|
[Main Tabs]
[Table of Contents - 4000]
[Index]
[Previous Page]
[Next Page]
[Search]
4000 - Advisory Opinions
Request for Extension of Time under Regulation O
FDIC-80-6
April 1, 1980
Pamela E.F. LeCren, Attorney
*** has been scheduled concerning a request by *** for an extension
of time under section 215.6(b) of Regulation O to bring loans to
insiders into compliance with the statutory loan limit. In particular,
*** the bank's newly elected chairman of the board, has loans in the
area of $400,000. The bank's lending limit to insiders is $66,100.
Section 215.6(b) permits up to two one year extensions from March 10,
1980 in which the bank is to comply with the loan limit. Extensions may
be granted upon a finding of good cause.
Federal Reserve Board Regulation O is prospective in nature. It
prohibits extensions of credit over the statutory ceiling to persons
that are subject thereto. It does not prohibit the
maintenance of loans in excess of that ceiling if the loans
when made were extended to an individual who was not subject to the
loan ceiling, i.e., a director or other person who is not an executive
officer 1
or principal shareholder. In short, after-acquired status will not give
rise to a Regulation O violation, 2
nor does section 215.6 apply in such circumstances.
The loans made to *** were extended prior to his being elected
chairman of the board and when he was not subject to the loan ceiling.
Therefore the extension of those loans in an amount exceeding the
statutory loan ceiling is not a violation of the regulation nor is the
maintenance of those loans a violation. They may be paid down in
accordance with their existing schedule. No new extensions of credit
may be made to *** however, until such time as his outstanding
indebtedness is below the statutory
ceiling.
1 The chairman of the board of a bank is presumed to be an
executive officer as that term is defined in § 215.2(d) of Regulation
O. Go Back to Text
2 The one exception in our opinion is where the loan is made in
contemplation of the borrower becoming an executive officer or
principal shareholder. Go Back to Text
[Main Tabs]
[Table of Contents - 4000]
[Index]
[Previous Page]
[Next Page]
[Search]
|
