Application of 18 U.S.C. §§ 212–213 to Borrowing Practices of Bank Examiners

June 21, 1977
77-39 MEMORANDUM OPINION FOR THE
UNITED STATES ATTORNEY, JUDICIAL
DISTRICT OF MAINE
Borrowing Practices of Bank Examiners
O ur opinion has been requested whether the provisions of 18 U.S.C.
§§212-13 are violated if (1) the spouse of a bank examiner borrows
money from a federally insured State bank, or (2) a bank examiner
borrow s money from such a bank where the State superintendent of
banking has first revoked the examiner’s authority to examine that bank.
For the reasons that follow, it is our conclusion that no violation of 18
U.S.C. §§212-13 would be presented by the second approach; the first
approach, however, poses problems that we believe are best avoided.
W e shall first discuss the problems presented under 18 U.S.C. §§212-
13 by a loan to the spouse of a bank examiner. Section 212 prohibits
bank officers of any federally insured bank, under penalty of criminal
sanction, from making or granting “any loan or gratuity . . . to any
examiner or assistant examiner who examines o r has authority to exam­
ine such bank.” Section 213 provides for a corresponding prohibition
on bank examiners from accepting “a loan or gratuity from any bank
. . . examined by him or from any person connected therewith.” It is
quite apparent that neither of these provisions explicitly imposes any
restrictions on the spouses o f bank examiners. According to the general
rule requiring strict construction of criminal statutes, the activities of a
spouse would not normally come within the provisions of such laws.
H ow ever, we question w hether this result will always follow. Our
problem here stems from the decision in United States v. Bristol, 343 F.
Supp. 1262 (S.D. Tex. 1972), affirmed, 473 F. 2d 439 (5th Cir. 1973). In
that case it was held that a bank officer’s loan funneled through an
entity not subject to 18 U.S.C. 213, nevertheless came within the
provisions o f that statute. T h e courts reasoned that, even though crimi­
nal statutes must be strictly construed, §213 should not be interpreted
so as to depart from the evident congressional intent “to proscribe
certain financial transactions which could lead to a bank examiner
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carrying out his duties with less than total, unbiased objectivity.” 473 F.
2d at 442.
We believe that this same reasoning would apply to at least some
loans made to spouses of bank examiners. In the most egregious case,
the loan to the spouse may in actuality be a loan to the bank examiner.
Even if the transaction did not partake o f this type of fraudulent
behavior, it seems to us that, in certain circumstances, a loan to the
spouse of a bank examiner could easily cause that examiner to perform
his or her duties with respect to the particular bank in less than an
unbiased and objective manner. In both sorts of situations the courts
might then adopt the approach in Bristol and apply 18 U.S.C. §§ 212-13to such loans.
The Federal Deposit Insurance Corporation apparently shares this
view, for it has laid down criteria that must be met before the spouse of
an examiner may borrow from an uninsured bank. These criteria gener­
ally mandate that the loan be based entirely on the spouse’s credit, be
supported by the spouse’s own income or assets, and be employed for
the spouse’s own personal use. While these criteria largely alleviate our
concerns here, they do not entirely eliminate them. For example, it is
possible that the borrowed funds could allow the examiner’s income to
be used for purposes for which they might not otherwise be available.
A default on the loan, although theoretically enforceable only against
the spouse, could also bear on the examiner’s standard of living and
might even end up being paid out of the examiner’s own funds.
It thus seems that a bank examiner cannot be entirely insulated from
the effects o f his spouse’s loan transactions in every circumstance. We
therefore cannot conclude that the purposes underlying 18 U.S.C.
§§212-13 would not encompass a loan to a bank examiner’s spouse in
every situation, and that the courts would not follow Bristol and apply
those statutes to such situations. While this may not often occur, we do
believe that this prospect poses significant problems and precludes the
view that loans to the spouse of a bank examiner will never violate 18
U.S.C. §§212-13. We would therefore recommend that this practice be
followed, if at all, with extreme caution.
We have no problem, however, with the second alternative of revok­
ing a bank examiner’s authority to examine particular banks and allow­
ing him to obtain loans from those banks.1 We do not believe it
appropriate for this Office to comment on the authority of the superin­
tendent of banking to take this action; this is a question of State law
and should therefore be decided by the State authorities. However,
assuming that this authority exists, we believe that the revocation of an
examiner’s authority to examine certain banks would meet the purposes
served by 18 U.S.C. §§212-13. The examiner would, then, never be in
■We note here that 18 U.S.C. §213 does not expressly refer to those banks that the
exam iner has authority to examine, but only includes banks “exam ined” by the examiner.
N o such lim itation appears in 18 U.S.C. §212, how ever, and so the question o f the
exam iner’s authority is at least relevant to the bank officers’ liability.
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a position o f having dealings with a bank he could examine, and this
would serve to guarantee the examiner’s unbiased objectivity in the
performance of his duties. W e would caution, however, that 18 U.S.C.
§213 would still prohibit any dealings with a bank that the examiner
has already “examined.”
L eon U lm an
Deputy Assistant Attorney General
Office o f Legal Counsel
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