2010 New York Code
BNK - Banking
Article 3 - (94 - 140-A) BANKS AND TRUST COMPANIES
103 - Restrictions on loans, purchases of securities and total liabilities to bank or trust company of any one person.

§ 103.  Restrictions  on  loans,  purchases  of  securities  and total
  liabilities to bank or trust company of any one person. No bank or trust
  company shall:
    1. Lend to any person (which term shall mean, for the purposes of this
  subdivision, any individual,  partnership,  unincorporated  association,
  corporation  or  body  politic)  an amount which will exceed fifteen per
  centum of the capital stock, surplus fund and undivided profits of  such
  bank  or  trust company. Any extension of credit to a person by means of
  the issue or confirmation of irrevocable sight letters  of  credit  upon
  the  responsibility  of  such  person,  or  by  means of the discount or
  purchase  of,  or  investment  in,  bills  of  exchange,  notes,  bonds,
  debentures  or other obligations made, drawn or accepted by such person,
  shall be considered a loan to such  person  for  the  purposes  of  this
  subdivision except that (1) in the case of an accepted bill of exchange,
  the loan shall be considered, subject to clause (2) below, to be made to
  the  acceptor  and  not  to the drawer; and (2) if any bill of exchange,
  note, bond, debenture or other obligation is endorsed without limitation
  or guaranteed by any person and discounted with, or sold to,  such  bank
  or  trust company by such person, the loan shall be considered a loan to
  such person and not to the maker, drawer or acceptor  of  such  bill  of
  exchange,  note,  bond,  debenture  or  other  obligation. The foregoing
  limitation is subject to the following exceptions:
    (a) The limitations in this subdivision shall not  apply  to  (1)  any
  loan  to  the  extent  that  the  United States, this state or any city,
  county, town, village or school district  of  this  state,  any  federal
  intermediate  credit  bank,  Federal  National Mortgage Association, any
  federal land bank, any bank for cooperatives organized under the laws of
  the United States, any national mortgage association, any  federal  home
  loan  bank,  the  Small Business Administration or any other department,
  agency or instrumentality of the United States or this state  designated
  by   the  banking  board  by  general  or  specific  regulation  upon  a
  three-fifths vote of all its members, has agreed to  pay  the  principal
  and  interest  thereof,  or  has  guaranteed  payment  (by  guaranty  or
  commitment to purchase or otherwise) of such principal and interest,  or
  is  committed to supply, by loan, subsidy or otherwise, funds sufficient
  to pay such principal and interest, or has otherwise pledged  its  faith
  and  credit  for  the payment of such principal and interest; or (2) any
  loan secured by not less than a like amount of direct obligations (based
  on their principal amount or market value, whichever is  lower,  at  the
  time  the  loan is made) of the United States or of this state or of any
  city, county, town, village or school district of this state or  of  any
  such  department, agency or instrumentality of the United States or this
  state; or (3) when authorized by  the  superintendent,  any  loan  to  a
  savings  bank of this state or a corporation all of the capital stock of
  which is owned by not less than twenty savings banks of this state.
    (b) The limitations in this subdivision shall not apply to any loan to
  the extent such loan is secured by cash collateral which is not  subject
  to withdrawal.
    In  addition,  the limitations in this subdivision shall not apply (i)
  to loans arising from the  discount  of  commercial  or  business  paper
  evidencing  an  obligation  to  the person negotiating it with recourse;
  (ii) to loans to the student loan marketing association; (iii) to  loans
  to   any   financial   institution  or  to  any  receiver,  conservator,
  superintendent of banks, or other agent in charge of  the  business  and
  property  of such financial institutions when such loans are approved by
  the superintendent; (iv) to the purchase of bankers' acceptances of  the
  kind described in section 13 of an act of congress entitled the "Federal
  Reserve  Act" and issued by other banking corporations; and (v) to loans

made to facilitate prompt  clearance  or  settlement  arising  from  the
  purchase  or  sale  of readily marketable securities which loans (A) are
  secured by readily marketable securities having  a  market  value  or  a
  principal  face  amount (whichever is less) at the time the loan is made
  of not less than the principal amount of said loan,  and  (B)  shall  be
  required to be repaid upon settlement of such purchase or sale.
