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4000 - Advisory Opinions


Whether Individual Acting as Chairman of Bank and as Attorney for Two Other Banks Located in Same Standard Metropolitan Statistical Area Violates Depository Institution Management Interlocks Act, Antitrust Laws, or Privacy Laws

FDIC-92-42

June 23, 1992

Pamela E.F. LeCren, Counsel

Thank you for your letter of May 14, 1992 concerning Mr. [X]. According to your letter, Mr. [X] is the chairman of [Bank A] and the attorney of record for [Bank B] and [Bank C]. You have indicated that all these institutions are in the same standard metropolitan statistical area. I am assuming for the purposes of this letter that the two state banks are not members of the Federal Reserve System. You have inquired whether Mr. [X]' service at these respective banks violates the Depository Institution Management Interlocks Act, 12 C.F.R. § 7.8000, any applicable antitrust laws, or any applicable privacy laws. Having researched the issues you raised and based on the information which you provided, it is my opinion as more fully set out below that Mr. [X] is not in violation of any of the laws about which you asked. However, because [Bank B] is supervised by the Office of the Comptroller of the Currency, you should also contact the Comptroller of the Currency.

Depository Institution Management Interlocks Act

The Depository Institution Management Interlocks Act ("the Interlocks Act") was enacted in 1978 in order to foster credit availability and protect consumers against lending institutions' anti-competitive practices. The relevant language of the statute reads:

A management official of a depository institution . . . may not serve as a management official of any other depository institution . . . not affiliated therewith if an office of one of the institutions or any depository institution that is an affiliate of such institutions is located within either--

(1)  the same primary metropolitan statistical area, the same metropolitan statistical area . . . , or

(2)  the same city, town, or village . . . .

12 U.S.C. § 3202. According to the statute, a "management official'' is defined as "an employee or officer with management functions, a director (including an advisory or honorary director, except in the case of a depository institution with total assets of less than $100,000,000) a trustee of a business organization under the control of trustees, or any person who has a representative or nominee serving in any such capacity." 12 U.S.C. § 3201(4).

Certainly Mr. [X], as chairman of [Bank A], would be considered as management official of that institution. The question, therefore, is whether in his capacity as the attorney of record for the [Bank B] and [Bank C], Mr. [X] is serving as a management official. Being unfamiliar with Mr. [X]' specific duties as attorney for those banks, I am unable to conclusively state whether he is an employee with management responsibilities. However, if he is only providing standard legal services and is not involved in establishing and administering the banks' policies nor responsible for any day-to-day management decisions, he probably does not have any of the obligations with which the statute is concerned. Assuming that to be the case, Mr. [X] does not appear to be a management official under the language of the Interlocks Act.

Applicability of 12 C.F.R. § 7.8000

Title 12, part 7.8000 of the Code of Federal Regulations in part states:

(a)  All charges to customers should be arrived at by each bank on a competitive basis and not on the basis of any agreement, arrangement, undertaking, understanding or discussion with other banks or their officers.

(b)  Establishment of deposit account service charges, and the amounts thereof, is a business decision to be made by each bank according to sound banking judgment and federal standards of safety and soundness.

12 C.F.R. § 7.8000. As you probably know, this provision was issued by the Comptroller of the Currency. As such, it only applies to national banks. This being the case, it is the responsibility of the Comptroller to determine what action is a violation of this section. Thus, it is not for me to determine whether Mr. [X] stands in violation of this provision.

It should be noted that the Comptroller of the Currency has given its position on management official interlocks in title 12, part 26 of the Code of Federal Regulations under the authority of the Interlocks Act. In this section, the Comptroller recognizes the definition of "management official" as set forth in the act. As discussed above, Mr. [X] does not appear to be such an official under the statute's language.

Antitrust Law

A review of the relevant antitrust law revealed that, before 1990, section 8 of the Clayton Act (15 U.S.C. § 19) expressly prohibited any "private banker or director, officer, or employee of any member bank of the Federal Reserve System" from holding a similar position in any other bank. However, in 1990, the statute was amended to specifically exclude bank officials from the reach of its authority. The current version of the statute, entitled "Interlocking directorates and officers," states: "No person shall, at the same time, serve as a director or officer in any two corporations (other than banks, banking associations, and trust companies). . . ." 15 U.S.C. § 19 (emphasis added).

According to the staff of the Board of Governors of the Federal Reserve System, section 8 of the Clayton Act was amended because the provisions regarding banking officials were deemed to have been supplanted by the more comprehensive language of the Interlocks Act. 12 C.F.R. § 212.7. As such, Mr. [X], situation does not fall within the scope of federal antitrust law.

As for any pertinent Illinois antitrust law, it is generally not the role of the FDIC to act as arbiter on state law matters. As such, I cannot provide any definitive answers regarding Illinois law on this subject. However, in briefly examining the Illinois Antitrust Act (ch. 38 ¶ 60-1 et seq.), there appears to be no language which addresses a situation involving interlocking directors and officers.

Privacy Law

As with the antitrust law, there appears to be no applicable privacy law either on the federal or state level which speaks to the issue you have raised. Again, however, I must reiterate that the FDIC is not in a position of authority on state law. If you are interested in a definitive answer about Illinois law, I urge you to contact the appropriate state agency.

Once again, thank you for your correspondence. If you have any further questions about this matter, please do not hesitate to contact us.


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