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4000 - Advisory Opinions

Reporting Requirements under Titles VIII and IX of FIRA Relating to Overdrafts


February 15, 1980

Thomas W. Lawless, Jr., Regional Counsel

I am writing in reply to your letter of December 28, 1979, relative to Titles VIII and IX of the Financial Institutions Regulatory and Interest Rate Control Act of 1978 (the "Act") and implementing regulations. You state that *** is a bank holding company which owns more than 99% of the stock of both *** Bank & Trust Company (***) and *** National Bank (***). *** is a state nonmember insured bank, while *** is a member bank. *** maintains a correspondent account with *** with an average balance in excess of $100,000. From time to time *** is indebted to *** due to the fact that an occasion that correspondent account is in an overdraft status because of clerical errors and delays in processing checks. You state your opinions that neither *** nor *** would be required to report these overdrafts under either Title VIII or Title IX of the Act, and that *** would not have to report to either bank. Title VIII adds a new paragraph 2 to section 106(b) of the Bank Holding Company Amendements of 1970 (12 U.S.C. 1972). Title IX adds a new subsection (k) to section 7 of the Federal Deposit Insurance Act (12 U.S.C. 1817(k)).

I agree that section 106(b) of the Bank Holding Company Amendments of 1970 and related FDIC regulations (12 C.F.R. 349) do not require ***, ***, or *** to report these overdrafts to *** as borrowings from a correspondent bank, and that the overdrafts need not be reflected in any report made to this Corporation pursuant to section 106(b)(2)(G)(iii). Questions regarding the applicability of section 7(k) of the Federal Deposit Insurance Act and related regulations to *** regarding its obligations to report extensions of credit by it to its executive officers, stockholders, and related companies and committees, should be addressed to the Regional Administrator of National Banks here in ***.

You also state that *** is the obligor on a subordinated debenture due to an unaffiliated bank at which both *** and *** maintain correspondent accounts. You state your opinion that neither ***, ***, or *** is "required to report this indebtedness." I agree that neither section 106(b) nor Part 349 requires ***, ***, or *** to report to *** the amount of the debenture, and that the said amount need not be included in any report made to this Corporation pursuant to section 106(b)(2)(G)(iii).

Whether section 106(b) or related provisions of Federal Reserve Regulation O require reports to *** or to the Comptroller of the Currency is a question for the Regional Administrator.

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