    (c)  Loans  (exclusive  of any loan described in paragraph (a) of this
  subdivision) to any state other than the state of New York,  or  to  any
  foreign  nation,  the  New  York State thruway authority, the Triborough
  bridge and tunnel authority, The Port of New York Authority, a  railroad
  corporation,  a  municipal  corporation  of  this  state,  a corporation
  subject to the jurisdiction of  a  public  service  commission  of  this
  state,   or   any  international  lending  facility  or  public  benefit
  corporation designated by the  banking  board  by  general  or  specific
  regulation  upon  a  three-fifths vote of all its members, may equal but
  not exceed twenty-five per centum of the capital stock, surplus fund and
  undivided profits of such bank or trust company.
    (d) Loans to any person, other than loans described in paragraph  (a),
  (b) or (c) of this subdivision, may equal but not exceed twenty-five per
  centum  of the capital stock, surplus fund and undivided profits of such
  bank or trust company, provided such loans either in whole or  in  part,
  but  in  any  event that part thereof in excess of fifteen per centum of
  such capital stock, surplus fund and undivided profits:
    (1) are upon, or with respect to, drafts or bills of exchange drawn in
  good  faith  against  actually  existing  values,   or   upon   bankers'
  acceptances  or  bills  of  exchange  of  the  kinds and maturities made
  eligible by law for purchase in  the  open  market  by  federal  reserve
  banks; or
    (2)  are  secured by collateral having an ascertained market value, or
  otherwise having a value as collateral as found  in  good  faith  by  an
  officer  of  such bank or trust company, at least equal to the excess of
  such loans over fifteen per centum of such capital stock,  surplus  fund
  and undivided profits.
    (d-1) Loans secured by bills of lading, warehouse receipts, or similar
  documents  transferring  or securing title to readily marketable staples
  shall be subject to a  limitation  of  thirty-five  per  centum  of  the
  capital  stock, surplus fund and undivided profits of such bank or trust
  company in addition to the general limitations if the  market  value  of
  the staples securing each additional loan at all times equals or exceeds
  one  hundred  fifteen per centum of the outstanding amount of such loan.
  The staples shall be fully covered by insurance whenever it is customary
  to insure such staples.
    (d-2) Loans secured by shipping documents or instruments  transferring
  or  securing title covering livestock or giving a lien on livestock when
  the market value of the livestock securing the obligation is not at  any
  time  less than one hundred fifteen per centum of the face amount of the
  note covered,  shall  be  subject  to  a  maximum  limitation  equal  to
  twenty-five  per centum of the capital stock, surplus fund and undivided
  profits of such bank or trust company.
    In addition, loans which arise from the discount by dealers  in  dairy
  cattle of paper given in payment for dairy cattle, which paper carries a
  full  recourse endorsement or unconditional guarantee of the seller, and
  which are secured by the cattle  being  sold,  shall  be  subject  to  a
  limitation  of twenty-five per centum of the capital stock, surplus fund
  and undivided profits of such bank or trust company.
    (e) In computing the total loans by any bank or trust company  (i)  to
  any  individual,  there shall be included all loans by the bank or trust
  company to any partnership or unincorporated association of which he  is

a  member, and all loans made for his benefit or for the benefit of such
  partnership or association; (ii) to any  partnership  or  unincorporated
  association,  there  shall  be  included  all loans by the bank or trust
  company  to  its  individual  members  and all loans made by the bank or
  trust company for the benefit  of  such  partnership  or  unincorporated
  association  or  any member thereof; and (iii) to any corporation, there
  shall be included all loans made by the bank or trust  company  for  the
  benefit  of  the  corporation. A loan shall be deemed to be made for the
  benefit of a corporation only to the extent that the  proceeds  of  such
  loan (1) are to be loaned to the corporation; (2) are to be used for the
  acquisition  (otherwise  than in connection with a public offering) from
  the corporation by a person in control of, or under common control with,
  the corporation,  of  any  stock  or  other  securities  issued  by  the
  corporation,  or  (3)  are  to be transferred to the corporation without
  fair and adequate consideration, and  the  discharge  of  an  equivalent
  amount  of debt previously incurred in good faith and for value shall be
  considered fair and adequate consideration. A loan shall not  be  deemed
  to  be  made  for the benefit of a corporation if such loan is made to a
  person other  than  the  corporation  and  is  secured  as  provided  in
  subdivision  four  of this section or is secured by collateral having an
  ascertained market value, or otherwise having a value as  collateral  as
  found  in  good  faith  by  an officer of such bank or trust company, at
  least equal to the amount of the loan;  provided  that  stock  or  other
  securities  issued  by, or a lien on property of, such corporation shall
  not be considered collateral for the purposes of this provision.
