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Each depositor insured to at least $250,000 per insured bank

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4000 - Advisory Opinions

Polling Bank Directors to Obtain Necessary Votes for Insider Credit Approval


September 12, 1988

Gerald J. Gervino, Senior Attorney

In your letter of August 4, 1988, you stated that one of your affiliated insured nonmember state banks, ***, was cited by one of our examiners as in apparent violation of Regulation O, 12 C.F.R. Part 215 (1988). Our examiners specifically cited that bank for a violation of the prior approval requirements of § 215.4(b) of Regulation O. 12 C.F.R. § 215.4(b) (1988). You state that it has been the practice at *** and at your other affiliated institutions, to poll the directors individually by telephone to obtain the necessary votes for insider credit approval. Our field examiner informed you that this does not comply with the requirements of Regulation O.

You note that the regulation is silent with respect to telephone polling and that you did not find a formal interpretation addressing the issue in the current issue of our Laws, Regulations, and Related Acts. You point out that your banks have engaged in this practice for quite some time, and have never in the past received criticism from the FDIC or the Office of the Comptroller of the Currency.

Our position with respect to the telephone polling of directors insofar as to whether it meets the prior approval requirements of § 215.4(b) of Regulation O is that compliance depends upon whether or not the approval was obtained at a valid board meeting held in accordance with the requirements of state law. Thus, if this polling practice represents a valid meeting of the board of directors under *** law, we would consider the vote a valid prior approval as far as § 215.4(b) of Regulation O is concerned.

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