OCC 96-59
Subject: Extensions of Credit to Insiders and Transactions with Affiliates      Description:  Final Rule                 
                                                                                                                                 

TO:  Chief Executive Officers of all National Banks, Department and Division Heads, and all
     Examining Personnel


The Office of the Comptroller of the Currency (OCC) published a final regulation in the Federal
Register October 21, 1996, that governs how a national bank lends to its executive officers,
directors, and principal shareholders.  The rule is part of the OCC's ongoing regulatory review
program to reduce unnecessary burden and costs for national banks.

The rule contains exemptions that have been adopted by the other federal financial institution
regulatory agencies and are consistent with exemptions previously adopted by the OCC to its
loans-to-one-borrower limits.  These include exemptions for loans to executive officers that are
secured by U.S. obligations, guaranteed by a federal agency, or secured by a segregated deposit
account.
  
The rule also incorporates the terms of the Federal Reserve Board's Regulation O into Part 31
and, as a result, eliminates from Part 31 a redundant restatement of rules.  This change simplifies
the OCC's rule and addresses several commenters' concerns about confusion arising from rules
that are intended to be substantively identical but which had stylistic differences.

In addition, the rule includes an appendix that provides extensive guidance on the differences
between the insider lending rule and the loans-to-one-borrower rule.  In response to commenters'
requests, the guidance clarifies the differences between the two regulations' combination and
attribution rules.  The guidance also points out differences between the definitions of "extension
of credit" and the exceptions contained in the two rules.

For further information, contact Emily R. McNaughton, national bank examiner, Office of the
Chief National Bank Examiner (202) 874-5170; Aline Henderson, senior attorney, Bank Activities and Structure (202) 874-5300; or Mark Tenhundfeld, assistant director, Legislative and
Regulatory Activities (202) 874-5090.




____________________________________
Julie L. Williams
Chief Counsel
Date: October 23, 1996
Attachment   61 FR 54533