    (f) The limitations  in  this  subdivision  shall  not  apply  to  the
  acceptance  of bills of exchange or the issue or confirmation of letters
  of credit calling for acceptances by a bank or  trust  company,  but  no
  bank or trust company shall make acceptances, or issue letters of credit
  calling  for  acceptances,  upon  the responsibility of any person to an
  amount in excess of fifteen per centum of  the  capital  stock,  surplus
  fund  and  undivided  profits of such bank or trust company, unless that
  part thereof in excess of fifteen per  centum  of  such  capital  stock,
  surplus  fund  and undivided profits is, and will remain, secured either
  by accompanying documents or by some other actual security  growing  out
  of  the same transaction as the acceptance or by substituted security of
  similar character.
    (g) Loans arising from the discount of  negotiable  or  non-negotiable
  installment  consumer paper which carries a full recourse endorsement or
  unconditional guarantee by the transferor of such paper shall be subject
  to a limitation of twenty-five per centum of the capital stock,  surplus
  fund  and  undivided  profits  of such bank or trust company. Within the
  meaning of this subdivision, the liability to such bank or trust company
  of  any   individual,   partnership,   unincorporated   association   or
  corporation  as  endorser  or  guarantor of negotiable or non-negotiable
  instalment consumer paper shall not be deemed a loan to such individual,
  partnership, unincorporated association or corporation to the extent  of
  the  value  of  the  obligation  thereon of the maker of such instalment
  consumer paper, as found in good faith in writing by an officer of  such
  bank   or   trust  company,  designated  to  make  such  evaluation  and
  certification by the board of directors of the bank  or  trust  company,
  and  upon the further certification by the said officer that the bank or
  trust company is relying  primarily  on  the  maker  of  the  instalment
  consumer  paper  for  the payment of an amount owing upon the instalment
  consumer paper upon the security of which the bank or trust  company  is
  making   the  loan  or  in  which  it  is  making  the  investment.  The
  certifications are to be  made  at  the  time  of  making  the  loan  or
  investment, and are to be based on information contained in the files of

the  bank  or  trust  company,  or  on  the  personal  knowledge  of the
  designated officer. Instalment consumer paper, for the purposes of  this
  section,  shall  mean  retail instalment contracts and retail instalment
  obligations  as  defined  in  subdivisions six and six-a of section four
  hundred ninety-one of this chapter, and similar agreements entered  into
  outside of this state.
    (h) The limitations in this subdivision shall not apply to any advance
  of  federal  funds  by  such bank or trust company to a commercial bank,
  provided such advance is made on the condition that it be repaid on  the
  next  business  day  following the day on which the advance is made. For
  purposes of this paragraph, the term "federal funds" shall mean funds on
  deposit at a federal reserve bank or funds on deposit  at  a  commercial
  bank  which  are  exchangeable for funds on deposit at a federal reserve
  bank; the term "commercial bank" shall mean  any  bank,  trust  company,
  private  banker,  national  banking association, any banking corporation
  organized under the laws of the United States or any state of the United
  States and engaged in a commercial  banking  business,  or  any  banking
  corporation  organized under the laws of any foreign country and engaged
  in the commercial banking business that maintains  a  branch  or  agency
  licensed  by  any  state  of the United States or the comptroller of the
  currency; and the term "business day" shall mean any day  on  which  the
  bank  or trust company making the advance, the commercial bank obtaining
  the advance and any federal reserve bank or  banks  through  which  such
  advance was effected are all open for general business.
    (i)  The  limitations  in  this  subdivision  shall  not  apply to the
  investment of such bank or trust company in the bonds, debentures, notes
  or  other  obligations  of  any  person,  provided:  (i)   such   bonds,
  debentures,  notes  or  other  obligations mature not less than one year
  after their respective dates of issuance,  and,  at  the  time  of  such
  investment,  are  rated  in one of the three highest rating grades by an
  independent rating service designated by the banking  board;  (ii)  such
  investment  does  not  exceed  fifteen  per centum of the capital stock,
  surplus fund and undivided profits of such bank or  trust  company;  and
  (iii)  such  investment  complies  with  such additional limitations and
  conditions as the banking board from  time  to  time  may  prescribe  by
  general regulation.
