The Federal Reserve Board has requested public comments on a proposal to modernize Regulation O, which governs credit extensions to bank insiders such as executives, board members, and major shareholders. The update aims to replace outdated dollar-based thresholds with metrics indexed to economic growth, while preserving safeguards against preferential treatment. Regulation O, last comprehensively revised in 1979, would now address challenges faced by community banks where insiders often contribute local expertise. The proposal simplifies application of the rule, excludes passive investments held by funds, and incorporates statutory requirements. Comments are due 60 days after publication in the Federal Register. Vice Chair Michelle W. Bowman emphasized the need to balance conflict-of-interest protections with support for community bank governance. The Federal Reserve will accept feedback through the Federal Register notice process.
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