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FDIC Law, Regulations, Related Acts

[Main Tabs]     [Table of Contents - 4000]     [Index]     [Previous Page]     [Next Page]     [Search] 4000 - Advisory Opinions {{4-28-89 p.4121}} Part 348--Interlocks--Director Emeritus as Management Official FDIC-83-1 January 5, 1983 Pamela E. F. LeCren, Senior Attorney   Your December 21, 1982 letter to Chairman Isaac has been forwarded to the Legal Division for reply along with its enclosure (a December 21, 1982 letter directed to Chairman Isaac from * * *). In brief, the letters request that the FDIC permit you to continue to serve as chairman of the board of * * * while associated as director emeritus with * * *.   The Depository Institution Management Interlocks Act ("Interlocks Act", 12 U.S.C. 3201 et seq.) and Part 348 of FDIC's regulations (12 C.F.R. 348) prohibit management official interlocks between banks located in the same standard metropolitan statistical area ("SMSA") unless both banks have total assets of less than $20 million. Part 348 creates several exceptions to the general prohibitions. The Interlocks Act specifically defines the term management official to include advisory and honorary directors. Although neither the statute nor FDIC's regulations define the term advisory or honorary director, the Legal Division has by interpretation defined the term to include a director emeritus who attends board of directors' meetings and participates therein even if the individual is not a voting member of the board.   It is our understanding that you attend, but do not vote at * * * board of directors' meetings. Under the Legal Division's outstanding interpretation, you are considered to be an advisory or honorary director * * * and thus are currently serving in violation of the Interlocks Act and section 348.3(b) of FDIC's regulations. If you were to cease attending board of directors' meetings at * * *, you would no longer be considered a management official of that bank and the prohibited interlock would no longer exist. Neither the retention of your present title nor the receipt of benefits ("fees") paid by * * * to inactive directors emeritus would cause you to be considered a management official of the bank assuming that you cease attending board meetings.   Inasmuch as the Board of Directors declined to grant permission under section 348.4(b)(2) for your continued service § 348.4(b)(2) allows, under certain circumstances, interlocks between a newly-chartered bank and another depository institution) your continued association with both banks will be in violation of law unless the Board reconsiders and grants the exception request (see 12 C.F.R. § 303.10(d)) or you restrict your relationship with * * * as described above.   While we recognize that the statute may have a broad reach in that it picks up advisory and honorary directors as management officials of banks, the scope of the statute is a matter for Congress, and not the FDIC, to address. Should you have any questions, please feel free to contact me. Any reconsideration request should be directed to the appropriate FDIC regional office. [Main Tabs]     [Table of Contents - 4000]     [Index]     [Previous Page]     [Next Page]     [Search]

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