[Federal Register Volume 62, Number 54 (Thursday, March 20, 1997)]
[Rules and Regulations]
[Pages 13294-13298]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-7011]
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FEDERAL RESERVE SYSTEM
12 CFR Part 215
[Regulation O; Docket No. R-0940]
Loans to Executive Officers, Directors, and Principal
Shareholders of Member Banks; Loans to Holding Companies and Affiliates
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Final rule.
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SUMMARY: The Board is amending its Regulation O, which implements
section 22(h) of the Federal Reserve Act and limits how much and on
what terms a bank may lend to its own insiders and insiders of its
affiliates. Under the final rule, Regulation O will not apply to
extensions of credit by a bank to an executive officer or director of
an affiliate, provided that the executive officer or director is not
engaged in major policymaking functions of the bank and the affiliate
does not account for more than 10 percent of the consolidated assets of
the bank's parent holding company. Extensions of credit to executive
officers of an affiliate that accounts for more than 10 percent of the
consolidated assets of the bank's parent holding company are covered by
Regulation O as a result of the Economic Growth and Regulatory
Paperwork Reduction Act of 1996.
EFFECTIVE DATE: April 1, 1997.
FOR FURTHER INFORMATION CONTACT: Gregory Baer, Managing Senior Counsel
(202/452-3236), or Gordon Miller, Attorney (202/452-2534), Legal
Division, Board of Governors of the Federal Reserve System. For the
hearing impaired only, Telecommunications Device for the Deaf (TDD),
Dorothea Thompson (202/452-3544).
SUPPLEMENTARY INFORMATION:
Introduction
Section 22(h) of the Federal Reserve Act restricts insider lending
by banks, and Regulation O implements section 22(h). 12 U.S.C. 375b; 12
CFR Part 215. Regulation O limits total loans to any one insider and
aggregate loans to all insiders to a percentage of the bank's capital
and requires that such loans be on non-preferential terms--that is, on
the same terms a person not affiliated with the bank would
receive.1 12 CFR 215.4(a), (c), and (d). For this purpose, an
``insider'' means an executive officer,
[[Page 13295]]
director, or principal shareholder, and loans to an insider include
loans to any ``related interest'' of the insider, including any company
controlled by the insider. 12 CFR 215.2(h). Regulation O requires banks
to maintain records to document compliance with all its restrictions.
12 CFR 215.8.
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\1\ Regulation O also requires prior approval of the bank's
board of directors for certain loans to insiders and prohibits
certain overdrafts by executive officers and directors. 12 CFR
215.4(b) and (e).
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The Board in 1980 generally exempted executive officers of
affiliates from the restrictions of Regulation O so long as they did
not participate in major policymaking functions of a bank. The Board
did not exempt directors of affiliates because it lacked authority to
do so. On May 3, 1996, the Board proposed amendments to Regulation O to
conform its exemptions for executive officers and directors of
affiliates of banks to the requirements of section 22(h), as amended by
the Riegle Community Development and Regulatory Improvement Act of 1994
(Riegle Act), which had modified the authority of the Board to maintain
such exemptions.2 61 FR 19683. On September 30, 1996, in the
Economic Growth and Regulatory Paperwork Reduction Act of 1996
(EGRPRA),3 Congress amended section 22(h) to modify further the
Board's exemptive authority over affiliate insiders. In view of the
changes in the Board's authority and the comments received from the
public concerning the Board's original proposal, the Board on November
8, 1996, sought comment on a new proposal to exempt certain insiders of
affiliates from Regulation O. 61 FR 57797.
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\2\ Pub. L. 103-325, section 334 (1994).
\3\ Pub. L. 104-208, section 2211 (1996).
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After considering the comments received on the notice, the Board
has decided not to apply Regulation O to extensions of credit by a bank
to an executive officer or director of a bank affiliate, provided that:
(1) the executive officer or director is not engaged in major
policymaking functions of the bank; and (2) the affiliate does not
account for more than 10 percent of the consolidated assets of the
bank's parent holding company. All commenters supported the Board's new
proposal, except one commenter who complained that executive officers
of certain larger affiliates of a bank who previously could be exempted
from Regulation O no longer would be eligible to be exempted.
