The Ins & Outs of Insider Lending and Reg O

On Demand Course

Instructor: Rebekah Leonard

Duration: 2 HR

What You'll Learn

Insider abuse is a real thing. In finance, insiders hold positions of power or position that can be used to secure sweet loan deals that threaten the very stability of the institution. There is an entire law devoted to insider lending, and Regulation O implements it. Bank regulators take it all very seriously, with violations bringing civil money penalties, Cease and Desist orders, or even individual permanent removal from the banking industry. In 2022, a mid-size bank in Maryland paid a $9.5 Million dollar fine for Reg O violations!

Many compliance professionals shy away from Reg O topics for several reasons: it isn’t a consumer compliance issue, it lives in the realm of Safety and Soundness, and it is downright intimidating. Nobody wants to tell the Chairman of the Board that their overdraft will not and cannot be paid. However, it is crucial for compliance officers, auditors, loan staff members, and even operational employees to have a solid understanding of Reg O principles.

Reg O covers insiders, but who exactly is that? Directors, principal shareholders, and executive officers. But who exactly are each of them? Can you name names? And what about their related interests, such as business ventures, joint accounts, or non-profit representation? Do you know about all of them, and if they are restricted by Reg O limitations? You also need to know how to treat bank holding company and affiliate insiders.

Further, there are subcategories of being part of the in-crowd, and not all insider-ness is treated the same. Some insiders can receive more favors than others.

Topics covered in this session

Detailed explanations of who is an insider is who is not
Exploration of related interests
What “control” means
Detailed descriptions of “extensions of credit”
The different lending limits and when they apply
- Individual limits
- Aggregate limits
- Executive Officer limits
When Prior Approval is required, who must get it, and who can grant it
What preferential treatment is prohibited
What must be reported to the Board (or others?)

Who Should Attend

Compliance staff
Risk managers
Loan policy makers
Operations managers
Operations staff
Legal, and audit

About the Author:

Rebekah Leonard

Rebekah is the owner of Elucidate LLC, a compliance training and consulting company. Elucidate means to "make clear, explain, throw light upon", and describes Rebekah's desire to illuminate the complexities of compliance with passion and fun. She's created and produced a TRID music video parody and several Compliance Breakout escape rooms, which she frequently provides at state banking compliance conferences. She is an accomplished speaker and regularly provides webinars through BOL and Compliance Resource. Rebekah is currently serving as the VP Director of Compliance for a $6 Billion community bank in Montana. She began her career in 1995 at a private lending company, but soon settled into banking, where she's covered nearly all of it - customer service and teller work, loan processing and review, and security and business continuity. She now oversees CRA, BSA and all aspects of compliance as a senior leader. She has successfully navigated numerous FDIC Compliance, CRA, and BSA Exams. Rebekah has a bachelor's degree in Organizational Leadership from Chapman University (Magna cum Laude), attended the American Bankers Association National Compliance School in 2003, and has held her Certified Regulatory Compliance Manager designation since 2006.

On-Demand Course