    (j) In the case of a trust company which (1) does not receive deposits
  from  the  general public and (2) has been exempted by the banking board
  from the  requirements  of  section  thirty-two  of  this  chapter,  the
  limitations  of  this  subdivision  shall not apply to the investment of
  such trust company in the bonds, debentures, notes or other  obligations
  of,  any  foreign  nation,  or  any  political  subdivision,  agency  or
  instrumentality thereof, provided: (i) at the time of  such  investment,
  such  bonds,  debentures, notes or other obligations are rated in one of
  the three  highest  rating  grades  by  an  independent  rating  service
  designated  by  the  banking board; (ii) for any such bonds, debentures,
  notes or  other  obligations,  the  foreign  nation,  or  any  political
  subdivision,  agency  or instrumentality thereof, has guaranteed payment
  (by guaranty or commitment to purchase or otherwise) of  such  principal
  and  interest, or is committed to supply, by loan, subsidy or otherwise,
  funds sufficient to pay such principal and interest,  or  has  otherwise
  pledged  its  faith  and  credit  for  the payment of such principal and
  interest; (iii) such investments do not exceed the per centum applicable
  to such obligor of the capital stock, surplus fund and undivided profits
  of such bank or trust company as the superintendent shall  approve,  and
  (iv) such investments comply with such limitations and conditions as the
  superintendent may from time to time prescribe.

(k) In the case of a trust company which (1) does not receive deposits
  from  the  general public and (2) has been exempted by the banking board
  from the  requirements  of  section  thirty-two  of  this  chapter,  the
  limitations  of  this  subdivision  shall  not  apply to the purchase of
  securities  under  repurchase  agreement  provided  that  the repurchase
  agreement relates to not less than a like amount of  direct  obligations
  (based on their principal amount or market value, whichever is lower, at
  the  time  the  purchase occurs) of any foreign nation, or any political
  subdivision, agency or instrumentality thereof,  provided:  (i)  at  the
  time  of  such purchase, such direct obligations are rated in one of the
  three highest rating grades by an independent rating service  designated
  by  the banking board; (ii) for any such direct obligations, the foreign
  nation, or any political subdivision, agency or instrumentality thereof,
  has guaranteed  payment  (by  guaranty  or  commitment  to  purchase  or
  otherwise)  of  the  principal  and interest thereof, or is committed to
  supply, by loan, subsidy or otherwise,  funds  sufficient  to  pay  such
  principal  and  interest,  or has otherwise pledged its faith and credit
  for the payment of such principal and interest; (iii) the purchase price
  of such securities does not exceed the  per  centum  applicable  to  the
  obligor  of  such  securities  of  the  capital  stock, surplus fund and
  undivided profits of such bank or trust company  as  the  superintendent
  shall approve; and (iv) such purchase complies with such limitations and
  conditions as the superintendent may from time to time prescribe.
    The   banking  board  shall  be  empowered  to  promulgate  rules  and
  regulations as shall be appropriate to carry out the  purposes  of  this
  subdivision.
    4. Make a loan upon the security of real estate within or without this
  state  which  does  not comply with any such rules or regulations as the
  banking board may prescribe.
    No loan shall be made under the provisions of this subdivision  except
  upon  the  written  and  signed  certificate  of  an appraiser appointed
  pursuant to policies established by the board of  directors,  certifying
  to the value of the premises according to his judgment.
    The  provisions of this subdivision shall not constitute the authority
  to make a loan to a natural person upon the security of a mortgage which
  is not a first lien.