Background
Section 22(h) restricts lending not only to insiders of the bank
that is making the loan but also to insiders of the bank's parent bank
holding company and any other subsidiary of that bank holding
company.4 Prior to FDICIA, the Board's rules exempted from all the
provisions of Regulation O a bank's loans to an executive officer of
any of its affiliates (other than the parent bank holding company),
provided that the executive officer did not participate in major
policymaking functions at the bank.5 12 CFR 215.2(d) (1992). The
Board considered this treatment appropriate for two reasons. First,
such persons generally were not considered to be in a position to exert
sufficient leverage on the lending bank to obtain a loan on anything
but arms-length terms, in contrast to executive officers of the lending
bank itself or its parent. Thus, the Board considered the benefits of
restricting loans to these affiliate insiders, in terms of protecting
the safety and soundness of bank, to be small. Second, applying these
restrictions to executive officers of affiliates would have required
each bank to maintain an updated list of all its affiliates' executive
officers and all related interests of those executive officers, and to
check all loans against the list. Particularly for a bank in a multi-
subsidiary bank holding company, this effort would have constituted a
significant burden not outweighed by any substantial benefit.
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\4\ As amended by the Federal Deposit Insurance Corporation
Improvement Act of 1991 (FDICIA), section 22(h)(8) provides that
``any executive officer, director, or principal shareholder (as the
case may be) of any company of which the member bank is a
subsidiary, or of any other subsidiary of that company, shall be
deemed to be an executive officer, director, or principal
shareholder (as the case may be) of the member bank.'' 12 U.S.C.
375b(8)(A).
\5\ Subsection (h) of section 22 was added in 1978. Financial
Institutions Regulatory and Interest Rate Control Act of 1978, Pub.
L. 95-630, section 104. At that time, subsection (h) was ambiguous
about whether an executive officer of a bank's affiliate was
required to be treated like an executive officer of the bank itself.
The statute provided that an ``officer'' of a bank included officers
of affiliates, but did not similarly address ``executive officers.''
The statute's restrictions on lending by a bank to ``executive
officers'' of the bank therefore did not clearly apply to
``executive officers'' of affiliates. No such ambiguity existed with
respect to directors and principal shareholders of affiliates, who
were explicitly treated like their counterparts at the lending bank.
In 1980, the Board amended Regulation O to cover insiders of
affiliates, but included a regulatory exception for executive
officers of affiliates who did not participate in major policymaking
functions at the bank.
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However, after the FDICIA amendment, the language of the statute no
longer appeared to allow such an exception for executive officers of
affiliates. Under the amendment, executive officers of affiliates were
explicitly treated like executive officers of the bank itself. Still,
nothing in the legislative history of FDICIA indicated that Congress
intended to invalidate the Board's regulatory exception and extend
coverage to all executive officers of affiliates.
In the Riegle Act, Congress addressed this issue by amending
section 22(h)(8) again. The Riegle Act authorized the Board to make
exceptions for executive officers and directors of affiliates, provided
that the executive officer or director did not have the authority to
participate, and did not participate, in major policymaking functions
of the lending bank. The Act, however, did not authorize the Board to
include any exception from section 22(h)(2), which prohibits lending on
preferential terms.6 Although the legislative history of the
provision indicates that it was intended to allow the Board to maintain
its existing exception for executive officers, its language did not
allow the Board to do so. 7
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\6\ The provision extending the statute to executive officers
and directors of affiliates was moved to a new paragraph (8)(A), and
the authority of the Board to make exceptions was placed in a new
paragraph (8)(B), which reads as follows:
The Board may, by regulation, make exceptions to subparagraph
(A), except as that subparagraph makes applicable paragraph (2), for
an executive officer or director of a subsidiary of a company that
controls the member bank, if that executive officer or director does
not have authority to participate, and does not participate, in
major policymaking functions of the member bank. 12 U.S.C.
375b(8)(B). ``Paragraph (2)'' is the prohibition against lending on
preferential terms.
\7\ The Conference Report stated, ``It is not the intent of the
Conferees to affect the exemptions that the Federal Reserve Board
has already extended to executive officers, but rather to allow the
Board the authority to provide appropriate treatment for
directors.'' House Report 103-652, 103d Cong., 2d Sess. at 180
(1994).
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The Board suggested and supported an amendment to section 22(h) to
make its language consistent with its apparent intent, and EGRPRA
resolved the situation by dropping the requirement in section 22(h)(8)
that the Board's exceptions not include the preferential lending
provision. EGRPRA therefore restored the ability of the Board prior to
FDICIA to exempt executive officers of a bank's affiliates from all the
provisions of section 22(h), and granted the Board the authority to
make the same exception for directors of a bank's affiliates as well.
