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#1227925 - 08/05/09 09:24 PM Regulation O
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Does NY state law superceed Federal Regulation O with regards to legal lending limit? Also, under NY state legal lending limit law, section 103(1)(d)(2), can real estate appraisals be considered collateral that is allowed to be used as a basis for granting the additional 10% of capital? I think that under Federal Regulation O, you cannot consider real estate as readily marketable collateral, however, is it OK if under NY law? Help....

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#1227971 - 08/05/09 11:45 PM Re: Regulation O Starter
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State law does not supercede Federal law in this area unless it is more restrictive. If you are a State non-member bank you need to refer here for the differences in the application of Reg. O on FDIC regulated institutions:

http://www.fdic.gov/regulations/laws/rules/2000-5900.html#fdic2000part337.3

I would be suprised that anyone would classify real estate as readily marketable. I know people that have been stuck with real estate that they can't sell for a reasonable price for over two year now.
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#1229280 - 08/07/09 03:52 PM Re: Regulation O rlcarey
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Mr. Carey, please look at 337.3(a) ( the link you gave me) - the first sentence says, "With the exception of ...215.5(c)(4)..... - 215.5(c)(4) is where the $100,000 limit falls in, therefore, does this mean that executive officers in non-member banks are allowed to go up to the bank's legal lending limits?

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#1231672 - 08/12/09 06:55 PM Re: Regulation O Starter
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Help! - I need a Regulation O and legal lending limit expert from New York to help answer a question - under legal lending limits in New York law section 103 (1)(d)(2), (talking about the 25% lending limit) "are secured by collateral having an ascertained market value, or otherwise having a value as collateral as found in good faith by an officer of such bank, at least equal to the excess of such loans over 15% of such capital stock, surplus fund and undivided profits" - for a state chartered bank, does this state law prempt federal law, and allow the bank to lend the extra 15% for loans secured by real estate?

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#1231766 - 08/12/09 08:26 PM Re: Regulation O Starter
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Also, under NY state law section 84.4 states that no bank shall make a mortgage loan in excess of 15% - does this include commercial mortgage as well as residential mortgage?

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#1231903 - 08/13/09 12:40 AM Re: Regulation O Starter
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I will again state that State law cannot preempt Federal law regarding loans to EOs. It can only impose additional restrictions.

You need to read further in the FDIC regulation that I linked:

(2) An insured nonmember bank is authorized to extend credit to any executive officer of the bank for any other purpose not specified in ยง 215.5(c)(1) and (2) of Federal Reserve Board Regulation O (12 CFR 215.5(c)(1) and (2)) if the aggregate amount of such other extensions of credit does not exceed at any one time the higher of 2.5 percent of the bank's capital and unimpaired surplus or $25,000 but in no event more than $100,000, provided, however, that no such extension of credit shall be subject to this limit if the extension of credit is secured by:

(i) A perfected security interest in bonds, notes, certificates of indebtedness, or Treasury bills of the United States or in other such obligations fully guaranteed as to principal and interest by the United States;

(ii) Unconditional takeout commitments or guarantees of any department, agency, bureau, board, commission or establishment of the United States or any corporation wholly owned directly or indirectly by the United States; or

(iii) A perfected security interest in a segregated deposit account in the lending bank.
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#1233158 - 08/14/09 07:00 PM Re: Regulation O rlcarey
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So in regards to my question, "for a state chartered bank, does this state law prempt federal law, and allow the bank to lend the extra 15% for loans secured by real estate?" - the answer is that they cannot allow 15% if only secured by real estate?

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#1233250 - 08/14/09 08:29 PM Re: Regulation O Starter
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I mean extra 10% not 15% - typo

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#1233397 - 08/15/09 08:47 PM Re: Regulation O Starter
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OK - are you talking about loans to insiders or your legal lending limits. Legal lending limits for State chartered banks are established by the State. Insider lending limits for State chartered banks are established by Federal regulations (State member banks - Regulation O, State non-member banks 12 CFR 337.3). States can have thier own insider lending limits, but they can only be more restictive. State laws DO NOT PREEMPT Federal laws.
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#1233747 - 08/17/09 05:40 PM Re: Regulation O rlcarey
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that is exactly the answer I was looking for - thank you so much for your help in this matter

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