Last month, the Federal Reserve Board (FRB) announced a $9,524,000 fine to be imposed on EagleBank, of Bethesda, Maryland for violations of Regulation O. The bank improperly extended credit to entities owned or controlled by its then-CEO and Chairman, Ronald D. Paul. The FRB: Found that EagleBank had deficient internal controls over insider lending practices between 2015 and 2018: Which allowed the bank to extend credit totaling $99 million to entities that Paul owned or controlled, including certain […]
Tag: Regulation O
FRB EXTENDS REGULATION O PPP EXCEPTION
On May 14, 2021, the Federal Reserve Board announced the third extension of a temporary modification to Regulation O that allows certain bank directors and shareholders to apply to their banks for PPP loans for their small businesses. The rule extension, which is effective immediately, applies to PPP loans made from March 31 through June 30, 2021. The rule change will continue to apply if the PPP is extended, with the change ultimately sunsetting on March […]
FRB FAQS ON REGULATION O
On March 31, 2021, the Board of Governors of the Federal Reserve Board published ten Frequently Asked Questions about Regulation O.
REGULATION O – LENDING TO INSIDERS
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. Enforcement actions may take the form of civil monetary penalties , a Memorandum of […]
DODD-FRANK CHANGES TO REGULATION O
The Dodd-Frank Act contains over 2,000 pages of law. One page buried deep within the massive law has made two changes that impact Regulation O, the regulation that limits lending to insiders. The laws upon which Regulation O is based have been changed; the regulation itself has not been changed yet. The first change expands the definition of “extension of credit,” to include extending credit to a person and having credit exposure to the person […]