Loans to Executive Officers, Directors, and Principal Shareholders of Member Banks; Loans to Holding Companies and Affiliates

Resumo

The proposed rule would amend the Board's Regulation O, which limits how much and on what terms a bank may lend to its own insiders and insiders of its affiliates. Under the proposed rule, four of the five restrictions of Regulation O would not apply to extensions of credit by a bank to executive officers and directors of the bank's affiliates, provided that those executive officers and directors were not engaged in major policymaking functions of the lending bank. Of the restrictions in Regulation O, only the prohibition on preferential lending would apply to extensions of credit to such persons. The Board was granted authority to create such an exception for directors of affiliates for the first time by the Riegle Community Development and Regulatory Improvement Act of 1994; Regulation O already contains a blanket regulatory exception for executive officers of affiliates not involved in policymaking at the lending bank, which as a result of the statute must be scaled back to no longer include the prohibition on preferential lending.