Bank Agencies Extend No Action Relief on Loans to Insiders – Finance and Banks

Bank Agencies Extend No Action Relief on Loans to Insiders - Finance and Banks

Cadwalader, Wickersham & Taft LLP

31 December 2021

Highlights

  • The Federal Reserve Board, the FDIC and the OCC (collectively,
    the “agencies”) extended previously issued no-action
    relief to asset managers and other institutions from certain
    regulations that limit extensions of credit to
    “insiders.”


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The new relief rescinds and supersedes the agencies’ previous extension of the no-action
relief (see previous coverage). The relief, previously set
to expire on January 1, 2022, will now expire on the earlier of (i)
January 1, 2023, or (ii) the effective date of a final rule by the
FRB that revises Regulation O with respect to “treatment of
extensions of credit by a bank to fund complex-controlled portfolio
companies that are insiders of the bank.”

Regulation O (“Loans to Executive
Officers, Directors, and Principal Shareholders of Member
Banks”) establishes quantitative limits and qualitative
restrictions on extensions of credit by depository institutions to
“insiders” (i.e., executive officers, directors,
and principal shareholders and affiliates).

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