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OCC BULLETIN 2007-31
To: Chief Executive Officers of All National Banks, Department and Division Heads, and All Examining Personnel

Description: Updated Guidance

Purpose

The Office of the Comptroller of the Currency (OCC), after consultation with the Federal Election Commission (FEC), prepared this issuance to describe and to emphasize the prohibitions on political contributions or expenditures by national banks pursuant to the Federal Election Campaign Act of 1971, as amended, 2 USC § 441b (the Act). This bulletin replaces OCC Bulletin 2000-8 (March 22, 2000).

SUMMARY

The Act makes it unlawful for a national bank to make any contribution or expenditure or to provide any service (except usual and customary banking services) or anything of value in connection with any election to any political office, or in connection with any primary election or political convention or caucus held to select candidates for any political office. This prohibition applies to all federal, state, and local elections, political conventions, and caucuses. 11 CFR § 114.2(a). In addition, it is unlawful for any officer or any director of a national bank to consent on behalf of the bank to any political contribution or expenditure prohibited by the Act, and it is unlawful for any candidate, political committee, or other person to knowingly accept or receive a political contribution or expenditure prohibited by the Act. 2 USC § 441b.

FEC Regulations prohibit other forms of political contributions or expenditures by national banks, including, but not limited to, the purchase of tickets to political dinners or other political fundraising events, advertisements in political literature, and donations of goods or services in connection with political fundraising events and activities. 11 CFR §§ 100.51-100.57 and 114.2. However, bank employees, in their personal capacity, may make contributions from their own funds. Also, a national bank is not prohibited under the Act from making a contribution to a fund whose purpose is to influence a ballot referendum, provided the referendum does not involve elections to any political office.

The Act requires that every political committee designate at least one insured depository institution as its campaign depository where all receipts are deposited and from which all significant disbursements are made. 2 U.S.C. § 432(h). National banks may serve as those depositories for political committees and may pay interest and dividends, in the regular course of business, on funds in such accounts. Fees for banking services may be waived or discounted, provided that such concessions are offered to others on equal terms and are a normal business practice.

DEFINITIONS

The term "contribution or expenditure," within the meaning of the Act, includes any direct or indirect payment, distribution, loan, advance, deposit, or gift of money, or any services, or anything of value (except a loan of money by a national bank made in accordance with the applicable banking laws and regulations and in the ordinary course of business) to any candidate, campaign committee, or political party or organization in connection with any election. 2 USC § 441b(b)(2). See also, 11 CFR §§ 100.82 and 100.142 (exception to the terms "contributions" and "expenditures" for bank loans).

For purposes of the Act, a loan by a national bank will be deemed to be made in the ordinary course of business if it: (i) bears the usual and customary interest rate of the lending institution for the category of the loan involved; (ii) is made on a basis which assures repayment; (iii) is evidenced by a written instrument; and (iv) is subject to a due date or amortization schedule. 11 CFR § 100.82.

The term "contribution or expenditure" does not include: (a) communications by a national bank to its stockholders and executive or administrative personnel; (b) nonpartisan registration and get-out-the-vote campaigns by a national bank aimed at its stockholders and executive or administrative personnel and their families; and (c) the establishment, administration, and voluntary solicitation of contributions to a separate segregated fund (SSF). 2 USC § 441b(b)(2). However, national banks are not permitted to make direct or indirect contributions or expenditures of bank funds to SSFs. Additionally, national banks (including officers, directors, or other representatives acting as agents for the bank) are prohibited from "facilitating the making of contributions." 11 CFR § 114.2(f).

ENFORCEMENT

The Act gives the FEC exclusive jurisdiction with respect to civil enforcement of its provisions and provides the FEC with authority to assess civil penalties. 2 USC §§ 437c(b)(1) and 437g(a)(5). The FEC may also refer cases to the United States Attorney General for criminal prosecution when there is probable cause to believe that a violation is knowing and willful. 2 USC § 437g(a)(5)(C).

National banks are reminded that when a bank examiner discovers a direct or indirect political contribution or expenditure by a national bank, the OCC will require that the bank stop the practice, take measures to prevent its recurrence, and will make appropriate referrals to the FEC. In the event the FEC does not pursue a matter referred to it by the OCC, the OCC will consider taking appropriate action, including supervisory and enforcement actions to make the bank whole.

ADVISORY OPINIONS AND ADDITIONAL INFORMATION

Requests for advisory opinions may be submitted in writing to the FEC if they concern the application of the Act, chapter 95 or 96 of the Internal Revenue Code, or a regulation prescribed by the FEC to a specific transaction or activity in which the requestor is involved. 11 CFR § 112.

All requests for advisory opinions should be directed to:

Federal Election Commission
999 E Street, NW
Washington, D.C. 20463

For further information please contact the FEC at 1-800-424-9530.

Mark L. O'Dell
Deputy Comptroller for Operational Risk