Congress enacted the Financial Institutions Regulatory and Interest Control Act in 1978. The insider lending provisions of the law were implemented as Regulation O. Historical data show that insider abuse is at the heart of many bank failures. Examiners take very seriously their mission to prevent insider abuse. They frequently cite violations of Regulation O during examinations, and often take enforcement action.
Typical violations include illegal overdrafts to insiders or extensions of credit that exceed one of several lending limit provisions contained in the regulation. These violation generally result from a lack of adequate procedures. This program provides suggestions for procedures. In other cases violations result from a lack of understanding of the fine details of Regulation O. The concepts are fairly straightforward, but contain enough details to cause confusion.
Forms provide the framework for tracking the status of a request, providing accurate information, and relaying and providing information in a timely manner. The Regulation O List of Insiders Form can be used to update and track the list of insiders (and their related interests) at your institution.