The federal banking agencies have extended, to Jan. 1, 2022, temporary “no-action” relief for applying Regulation O to companies that manage funds investing in banking organizations.
The action by the agencies extends relief provided last year (Dec. 27, 2019). In a Financial Institution Letter (FIL115-2020) sent Tuesday, the Federal Deposit Insurance Corp. (FDIC) said it was extending the “no-action” relief as it (along with the Federal Reserve and Office of the Comptroller of the Currency [OCC]) consider whether to amend Reg O “to address concerns about unintended consequences of the application” of the regulation.
Reg O places limits and stipulations on the credit extensions a member bank can offer to its executive officers, principal shareholders, and directors. It covers insider loans and extensions of credit to executive officers, directors, or principal shareholders of a bank; a bank holding company of which the bank is a subsidiary; and any other subsidiary of that bank holding company.
The question the agencies are grappling with is how to apply Reg O to companies that sponsor, manage, or advise investment funds and institutional accounts that invest in voting securities of banking organizations.