Insider-Lending Laws and Compliance Considerations for Financial Institutions

Extensions of credit to insiders are scrutinized heavily by regulatory authorities who are on the lookout for poor management, neglect, and abuse. Insider lending includes extensions of credit to individuals, parent companies, subsidiaries, and any other company controlled by an insured depository institution. Stay abreast of promulgated rules and regulations that govern extensions of credit to insiders.

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Related Content        

• Lending Limits and Restrictions
  Explore the various federal laws that impose specific restrictions on the terms of loans to insiders and tying loans to other bank business. Sections 23A and 23B of the Federal Reserve Act are discussed in detail, as they relate to limits and reporting obligations that an insured depository institution (IDI) must adhere to when lending to insiders and affiliated institutions.

• Legal Duties and Responsibilities of Bank Directors
  Review this practice note for a general overview of the legal requirements and duties of directors of IDIs, including key highlights to distinguish between IDI directors and directors of nonbank companies. Guidance is provided on the responsibility of bank directors to establish processes that monitor and track corrective action once deficiencies, fraud and/or abuse are identified.

• Dodd-Frank and Capital Requirements: Impact on Commercial Lending
  Access this practice note to learn about limits on interbank financing and capital regulations contained in the Dodd-Frank Wall Street Reform and Consumer Protection Act. The practice note provides key information to inform bank counsel on lending prohibitions to certain hedge funds or private equity funds, as well as other pertinent insider limitations contained under the Dodd-Frank Act.

• Industrial Loan Companies
  Read this practice note for guidance on industrial loan companies (ILCs), their regulatory framework, and restrictions governing loans to insiders and affiliates. The practice note provides insight into the federal regulatory restrictions that apply to commercial banks and savings associations, and includes a wealth of information on the state supervisory authority and treatment of ILCs as state-chartered institutions subject to supervision, regulation, and examination by state banking regulators.

Practical Guidance Updates

Featuring the latest updates from your Practical Guidance account.                    

• Loan to Insiders (Regulation O) Compliance Checklist is a key resource for practitioners, financial institutions, and insiders developing and maintaining a control system designed to ensure compliance with applicable insider lending restrictions and requirements.
• Bank Regulatory Counsel Resource Kit and In-House Banking and Financial Services Resource Kit are some of the resources available to cover key issues, laws, and regulations applicable to in-house lawyers and counsel advising on insider lending laws and board of directors’ roles and responsibilities. These resource kits include helpful articles, practice notes, templates, and checklists.
• The Practical Guidance Journal Fall 2021 Edition features guidance as financial institutions gear up for climate-related risk implications under Executive Order 14030.
• Check out the new Practical Guidance Author Center! Learn about the 1500+ leading attorney authors contributing to our 20 practice areas, and find out how you can Become a Practical Guidance Author.
• Document alerts are now available in Practical Guidance. This allows you to stay current on legal developments that affect your practice. Find out how to set up your document alerts.

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