement that executive officers and shareholders controlling over ten percent of any class of voting securities of an insured bank make a written report to the board of directors of such bank for any year during which the executive officer or shareholder has outstanding an extension of credit from a bank which maintains a corresponding account in the name of such bank. Title VIII required the banks compiling the reports to forward them to the Comptroller of the Currency, the FRB, or the FDIC.

Section 106(b) of the Bank Holding Company Act was later amended by Title IV, section 428(b) of the Garn-St Germain Depository Institutions Act of 1982. Title IV deleted the requirement that banks compiling reports forward them to the Comptroller of the Currency, the FRB, or the FDIC, and replaced it with a provision authorizing the appropriate federal banking agencies to issue rules and regulations to require the reporting and disclosure of such extensions of credit. This provision is codified at 12 U.S.C. § 1972(2)(G)(ii). As you noted in your memorandum to Deputy General Counsel Jones, Part 349 of the FDIC rules and regulations was issued pursuant to the authority set forth in 12 U.S.C. § 1972(2)(G)(ii).

Section 349.2(a) of the FDIC rules and regulations provides that "bank" has the same meanings ascribed to it in 12 U.S.C. § 1841c and 12 U.S.C. § 1972(2)(H)(i). The latter provision is only concerned with "mutual savings banks,'' and is irrelevant here. The definition of "bank" set forth in section 349.2(a) of the FDIC rules and regulations is consistent with the definition set forth in 12 U.S.C. § 1971. That section provides that for the purposes of Chapter 22--Tying Arrangements (12 U.S.C. §§ 1971 to 1983c), the term "bank'' has the meaning ascribed to it in 12 U.S.C. § 1841.

In 12 U.S.C. § 1841(c)(2), exceptions to the definition of "bank'' are listed. Among them is 1841(c)(2)(B), which exempts all "insured institutions" as defined in 12 U.S.C. § 1730a(a)(1). Section 1730a(a)(1) explicitly includes FDIC-insured federal savings banks in its list of "insured institutions."

As a result, FDIC-insured federal savings banks are not included in the definition of "bank" for purposes of Chapter 22--Tying Arrangements, and are therefore not subject to 12 U.S.C. § 1972(2)(G)(ii) (Title VIII of FIRIRCA as revised by Title IV of the Garn-St Germain Depository Institutions Act of 1982).

This conclusion appears to be consistent with Chapter 22--Tying Arrangements in that there are several references to the Comptroller of the Currency, the Federal Reserve Board, and the FDIC, but no reference to FHLBB.

As you pointed out in your memorandum, 12 U.S.C. § 1813(q)(4) includes the FHLBB in the definition of "appropriate Federal banking agency.'' However, 12 U.S.C. § 1813 defines terms as they are used in Chapter 16--Federal Deposit Insurance Corporation (12 U.S.C. §§ 1811 to 1832), and is superceded by 12 U.S.C. § 1971 for purposes of Chapter 22--Tying Arrangements.


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