    Where the collateral for any  loan  consists  partly  of  real  estate
  security  and  partly  of  other  security,  including  a  guarantee  or
  endorsement by or an obligation or commitment of a person other than the
  borrower, only the amount  by  which  the  loan  exceeds  the  value  as
  collateral  of  such  other  security,  as found in good faith by a duly
  authorized officer of such bank or trust company, at  the  time  of  the
  making  of  the  loan or commitment therefor, shall be considered a loan
  upon the security of real estate, provided, that in  no  event  shall  a
  loan be considered a loan upon the security of real estate (i) where the
  principal amount of any real estate security taken therefor is less than
  fifteen  per centum of the amount of such loan or (ii) where the loan is
  payable in monthly or quarterly installments over a period not to exceed
  one hundred twenty-one  months  and  does  not  exceed  twenty  thousand
  dollars  and  is  for  the  purpose  of  paying the cost of any repairs,
  alterations or improvements upon, or in  connection  with,  or,  as  the
  superintendent  may  authorize,  the equipping of existing structures or
  the building of new structures by the owners thereof or by  the  lessees
  under  a  lease  expiring not less than six months after the maturity of
  the loan or (iii) where the loan is fully guaranteed or insured  by  the
  United  States  or a state, or any department, agency or instrumentality
  thereof, and for the payment of which loan the full faith and credit  of
  the  United States or of such state is pledged and if under the terms of

the guaranty or insurance agreement the bank or trust  company  will  be
  assured  of  repayment  in accordance with the terms of the loan or (iv)
  where there is  a  binding  and  valid  commitment  or  agreement  by  a
  financially   responsible   lender,   purchaser   or  other  financially
  responsible party either directly with the lending bank or trust company
  or which is for the benefit of, or has been  assigned  to,  the  lending
  bank  or  trust  company  and pursuant to which commitment, agreement or
  assignment, the lender, purchaser or other party is required to  advance
  to  the lending bank or trust company within thirty months from the date
  of such commitment or agreement the full amount of the loan to  be  made
  by  the  lending  bank or trust company upon the security of real estate
  improved by a building or buildings, or to be improved by a building  or
  buildings  in  the  process  of construction, the major portion of which
  building is used, or in the case of a building under construction is  to
  be  used,  for  residential,  business,  manufacturing  or  agricultural
  purposes, and where  pursuant  to  the  terms  and  provisions  of  such
  commitment  or agreement such advance shall be made prior to or upon the
  maturity of the loan by the lending bank or trust company.
    Real estate security for purposes of this section  shall  not  include
  (a)  an  assignment of rents under a lease, (b) a mortgage or other lien
  upon a leasehold, (c) a mortgage or other lien upon  leasehold,  royalty
  or  other  rights  in  oil,  gas,  minerals,  standing  timber, or other
  products of land, (d) a mortgage or other lien made or given  upon  real
  estate  and  taken  as  collateral  security  for  loans  to a borrower,
  provided, that at the time of the  making  of  the  loan  or  commitment
  therefor, repayment thereof is reasonably expected to be made out of the
  operations  of  such borrower or of the mortgagor, or (e) such mortgages
  or other liens on property as may  be  specifically  exempted  from  the
  limitations and restrictions of this subdivision by the banking board by
  general  or  specific  regulations adopted by a three-fifths vote of all
  its members.  Nothing in this paragraph shall be construed to imply that
  security of a kind not mentioned herein is  to  be  deemed  real  estate
  security.
    The  limitations  and restrictions contained in this subdivision shall
  not prevent the acceptance of any real estate  security  to  secure  the
  payment  of  a  debt previously contracted in good faith. Every mortgage
  and every assignment of a mortgage taken or held by such bank  or  trust
  company  shall  immediately be recorded or registered in its name in the
  office of the clerk or the proper recording officer  of  the  county  in
  which  the real estate described in the mortgage is located, except that
  where the underlying real estate is located outside  the  state  of  New
  York  such  mortgage  or assignment may be recorded or registered in the
  name of a duly authorized nominee, and except that if such  mortgage  or
  assignment  of  mortgage or of an interest therein shall be taken from a
  corporation organized under the banking law or all of the capital  stock
  of  which  is owned by not less than twenty savings banks of this state,
  the  bank  or  trust  company  may  hold  such  mortgage  or  assignment
  unrecorded  unless  the  superintendent  shall  direct the bank or trust
  company to record the same. The recording or registering of  assignments
  of  mortgages shall not be required when not less than ten mortgages are
  assigned as security for a loan, the  term  of  which  does  not  exceed
  twelve months.
    Any  bank  or  trust company may renew from time to time any loan upon
  the security of real estate lawfully made by it prior to June thirtieth,
  nineteen hundred thirty-seven.
    None  of  the  prohibitions  and  restrictions   contained   in   this
  subdivision  shall  apply to any corporation all of the capital stock of
  which is owned by not less than twenty savings banks of this state.

4-a. A bank or trust company may, in addition to the authority granted
  under any other provisions of this article, make a  loan  to  a  natural
  person  upon the security of a mortgage which is not a first lien at the
  rate or rates agreed to by the bank or trust company and  the  borrower,
  subject  to  such  regulations  as the banking board may prescribe. Such
  regulations by the banking board may include such  restrictions  as  the
  banking board finds necessary or proper, including without limitation, a
  restriction  as  to the percentage of total assets which may be invested
  in such loans or a  restriction  on  the  loan  to  appraisal  value  of
  property securing such loan.
    For  purposes  of  this subdivision, the term mortgage shall include a
  lien on an existing ownership interest in certificates of stock or other
  evidence of an ownership interest in, and a proprietary  lease  from,  a
  corporation  or  partnership  formed  for the purpose of the cooperative
  ownership of real estate.
