A lender would like to offer the following:
Certificate of Deposit (CD) secured 5/5 adjustable rate product with a 20 amortization.
Index would be the current 5 year Bank CD rate plus a margin.

Our question is "can the Bank be in control of the index on a consumer loan product?"

Sure - but a twenty year loan secured by a CD - really?? I can see short term CD secured loans - but who the heck is going to tie up money that long to borrow against it. Maybe one in a million customers? A product like this is just an ill conceived notion.

Normally, there are excellent reasons why your competitors haven't already offered everything you dream up. If the idea doesn't violate state law, then there's probably no demand or no way to originate and service it profitably.

Thank you

If your role is strictly regulatory oversight and advice, answer those questions and pass along the FYI thoughts about business issues...but recognize that it's up to the lender to make the business decisions. They don't happen often (Morris Plan, NOW accounts, and Wachovia Mortgages come to mind), but every so often there are brilliant product innovations. When they do happen, regulatory support will be essential and you will need to be a charter member of the product development team.