Bank President wants to lend about $20,000 over bank's legal lending limit to a customer. Says he will take responsibility and explain to examiners down the road. Repurcussions for those in the know? Is there any leeway, like a percentage over the LLL that is acceptable?

There is no leeway. Limit means limit.

Does the President have sole lending authority, even just under the limit? Usually the Board or Loan committee has to approve credit above a certain amount.

A loan made in excess of the legal lending limit is a violation of law, and the President AND the Board can be held personally responsible if the credit goes bad. And it's a violation until the loan is paid in full. What will the Board have to say?

p.s. the President is stupid, imo.

The only exemptions are those within the rules themselves (OCC or state, whichever applies to your situation), such as cash secured, etc. this is a dangerous venture.

Thanks so much for the support in your responses. I will be more explicit in my conversation with him, but if he decides to proceed, am I required to notify anyone inside or outside the organization? I'm worried about any possible personal penalties or repurcussions.

Do you report to the Audit Committee? If so, I would make them aware during your next meeting.

I don't, but if I can't change the President's stance, I will relay this information to someone who is.

Would a SAR be required in this type of situation?

I would tell you to "CYA" and document, document, document.

In my opinion, a knowing violation of law is grounds for a SAR consideration, like doyoucanoe asks. Document everything: every conversation, every email, every piece of advice you gave or opinion you shared. Hang onto all of your documentation because this might come back to haunt you if you are the Compliance Officer.

Blatantly flouting the legal lending limit like this is going to invite severe criticism from every auditor and examiner for the life of this loan. And woe to you if the loan doesn't perform.

He is risking getting banned for life from banking and most likely being subjected to a personal CMP from the regulators for a blatant disregard of safety and soundness rules. The regulators no longer fool around with these situations or issues. A mistake or a misunderstanding by the bank is one thing. An executive officer knowingly violating the single borrower rule is a grave violation.

Thanks, all! I've scheduled the conversation for tomorrow, so hopefully this very informative feedback will change his position!