§ 375a. — Loans to executive officers of banks.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC375a]
TITLE 12--BANKS AND BANKING
CHAPTER 3--FEDERAL RESERVE SYSTEM
SUBCHAPTER X--POWERS AND DUTIES OF MEMBER BANKS
Sec. 375a. Loans to executive officers of banks
(1) General prohibition; authorization for extension of credit;
conditions for credit
Except as authorized under this section, no member bank may extend
credit in any manner to any of its own executive officers. No executive
officer of any member bank may become indebted to that member bank
except by means of an extension of credit which the bank is authorized
to make under this section. Any extension of credit under this section
shall be promptly reported to the board of directors of the bank, and
may be made only if--
(A) the bank would be authorized to make it to borrowers other
than its officers;
(B) it is on terms not more favorable than those afforded other
borrowers;
(C) the officer has submitted a detailed current financial
statement; and
(D) it is on condition that it shall become due and payable on
demand of the bank at any time when the officer is indebted to any
other bank or banks on account of extensions of credit of any one of
the three categories respectively referred to in paragraphs (2),
(3), and (4) in an aggregate amount greater than the amount of
credit of the same category that could be extended to him by the
bank of which he is an officer.
(2) Mortgage loans
A member bank may make a loan to any executive officer of the bank
if, at the time the loan is made--
(A) it is secured by a first lien on a dwelling which is
expected, after the making of the loan, to be owned by the officer
and used by him as his residence, and
(B) no other loan by the bank to the officer under authority of
this paragraph is outstanding.
(3) Educational loans
A member bank may make extensions of credit to any executive officer
of the bank to finance the education of the children of the officer.
(4) General limitation on amount of credit
A member bank may make extensions of credit not otherwise
specifically authorized under this section to any executive officer of
the bank, in an amount prescribed in a regulation of the member bank's
appropriate Federal banking agency.
(5) Partnership loans
Except to the extent permitted under paragraph (4), a member bank
may not extend credit to a partnership in which one or more of its
executive officers are partners having either individually or together a
majority interest. For the purposes of paragraph (4), the full amount of
any credit so extended shall be considered to have been extended to each
officer of the bank who is a member of the partnership.
(6) Report of date and amount of credit extensions, security, and uses
of proceeds upon excessive extension of credit
Whenever an executive officer of a member bank becomes indebted to
any bank or banks (other than the one to which he is an officer) on
account of extensions of credit of any one of the three categories
respectively referred to in paragraphs (2), (3), and (4) in an aggregate
amount greater than the aggregate amount of credit of the same category
that could lawfully be extended to him by the bank, he shall make a
written report to the board of directors of the bank, stating the date
and amount of each such extension of credit, the security therefor, and
the purposes for which the proceeds have been or are to be used.
(7) Endorsement or guarantee of loans or assets; protective indebtedness
This section does not prohibit any executive officer of a member
bank from endorsing or guaranteeing for the protection of the bank any
loan or other asset previously acquired by the bank in good faith or
from incurring any indebtedness to the bank for the purpose of
protecting the bank against loss or giving financial assistance to it.
(8) Continuation of violation
Each day that any extension of credit in violation of this section
exists is a continuation of the violation for the purposes of section
1818 of this title.
(9) Report of loan activity since previous report of condition
Each member bank shall include with (but not as part of) each report
of condition and copy thereof filed under section 1817(a)(3) of this
title a report of all loans under authority of this section made by the
bank since its previous report of condition.
(10) Rules and regulations; definitions
The Board of Governors of the Federal Reserve System may prescribe
such rules and regulations, including definitions of terms, as it deems
necessary to effectuate the purposes and to prevent evasions of this
section.
(Dec. 23, 1913, ch. 6, Sec. 22(g), as added June 16, 1933, ch. 89,
Sec. 12, 48 Stat. 182; amended June 14, 1935, ch. 245, 49 Stat. 375;
Aug. 23, 1935, ch. 614, title III, Sec. 326(c), 49 Stat. 716; Apr. 25,
1938, ch. 173, 52 Stat. 223; June 20, 1939, ch. 214, Sec. 1, 53 Stat.
842; Pub. L. 90-44, Sec. 1, July 3, 1967, 81 Stat. 109; Pub. L. 95-630,
title I, Sec. 110, Nov. 10, 1978, 92 Stat. 3665; Pub. L. 97-320, title
IV, Sec. 421, Oct. 15, 1982, 96 Stat. 1522; Pub. L. 103-325, title III,
Sec. 334(a), Sept. 23, 1994, 108 Stat. 2233.)
