I am trying to rewrite our Regulation O Policy and Procedures. If a BOD is over the Legal Lending Limit and subsequent loans are approved after the initial violation, would these additional loans be in violation too?
Thank you for your help.

If I understand your question not only would they be violations but they would be willful violations IMO because the BOD knows the specific insider is already over the legal lending limits allowed by Reg. O.

The BOD should be declining these loan requests, or at a minimum they should carry a condition that the insider reduce their outstandings below the Reg. O limitations.

Sec. 215.11 Civil penalties.
Any member bank, or any officer, director, employee, agent, or other person participating in the conduct of the affairs of the bank, that violates any provision of this part (other than § 215.9) is subject to civil penalties as specified in section 29 of the Federal Reserve Act (12 U.S.C. 504).

The following are the penalities your board and financial institution are facing for Reg. O violations.

Civil Money Penalties - FIRREA
Tier 1 - $5,500 per day
Tier 2 - $27,500 per day
Tier 3 - $1.1 million per day

If the BOD's had no knowledge of the original loan that was the 1st violation or the subsequent loans thereafter. Would all the loans be considered a violation or just the 1st loan?
(Example: 12/15/2014 loan $1,000,000 puts the BOD over the legal lending limit. 12/16/2014 loan $1500 is approved. If the 1st loan was not approved, the 2nd loan would not have been a violation.)

Thanks again,

I don't understand your question. If the 12/15/14 loan request was not approved then how would the $1500 loan exceed the Reg. O limitations?

I guess what I want to know is the violation for every loan that is over the legal lending limit? In the case of my example, would this be 2 Violations?

I want to show what could happen if the controls (procedures) are not updated. And then show the CMP's and how they could add up with this example. More internal controls need to be in place.

If loan request #1 is over limit but the credit is extended anyhow, any loan request thereafter will also be a violation unless the balance on the first loan has been brought under the limit and there's room above that balance for the new request.