ICBA said it strongly supports a proposal to modernize Regulation O rules on extending credit to executive officers and board members—a longtime ICBA priority.
Recommendations: In a comment letter to the Federal Reserve on its proposed rulemaking, ICBA offered suggestions to reduce unnecessary burdens on community banks, including:
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Promptly finalizing the proposal’s dollar-threshold increases and indexing mechanism.
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Providing targeted relief for well-capitalized, well-managed community banks.
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Preserving sensible treatment of overdrafts, modifications, and workouts.
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Adopting a good-faith reliance safe harbor.
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Providing transition relief and interagency coordination.
Background: The Federal Reserve in July proposed modernizing Reg O, the rule governing the extension of credit to insiders who could influence a bank's lending decisions. The FDIC issued a related proposal to adjust thresholds for the banks it supervises.
ICBA View: ICBA supports raising and indexing overly restrictive thresholds such as those found in Reg O—which has not seen a comprehensive update since the 1970s—to better enable community banks to recruit and retain directors, particularly in rural areas.
ICBA Advocacy: ICBA has been advocating for modernization of Reg O for some time:
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In a letter to the FDIC regarding its proposal, ICBA in October said it supported the effort and recommended that the agency promptly finalize and implement the proposal’s dollar-threshold increases and indexing mechanism.
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ICBA last fall advocated for the agencies to update Reg O and related rules during the Economic Growth and Regulatory Paperwork Reduction Act review and in recommendations last year to the Office of Management and Budget.