Congress further revised section 22(h)(8) in EGRPRA, however, to
introduce an additional restriction on the Board's exemptive authority.
Under section 22(h), as amended, the Board may not grant an exception
to an executive officer or director of an affiliate that constitutes
more than 10 percent of the consolidated assets of the highest-tier
holding company controlling the affiliate and the bank making the loan.
[[Page 13296]]
Accordingly, the Board proposed an amendment to Regulation O that
would eliminate its restrictions on a bank's lending to executive
officers and directors of an affiliate who are not involved in major
policymaking functions of the lending bank, if the assets of the
affiliate did not exceed 10 percent of the consolidated assets of a
company that controlled the member bank and such subsidiary and was not
controlled by any other company.8 As the Board stated in its
proposal, the Board believes, for the same reasons that it originally
exempted executive officers of affiliates, that retaining the executive
officer exemption and expanding it to cover directors would relieve
regulatory burden on bank holding companies without increasing the risk
of excessive or preferential lending or resultant safety and soundness
problems.
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\8\ The proposed amendment also would retain the current
provision in Regulation O that excludes extensions of credit to
exempt insiders of affiliates from the recordkeeping requirements of
Sec. 215.8 of Regulation O. The Board in its original proposal
retained the recordkeeping requirement because the lending bank was
required to identify loans to exempted insiders of affiliates and
their related interests in order to ensure that such loans were not
made on preferential terms. Under the proposed amendment, however,
the Board's exemption would encompass all prohibitions under section
22(h), including the prohibition on preferential terms, and
therefore make recordkeeping for loans to exempt borrowers
unnecessary.
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The proposal also reflected a simplified procedure for excluding
executive officers of affiliates that was adopted by the Board in a
final rule effective the same date as the supplemental notice, and
extended the procedure to directors. 61 FR 57769. The procedure allows
the board of directors of a bank to exclude affiliate insiders without
requiring any action by the affiliate board of directors. The Board
adopted the simplified procedures because the lending bank and its
board of directors have full and formal control over who participates
in the bank's policymaking. For the same reasons, the Board stated in
the proposal that it believed that simplifying the requirements to
exempt a director of an affiliate would relieve regulatory burden
without increasing the risk of evasion of Regulation O.
The Board received 44 comments on its original rulemaking proposal.
Forty-one commenters supported the Board's proposed amendments,
including 17 commenters who supported the Board's amendments without
qualification.9 Several commenters asked the Board to expand its
proposed amendments to provide additional relief from Regulation O.
These proposals included extending the exception to include
Secs. 215.8, 215.10, and 215.11 of Regulation O, which impose various
recordkeeping and disclosure requirements, and making the amendments
effective retroactively to the effective date of the Riegle Act.10
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\9\ Eleven commenters generally supported the amendments as
originally proposed but complained that banks would continue to bear
a significant recordkeeping burden to ensure that loans to affiliate
insiders were not made on preferential terms. The three commenters
who opposed the original proposal also objected on the basis of the
recordkeeping burden. As discussed above, the recordkeeping
requirement for loans to exempted insiders of affiliates has been
eliminated.
\10\ One commenter also suggested that the requirement for a
board of directors resolution to exempt insiders of a bank's
affiliates be dropped entirely. This comment was addressed in the
Board's notice of final rulemaking dated November 8, 1996. 61 FR
57770.
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The Board received 21 comments on its supplemental rulemaking,
including comments from three banks, nine bank holding companies, six
Federal Reserve Banks, and three trade associations. Twenty commenters
supported the Board's revised amendments, including 14 commenters who
supported the revised amendments without qualification. The other
commenters in favor sought clarification concerning the measurement of
consolidated assets, suggested further changes to Regulation O
concerning persons to be treated as executive officers subject to its
lending restrictions and the manner of exempting them, proposed
technical changes in the text of the amendment, or requested the Board
to seek further amendments of section 22(h) by Congress. One commenter
opposed the revised amendments because executive officers of certain
larger affiliates of a lending bank who previously could be exempted
from section 22(h) and Regulation O no longer can be exempted under
EGRPRA.
The Board has carefully considered the comments received, and has
decided to adopt the amendment substantially as proposed.