    5. Make any loan for the purpose  of  financing  the  purchase  of  or
  refinancing  an  existing ownership interest in certificates of stock or
  other evidence of an ownership interest  in,  and  a  proprietary  lease
  from,  a  corporation  or  partnership  formed  for  the  purpose of the
  cooperative ownership of real estate, unsecured except to the extent  of
  an assignment or transfer of the stock certificates or other evidence of
  ownership  interest  of  the  borrower  and the proprietary lease within
  ninety days from the making of the loan, which shall exceed the  maximum
  per  cent  of the loan permitted to be made on real estate improved by a
  single family  residence  occupied  by  the  owner,  provided  that  for
  purposes  of  this  section  the  amount  of the purchase price shall be
  deemed to equal the appraised value of  such  certificate  of  stock  or
  other  evidence  of  an  ownership  interest,  or,  in  the  case  of  a
  refinancing, the appraised value of such certificates of stock or  other
  evidence  of  an  ownership interest and which shall fail to provide for
  full repayment of principal and interest within the same number of years
  as  a  conventional  mortgage  loan   previously   described   in   this
  subdivision,  provided that all real estate owned by such corporation or
  partnership shall be located within the state;  and  provided,  further,
  that such loan shall be subject to such regulations as the banking board
  may from time to time promulgate. The maximum rate of interest which may
  be charged, taken or received upon any loan or forbearance made pursuant
  to  this  subdivision  may exceed the rate of interest prescribed by the
  banking board in accordance with section fourteen-a by no more than  one
  and one-half per centum per annum.
    6.  Make any loan or discount on the security of the shares of its own
  capital stock, or, except as provided in section five thousand twelve of
  this chapter, be the purchaser of any such shares, unless such  security
  or  purchase  shall  be  necessary to minimize or avoid loss upon a debt
  previously contracted in good faith, and stock  so  purchased  shall  be
  sold  at  public  or  private sale, or otherwise disposed of, within six
  months from the time of its purchase  unless  the  superintendent  shall
  authorize  such bank or trust company in writing to hold such shares for
  a longer period.  Any  bank  or  trust  company  violating  any  of  the
  provisions  of this subdivision shall forfeit to the people of the state
  twice the amount of the loan or purchase.
    7. Knowingly lend, directly or indirectly, any money or  property  for
  the  purpose  of  enabling  any  person to pay for or hold shares of its
  stock, unless the loan is  made  upon  security  having  an  ascertained
  market  value of at least fifteen per centum more than the amount of the
  loan. Any bank  or  trust  company  violating  the  provisions  of  this
  subdivision shall forfeit to the people of the state twice the amount of
  the loan.

8.  Except  in  conformity  with  such rules and regulations as may be
  promulgated by  the  superintendent,  lend  any  sum  of  money  to  any
  executive  officer  or  director  of  such  bank  or  trust company. The
  superintendent shall have power to determine by regulation who shall  be
  considered, under the provisions of this subdivision, to be an executive
  officer  and  what  shall  be  considered,  under the provisions of this
  subdivision, to be a loan to an executive officer or director. In making
  such determination, the superintendent shall have power  to  include  or
  exclude, subject to such conditions and limitations, if any, as he shall
  prescribe,  any or all of the following: (1) any transaction as a result
  of which an executive officer or director of a  bank  or  trust  company
  becomes  obligated  to  such bank or trust company upon any note, draft,
  bill of exchange or other  indebtedness,  as  maker,  drawer,  endorser,
  guarantor,  surety  or otherwise; and (2) any transaction as a result of
  which a corporation, in which an executive officer or  director  or  any
  combination  of  such persons, owns or controls a majority of the stock,
  or as a result of which a partnership in which an executive  officer  or
  director  is  a  partner,  becomes obligated or renews its obligation to
  such bank or trust company upon any note, draft,  bill  of  exchange  or
  other  indebtedness,  as  maker,  drawer, endorser, guarantor, surety or
  otherwise. Every bank or trust company violating this provision  or  any
  regulation issued pursuant thereto and every officer or director of such
  bank  or  trust company knowingly participating in such violation shall,
  for each offense, forfeit to the people of the state twice the amount of
  the loan.
    No executive officer or director of a  bank  or  trust  company  shall
  borrow  from  the  bank  or  trust  company  of which he is an executive
  officer or director except as permitted by this section.