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Historical data show that insider abuse is at the heart of many bank failures, so examiners take very seriously their mission to prevent it. Regulation O violations are frequently cited during examinations, and regulators often take enforcement action for insider lending infractions, such as civil money penalties , a Memoranda of Understanding, Cease and Desist Actions, and even Prohibition Orders.
Typical violations include illegal overdrafts to insiders or extensions of credit that exceed one of several lending limit provisions contained in the regulation. These violations generally result from a lack of adequate procedures. Simple steps to monitor overdrafts and total extensions of credit to insiders are usually sufficient to prevent such violations. 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. Most banks can easily identify their directors and executive officers, but confusion occurs when trying to determine the status of the directors and executive officers of affiliated institutions. Each of the three lending limits is fairly simple, but determining how the three limits interact with one another can cause confusion. This program provides detailed coverage of these, and other, fundamental requirements of Regulation O.
Civil money penalties can be assessed against the institution or against individuals. For example, federal regulators fined five former directors and executives in amounts from $8,000 to $20,000 per individual for violations of insider lending rules.
This program provides the information needed by the lending, compliance and audit staff to ensure ongoing compliance with the regulation. Participants receive a detailed manual that serves as a continuing resource.
Regulation O places strict requirements on loans made to "insiders." This two-hour program explains:
•Who is considered an insider
•What transactions are considered "extensions of credit"
•The prohibition against preferential treatment
•The requirements for prior approval
•The lending limits for each insider, all insiders as a group, and special limits for executive officers
•The restrictions on overdrafts
•How Regulation O rules impact existing extensions of credit to newly elected/appointed insiders
The program is designed for loan officers, compliance officers, loan support staff and auditors.
Reg O - Insider Lending
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