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Question 314

Which of the following relationships does NOT violate Regulation L?

"¢ Relationship A: First National Bank is located in the same city as an affiliate of First Savings and Loan. First National and the affiliate share a board member.

"¢ Relationship B: State Bank and an affiliate of First National Bank are located in the same RMSA but not in the same town. State Bank has assets of $60 million, and the affiliate has assets of $7 million. The two institutions share a board member.

"¢ Relationship C: Savings and Loan Association and Bank Holding Company do not have offices within the same RMS

Bank Holding Company's assets are in excess of $1.75 billion, and Savings and Loan Association's assets are in excess of $2.5 billion. These institutions share a board member.

    Correct Answer: C

    Relationship C does not violate Regulation L because it involves institutions that do not have offices within the same RMSA (Retail Metropolitan Statistical Area). Regulation L generally focuses on preventing anti-competitive practices within the same market, typically defined within geographic or market boundaries like an RMSA. Since Bank Holding Company and Savings and Loan Association are not located in the same RMSA, their shared board member is less likely to present a conflict of interest or anti-competitive behavior in the local market context Regulation L aims to address.

Discussion
Cam22Option: C

elationship C (C) is the most likely to not violate Regulation L because it involves institutions in different RMSAs (RMSA: Retail Metropolitan Statistical Area) with significant asset sizes, where the regulation's primary concern—anticompetitive practices within the same market—does not apply as directly. Thus, the correct answer under the assumptions based on Regulation L and its intent to prevent anticompetitive interlocks within the same market would be C. Relationship C. However, it's important to note that specific details about Regulation L's current thresholds and exemptions (which can vary and be updated) are essential for a definitive assessment.