With respect to the comments received on the original rulemaking,
the Board believes that no action is required to make the exceptions
effective with respect to Sec. 215.10, concerning the reporting of
loans to executive officers of member banks in a bank's quarterly
report of condition pursuant to 12 U.S.C. 1817(a)(3), and Sec. 215.11,
concerning public disclosure of extensions of credit to executive
officers and principal shareholders of member banks pursuant to 12
U.S.C. 1817(k). Sections 215.10 and 215.11 do not apply to executive
officers of affiliates in any case. Accordingly, no action is necessary
to exclude executive officers of affiliates who are covered by the
exceptions. The Board also has determined that a retroactive effective
date for this amendment is not appropriate.11
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\11\Executive officers of affiliates of a lending bank that
account for more than 10 percent of the consolidated assets of the
lending bank's top-tier bank holding company previously could be
exempted from section 22(h) and Regulation O, but they no longer can
be exempted under EGRPRA, effective September 30, 1996. The statute
makes no provision for the grandfathering of nonconforming loans
that were outstanding when the law became effective. The Board's
practice concerning loans that are outstanding at the time a
borrower becomes an insider has been not to require that such loans
be brought into conformity until such loans are renewed, revised, or
extended, which events are deemed to be a new extension of credit
subsequent to the date the borrower became an insider. The dollar
amount of nonconforming loans, however, is counted toward the
individual insider and aggregate insider lending limits whenever any
additional extensions of credit subject to these limits are
considered. See 12 CFR 215.4(c) and (d).
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With respect to the comments received on the supplemental
rulemaking, one commenter noted that EGRPRA did not address when or how
often the assets of affiliates and the consolidated assets of the top-
tier bank holding company should be measured in order to determine
whether insiders of certain larger affiliates are ineligible to be
exempted from the lending restrictions of Regulation O. The Board has
decided that assets should be measured once per year, based on the
average assets reported by the top-tier holding company and its banking
and nonbanking subsidiaries during the four preceding calendar quarters
or as determined in the examination process. This method of measurement
should minimize fluctuations in asset size (as may occur, for example,
as a result of seasonal loan demand) and simplify the collection of
relevant data.12
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\12\When calculating the assets of any affiliate, all inter-
affiliate liabilities should be excluded, in the same manner as such
liabilities are excluded when calculating the consolidated assets of
the top-tier bank holding company.
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Two commenters sought further simplification of the procedure to
exclude insiders of an affiliate of a bank from the insider lending
restrictions. The Board has amended the definitions of ``director'' and
``executive officer'' in Regulation O to clarify that insiders of an
affiliate may be excluded by any form of resolution of the board of
directors or bylaw of a bank that identifies the persons who are
excluded.13 Even under the amended
[[Page 13297]]
procedures, however, a bank may not rely solely on its resolution or
bylaw to identify all individuals subject to Regulation O, as some
affiliate officers and directors who are excluded from policymaking at
the bank by a bylaw or resolution may nevertheless remain subject to
Regulation O because their employer controls the bank or controls more
than 10 percent of the consolidated assets of the top-tier bank holding
company. 12 CFR 215.2(d)(2)(ii) and (iii) and 215.2(e)(2)(ii) and
(iii).14
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\13\ See 12 CFR 215.2(d) and (e). A bank may exclude an insider
of an affiliate by using an affirmative resolution or bylaw that
lists, by name or by title, persons authorized to participate in
major policymaking functions of the bank and does not include the
affiliate insider. A resolution or bylaw that stated, ``A, B, and C
are the only persons authorized to participate as executive officers
in major policymaking functions of the bank'' would be sufficient to
exclude all other persons. A bank also may exclude an insider of an
affiliate by using a negative resolution or bylaw that lists, by
name or by title, persons not authorized to participate in such
functions, and includes the affiliate insider. A resolution or bylaw
that stated, ``No executive officer of X Bank or Y Company is
authorized to participate in major policymaking functions of this
bank unless that individual is directly employed by this bank as an
executive officer,'' would be sufficient to exclude all executive
officers of the identified affiliates. The identical procedures also
may be used to exclude officers of a company or bank from being
classified as executive officers of the company or bank. See 12 CFR
215.2(e)(1) and (3).
