Would a change to cash collateral securing an already exisiting loan to a board member that occurred prior to any approval be a violation of Reg O? We would not allow for any modification to cash collateral to be made without approval (management, credit committee, board or otherwise) for a client - but we did for the board member. Reg O speaks very specifically to extending credit to insiders but I cannot find where it addresses "modifications, adjustments, servicing" type matters on already exisiting credits.

Sounds like preferential lending treatment to me. If this loan originally required prior board approval, then you would have that violation to deal with also.

Thought on whether this reduction in cash collateral (still remaining fully collateralized) would be considered a modification thereby the extention of credit under new "terms" would require (per Reg O) board approval prior to the withdrawal. (This credit is well over any Reg O $ thresholds)

Let me clarify...we're in compliance with Reg O's aggregate limitations but at the time of the original underwriting this credit was over the threshold requiring full board approval.

I would not change collateral on a Reg O loan requiring board approval without said board approval.

I strongly agree with this statement.