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4000 - Advisory Opinions

Chairman of Insured Institution is Presumed to be an Executive Officer for Purposes of Regulation O Unless Institution Adopts Resolution Indicating Otherwise


May 21, 1992

Pamela E.F. LeCren, Counsel

Regulation O specifically provides that the term "executive officer" means any person who participates or has authority to participate (other than in the capacity of a director) in major policymaking functions. The term is specifically presumed to include the chairman of the board of directors unless the chairman is excluded by resolution or the bank's bylaws from participating other than in the capacity of a director in major policymaking functions and the individual does not actually participate therein. The above definition has been in effect since 1979 and was not affected in any way by the recent statutory and regulatory amendments.

Your letter asks us to determine whether the bank's existing chairman of the board is an executive officer. The chairman is apparently an outside director who "has no signatory nor loan authorities and exercises no policy powers greater than other directors."

Please be advised that the bank's chairman of the board is presumed to be an executive officer unless the bank adopts a resolution indicating otherwise. (See above). Even then, such a resolution is ineffective if the individual does in fact participate in major policymaking functions. Without additional information about the chairman's responsibilities and authority we cannot determine whether the chairman of the board of your bank is capable of being excluded from the definition of executive officer by resolution.

The Federal Reserve Board has a published staff opinion which concluded that a vice chairman of a bank's board of director who has signatory authority for deeds, checks, drafts and other documents in the absence of the bank's president is an executive officer even in the absence of the authority to make loans or to perform any of the other duties of an executive officer. (FRRS 3--1042, June, 1981, 1962 Fed. Res. Bull. 289; 12 C.F.R. 215.102, P3786). The letter also characterizes supervisory and advisory functions as ones normally performed by directors and contrasts such functions with the duties of management. Although the clear implication of that opinion is that signatory authority is a policymaking function, we cannot say that the absence of that authority, in and of itself, signifies a lack of policymaking functions. That determination can only be made in the context of the chairman's overall authority and responsibility.

If you would like the FDIC to undertake a further review of the question you present, please submit more detailed information. Please be advised that in general the FDIC is of the opinion that the burden of persuasion as to the issue of whether a chairman of the board does or does not exercise policymaking functions beyond those of a director falls upon the bank. That is to say, that as a general matter, it is the FDIC's experience that someone who holds the title of chairman of the board does in fact have more authority and responsibility than other directors and that that authority and responsibility generally goes beyond supervision and advice.

If you have any questions, I can be reached at (202) 898--3730.

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