\14\ Another commenter proposed that the Board permit a bank or
company to identify its executive officers solely by reference to
all members of a particular senior management committee of the bank
or company, in order to avoid all presumptions that may arise from a
person's title. The comment did not indicate, however, and the Board
is not aware that such a procedure for identifying persons with
major policymaking functions is so widespread or standardized that
it would serve as a reliable substitute in general, at this time,
for the traditional identification of persons with major
policymaking functions by title. Accordingly, the Board has
determined not to adopt this proposal at this time. This procedure
may be suitable, however, in the particular circumstances of a given
bank or company, and would be permissible under the terms of
Sec. 215.2(e)(2) as amended.
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Technical changes to the text of the amendment have been made to
conform the amendment to other provisions of Regulation O and clarify
the application of the percentage of assets test. A technical change
also has been made to Sec. 215.4(a)(2) to clarify the scope of the
exception contained therein to the provisions of Sec. 215.4(a)(1). This
exception was added as part of the final rule effective November 8,
1996, implementing certain provisions of EGRPRA. 61 FR 52769.
Determination of Effective Date
Because the final rule adjusts a requirement on insured depository
institutions, the final rule will become effective April 1, 1997, the
first day of the calendar quarter after the date of the final rule's
publication. See 12 U.S.C. 4802(b).
Final Regulatory Flexibility Analysis
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires an
agency to publish a final regulatory flexibility analysis when the
agency publishes a final rule. Two of the requirements of a final
regulatory flexibility analysis (5 U.S.C. 604(b))--a succinct statement
of the need for, and the objectives of, the rule, and a summary of the
issues raised by the public comments received, the agency assessment
thereof, and any changes made in response thereto--are contained in the
supplementary information above. No significant alternatives to the
final rule were considered by the agency.
Pursuant to section 605(b) of the Regulatory Flexibility Act (5
U.S.C. 605(b)), the Board certifies that the amendment to Regulation O
will not have a significant adverse economic impact on a substantial
number of small entities. The amendment will reduce the regulatory
burden for most banks by increasing the number of insiders of
affiliates who may be excepted from the insider lending restrictions of
Regulation O.
One aspect of the amendment may increase the regulatory burden on
multi-subsidiary bank holding companies. Because EGRPRA no longer
authorizes the Board to exempt extensions of credit to executive
officers of affiliates holding more than 10 percent of the consolidated
assets of the bank holding company, the Board's existing exemption,
which covers such persons, is being amended to do so no longer.
Although this action will increase the recordkeeping burden on some
multi-subsidiary bank holding companies, the increase in burden is
required by statute and outside the Board's discretion, will generally
not be significant, and will not be focused on small entities, which
are less likely to have multiple subsidiaries.
Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
3506; 5 CFR 1320 Appendix A.1), the Board reviewed the final rule under
the authority delegated to the Board by the Office of Management and
Budget. The Board may not conduct or sponsor, and an organization is
not required to respond to, the information collection required in the
final rule unless the Board displays a currently valid OMB control
number. The Board's OMB control number is 7100-0036.
This collection of information is authorized by section 22(h)(10)
of the Federal Reserve Act (12 U.S.C. 375b(10)), and is mandatory under
Regulation O. This information is used to evidence compliance with the
requirements of section 22(h) of the Federal Reserve Act.
The respondents and recordkeepers are for-profit financial
institutions, including small businesses. These parties must retain
records concerning their insider lending for two years, and certain
information in these records must be disclosed to the public upon
request. Because these records are maintained at state member banks, no
issue of confidentiality under the Freedom of Information Act arises
concerning this disclosure to the public.
The amendment is estimated to result in a 10 percent reduction in
the annual hour burden of recordkeeping and disclosure associated with
Regulation O for state member banks. The revisions affecting this
burden are detailed in Section 215.2 of the final rule. The amendment
will reduce the burden for most banks by increasing the number of
insiders of affiliates who may be excepted from the insider lending
restrictions of Regulation O. The burden may increase, however, for
some multi-subsidiary bank holding companies. Comments on the burden
are discussed in the Background section of this notice. The Board
estimates there will be no cost burden in addition to the annual hour
burden.
Some of the information collected by banks on extensions of credit
to insiders of the bank and its affiliates is reported in the
Consolidated Reports of Condition and Income (Call Report; FFIEC 031-
034; OMB No. 7100-0036). Regulation O information is reported in the
Call Report on Schedule RC-M, Memoranda, and Special Report on Loans to
Executive Officers, and is available to the public upon request.
