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4000 - Advisory Opinions

Applicability of § 215.8 of Regulation O Where Bank Makes Loans Only to Individuals and Not Companies


November 5, 1993

Alan J. Kaplan, Assistant General Counsel

This is in response to your letter of October 6, 1993 to Alfred J. T. Byrne, General Counsel of the FDIC. In your letter, you request that FDIC staff take a "no-action" position with respect to a recordkeeping requirement set forth in 12 C.F.R. § 215.8 (section 215.8 of Regulation O) as it applies to [BANK].

As currently drafted, section 215.8 requires, among other things, that a bank which is subject to Regulation O maintain records of the "related interests" of the bank, the bank's holding company and all of the bank holding company's subsidiaries. A related interest is defined by section 215.2(m) of Regulation O as a company or a political or campaign committee. As you note in your letter, however, the Board of Governors of the Federal Reserve System (the "FRS") has proposed to amend Regulation O so as to allow banks to employ other methods than maintaining records of related interests, as long as those other methods ensure compliance with Regulation O requirements. See 58 Fed. Reg. 47400 (to be codified at 12 C.F.R. Part 215) (1993).

You state that [BANK] makes loans only to individuals and not to companies or political organizations. You contend that [BANK] therefore cannot make a loan to a related interest and that no purpose would be served by compelling [BANK] to maintain records of related interests. You have received a letter dated October 18, 1993 from J. Virgil Mattingly, General Counsel of the FRS, indicating that FRS staff will not object if the bank does not compile and maintain records of related interests of insiders. You seek an opinion from the FDIC on the question, however, because the FDIC is the primary federal regulator of [BANK].

Please be advised that after reviewing your letter, as well as the October 18 letter from the FRS, we have concluded that staff will not object if [BANK] does not keep a list of related interests pursuant to section 215.8 of Regulation O provided that [BANK] maintains records sufficient to ensure compliance with all other Regulation O recordkeeping requirements and [BANK] abides by Regulation O's insider lending restrictions.

This opinion only applies to the facts and circumstances which you have described and may change if those facts and circumstances change.

We hope that this letter is responsive to your inquiry. Should you have any questions about this matter, please contact Pamela LeCren (202-898-3730) or Mark Mellon (202-898-3854) of my staff.

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