Insider Report Requirement on Guaranty?
by John Burnett and Dan Persfull, BOL Gurus Guru BIOS
Question: Are there any Reg O or State of Nebraska laws/requirements for executive officers to report to the Board of Directors commercial loans that they guaranty when the loan is not at the subject bank, or any of its correspondent banks?
Answer by John Burnett: I believe that giving a guaranty on a loan is the equivalent, for insider lending purposes, of being obligated on that loan.
Both Reg. O section 215.9 and Nebraska statutes 8-143.01 have similar reporting requirements if the executive officer's obligations to other banks exceed that which he or she could legally obtain at his/her own bank.
Answer by Dan Persfull: I can't speak for Nebraska, but I agree with John on Reg. O.
Look at 215.3(a)(7). If the EO personally guaranteed the debt, there has been an extension of credit for Reg. O purposes:
Any other similar transaction as a result of which a person becomes obligated to pay money (or its equivalent) to a bank, whether the obligation arises directly or indirectly , or because of an endorsement on an obligation or otherwise, or by any means whatsoever.
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