Codification
Proviso which permitted renewal or extension of loans made to
executive officers prior to June 16, 1933, for periods expiring not more
than five years from June 16, 1939, was omitted as obsolete.
Amendments
1994--Par. (2). Pub. L. 103-325 in introductory provisions
substituted ``A member'' for ``With the specific prior approval of its
board of directors, a member''.
1982--Par. (2). Pub. L. 97-320, Sec. 421(a), struck out ``not
exceeding $60,000'' after ``may make a loan''.
Par. (3). Pub. L. 97-320, Sec. 421(a), struck out ``, not exceeding
the aggregate amount of $20,000 outstanding at any one time,'' after
``officer of the bank''.
Par. (4). Pub. L. 97-320, Sec. 421(b), substituted ``in an amount
prescribed in a regulation of the member bank's appropriate Federal
banking agency'' for ``not exceeding the aggregate amount of $10,000
outstanding at any one time''.
1978--Par. (2). Pub. L. 95-630 substituted ``$60,000'' for
``$30,000''.
Par. (3). Pub. L. 95-630 substituted ``$20,000'' for ``$10,000''.
Par. (4). Pub. L. 95-630 substituted ``$10,000'' for ``$5,000''.
1967--Par. (1). Pub. L. 90-44 rewrote in first sentence of
provisions designated as par. (1) the prohibition of former first
sentence against any executive officer borrowing or otherwise becoming
indebted to a member bank of which he is an officer and against any
member bank making any loan or extending credit in any other manner to
any of its own executive officers, authorized member banks to extend
credit to such executive officers and to report such extensions to the
board of directors, and provided in subpars. (A) to (D) conditions for
such extension of credit.
Pars. (2), (3). Pub. L. 90-44 inserted provisions, designated as
pars. (2) and (3), for mortgage loans and educational loans,
respectively.
Par. (4). Pub. L. 90-44 incorporated proviso of first sentence in
provisions designated as par. (4), increased amount of available credit
from $2,500 to $5,000, and struck out requirement of prior approval of
credit by majority of entire board of directors.
Par. (5). Pub. L. 90-44 substituted provisions, designated as par.
(5), for extension of credit to partnerships for former provisions of
third sentence that ``Borrowing by, or loaning to, a partnership in
which one or more executive officers of a member bank are partners
having either individually or together a majority interest in said
partnership, shall be considered within the prohibition of this
section''.
Par. (6). Pub. L. 90-44 incorporated reporting requirement of second
sentence in provisions designated as par. (6) but limited it to
extensions of credit from other banks to the executive officers as
exceeded amounts available to such officers from their member banks
under pars. (2) to (4) of this section.
Par. (7). Pub. L. 90-44 designated provisions of fourth sentence as
par. (7).
Par. (8). Pub. L. 90-44 designated proviso of sixth sentence as par.
(8) and identified the violation as one for purposes of section 1818 of
this title.
Par. (9). Pub. L. 90-44 added requirement, designated as par. (9),
that member banks report all loans made under authority of this section
since previous report of condition.
Par. (10). Pub. L. 90-44 designated provisions of fifth sentence as
par. (10) and substituted general authorization for definition of terms
for former specific authorization for definition of ``executive
officer'' and for determination what shall be deemed to be a borrowing,
indebtedness, loan, or extension of credit.
Pub. L. 90-44 struck out former sixth sentence, less proviso, which
provided for removal from office in manner prescribed in former section
77 of this title of any executive officer of member bank accepting a
loan or extension of credit in violation of this section.
1939--Act June 20, 1939, substituted ``June 16, 1939,'' for ``from
such date'', in first sentence.
1938--Par. (1). Act Apr. 25, 1938, substituted ``six'' for ``five''
in first sentence.
1935--Act Aug. 23, 1935, added last two provisos.
Act June 14, 1935, struck out a proviso and inserted in lieu thereof
first proviso.
Effective Date of 1978 Amendment
Amendment effective upon expiration of 120 days after Nov. 10, 1978,
see sec. 2101 of Pub. L. 95-630 set out as an Effective Date note under
section 375b of this title.
Section Referred to in Other Sections
This section is referred to in sections 375b, 503, 504, 1468, 1828,
1972 of this title.
