12 U.S.C. § 375a

Loans to executive officers of banks

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(1) General prohibition; authorization for extension of credit; conditions for creditExcept 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 loansA 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) 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.

(7) 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.

(8) 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, § 22(g), as added June 16, 1933, ch. 89, § 12, 48 Stat. 182; amended June 14, 1935, ch. 245, 49 Stat. 375; Aug. 23, 1935, ch. 614, title III, § 326(c), 49 Stat. 716; Apr. 25, 1938, ch. 173, 52 Stat. 223; June 20, 1939, ch. 214, § 1, 53 Stat. 842; Pub. L. 90–44, § 1, July 3, 1967, 81 Stat. 109; Pub. L. 95–630, title I, § 110, Nov. 10, 1978, 92 Stat. 3665; Pub. L. 97–320, title IV, § 421, Oct. 15, 1982, 96 Stat. 1522; Pub. L. 103–325, title III, § 334(a), Sept. 23, 1994, 108 Stat. 2233; Pub. L. 109–351, title VI, § 601(a), Oct. 13, 2006, 120 Stat. 1978.)Editorial NotesCodification

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

2006—Pars. (6) to (10). Pub. L. 109–351 redesignated pars. (7), (8), and (10) as (6), (7), and (8), respectively, and struck out former pars. (6) and (9) which related to report of date and amount of credit extensions, security, and uses of proceeds upon excessive extension of credit and report of loan activity since previous report of condition, respectively.

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, § 421(a), struck out “not exceeding $60,000” after “may make a loan”.

Par. (3). Pub. L. 97–320, § 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, § 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.

Statutory Notes and Related SubsidiariesEffective 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.

Notes of Decisions

Cited in 22 cases, 1937–2011 · leading case: United States v. John Christo, Jr., 614 F.2d 486 (5th Cir. 1980).

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United States v. John Christo, Jr., 614 F.2d 486 (5th Cir. 1980). · cites it 9× “§ 656 1 and 12 U.S.C. § 375a; 2 six counts of making or causing to be made “false statements” contrary to 18 U.”

First Nat'l Bank of Bellaire v. Comptroller of the Currency, 697 F.2d 674 (1st Cir. 1983). · cites it 12× “9 ALLEGED VIOLATION OF 12 U.S.C. § 375a On February 22, 1979, the Bank made a loan to C.”

United States v. Ramos, 537 F.3d 439 (5th Cir. 2008). · cites it 2× “Directly connecting liability under § 375a with guilt under the criminal banking statute was the central thrust of the government’s strategy: “[t]he indictment and government’s case at trial contended that each overdraft .”

United States v. Jay Ellsworth Krepps, 605 F.2d 101 (3rd Cir. 1979). · cites it 3× “The bank’s rules — in conformity with the dictates of 12 U.S.C. § 375a 1 — prohibited bank officers from borrowing for themselves more than $5000 from the bank, and required that all loans to officers be approved by the bank’s board of directors.”

United States v. Joseph Stefan, Irvin Freedman, United States of Am. v. Irvin Freedman, 784 F.2d 1093 (11th Cir. 1986). · cites it 2× “In Christo , the government contended that the defendants’ violation of 12 U.S.C. § 375a, a civil regulatory banking statute limiting the amount that a national bank may lend its executive officers, also constituted violations of 18 U.”

United States v. John Moran & Nora Moran, 312 F.3d 480 (1st Cir. 2002). “§ 215 , which, pursuant to 12 U.S.C. § 375a(10), requires interested directors to disclose fully any personal financial stake or that of their related entities in a given loan and prohibits them from participating directly or indirectly in any vote to extend such credit.”

United States v. John C. Riddle, 103 F.3d 423 (5th Cir. 1997). “The report mentions Riddle in connection with violations of 12 U.S.C. § 375a and 12 C.F.R. pt. 215.5(e)(3).”

United States v. Gary L. Shively, United States of Am. v. G. Winfield Pardee, 715 F.2d 260 (7th Cir. 1983). “See 12 U.S.C. § 375a; 12 C.F.R. §§ 215.3 (a)(8), 215.”

Kansas Bankers Sur. Co. v. Eggleston (In Re Eggleston), 243 B.R. 365 (Bankr. W.D. Mo. 2000). · cites it 2× “Federal statutes 12 U.S.C. §§ 375a, 375b and 12 C.F.R. § 215 , et seq.”

Saratoga Sav. & Loan Ass'n v. Fed. Home Loan Bank Bd., 879 F.2d 689 (9th Cir. 1989). “There is undoubtedly a direct relationship between compliance with 12 U.S.C. § 375a and a bank’s soundness.” (footnote omitted)); see also Gulf Fed.”

Adato v. Kagan, 599 F.2d 1111 (2d Cir. 1979). · cites it 2× “§ 503 , provides that any officer who knowingly participates in or assents to a violation of section 22(g) shall be personally liable for all damages “which the member bank, its shareholders, or any other persons shall have sustained in consequence of such violation.”

United States v. Robert B. Marx, 991 F.2d 1369 (8th Cir. 1993). “In such a case: [a] jury might plausibly deduce that the bank officer, by channeling the funds through another party, sought to conceal from the bank his own interest in the transaction and thereby to circumvent the barrier — imposed by both the statute [12 U.S.C. § 375a (1988)…”

Show all 22 citing cases →

— 12 U.S.C. § 375a(10) — 2 cases

United States v. Moran (1st Cir. 2002).

— 12 U.S.C. § 375a(2) — 1 case

First Nat'l Bank of Bellaire v. Comptroller of the Currency, 697 F.2d 674 (1st Cir. 1983). “9 ALLEGED VIOLATION OF 12 U.S.C. § 375a On February 22, 1979, the Bank made a loan to C.”

— 12 U.S.C. § 375a(4) — 1 case

Adato v. Kagan, 599 F.2d 1111 (2d Cir. 1979). “§ 503 , provides that any officer who knowingly participates in or assents to a violation of section 22(g) shall be personally liable for all damages “which the member bank, its shareholders, or any other persons shall have sustained in consequence of such violation.”

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