The Board has a continuing interest in the public's opinion of its
information collection activities. At any time, comments regarding the
burden estimate, or any other aspect of this information collection
requirement, including suggestions for reducing the burden, may be sent
to: Secretary, Board of Governors of the Federal Reserve System, 20th
and C Streets, N.W., Washington, DC 20551; and to the Office of
Management and Budget, Paperwork Reduction Project (7100-0036),
Washington, DC 20503.
List of Subjects in 12 CFR Part 215
Credit, Federal Reserve System, Penalties, Reporting and
recordkeeping requirements.
For the reasons set forth in the preamble, and pursuant to the
Board's authority under section 22(h) of the Federal Reserve Act (12
U.S.C. 375b), the Board amends 12 CFR part 215, subpart A, as follows:
[[Page 13298]]
PART 215--LOANS TO EXECUTIVE OFFICERS, DIRECTORS, AND PRINCIPAL
SHAREHOLDERS OF MEMBER BANKS (REGULATION O)
1. The authority citation for part 215 continues to read as
follows:
Authority: 12 U.S.C. 248(i), 375a(10), 375b (9) and (10),
1817(k)(3) and 1972(2)(G)(ii); Pub. L. 102-242, 105 Stat. 2236.
2. Section 215.2 is amended as follows:
a. Paragraph (d) introductory text and paragraphs (d)(1) through
(d)(3) are redesignated as paragraph (d)(1) introductory text and
paragraphs (d)(1)(i) through (d)(1)(iii), respectively;
b. New paragraphs (d)(2) and (d)(3) are added;
c. Paragraph (e)(2) is revised; and
d. A new paragraph (e)(3) is added.
The additions and revisions read as follows:
Sec. 215.2 Definitions.
* * * * *
(d)(1) * * *
(2) Extensions of credit to a director of an affiliate of a bank
are not subject to Secs. 215.4, 215.6, and 215.8 if--
(i) The director of the affiliate is excluded, by resolution of the
board of directors or by the bylaws of the bank, from participation in
major policymaking functions of the bank, and the director does not
actually participate in such functions;
(ii) The affiliate does not control the bank;
(iii) As determined annually, the assets of the affiliate do not
constitute more than 10 percent of the consolidated assets of the
company that--
(A) Controls the bank; and
(B) Is not controlled by any other company; and
(iv) The director of the affiliate is not otherwise subject to
Secs. 215.4, 215.6, and 215.8.
(3) For purposes of paragraph (d)(2)(i) of this section, a
resolution of the board of directors or a corporate bylaw may--
(i) Include the director (by name or by title) in a list of persons
excluded from participation in such functions; or
(ii) Not include the director in a list of persons authorized (by
name or by title) to participate in such functions.
(e)(1) * * *
(2) Extensions of credit to an executive officer of an affiliate of
a bank are not subject to Secs. 215.4, 215.6, and 215.8 if--
(i) The executive officer is excluded, by resolution of the board
of directors or by the bylaws of the bank, from participation in major
policymaking functions of the bank, and the executive officer does not
actually participate in such functions;
(ii) The affiliate does not control the bank;
(iii) As determined annually, the assets of the affiliate do not
constitute more than 10 percent of the consolidated assets of the
company that--
(A) Controls the bank; and
(B) Is not controlled by any other company; and
(iv) The executive officer of the affiliate is not otherwise
subject to Secs. 215.4, 215.6, and 215.8.
(3) For purposes of paragraphs (e)(1) and (e)(2)(i) of this
section, a resolution of the board of directors or a corporate bylaw
may--
(i) Include the executive officer (by name or by title) in a list
of persons excluded from participation in such functions; or
(ii) Not include the executive officer in a list of persons
authorized (by name or by title) to participate in such functions.
* * * * *
3. Section 215.4 is amended by revising paragraph (a)(2)
introductory text to read as follows:
Sec. 215.4 General prohibitions.
(a) * * *
(2) Exception. Nothing in this paragraph (a) or paragraph
(e)(2)(ii) of this section shall prohibit any extension of credit made
pursuant to a benefit or compensation program--
* * * * *
By order of the Board of Governors of the Federal Reserve
System, March 14, 1997.
William W. Wiles,
Secretary of the Board.
[FR Doc. 97-7011 Filed 3-19-97; 8:45 am]
BILLING CODE 6210-01-P
