Participation loan being made. There are accounting rules regarding how the agreement must be set up/, ow payments/fees/collections are to be handled. Are there any rules concerning who the participant can be? I've only seen other banks as participants before and we are looking at having an irrevocable trust as a participant. The trustee of the irrevocable trust is an executive officer of the bank. I don't believe that Reg O applies. If the bank sells an asset to an employee, the bank must be able to demonstrate it was sold at "Fair Market Value". However, the entire loan isn't being sold so I don't think that applies either. Would OCC Conflict of Interest rules apply? Any thoughts and or suggestions on what else I should be considering would be helpful. Thanks.

I would be calling my EIC prior to entering into such a transaction.

A trust would not automatically shield the executive officer from Regulation O considerations. See: CONTROL OF COMPANY OR BANK--Executor, Trustee, or Beneficiary of Estate or Trust

https://www.fdic.gov/regulations/laws/rules/7500-1500.html

Any loan that is made by the bank that benefits an insider (even indirectly) is considered covered. So the question then becomes if the bank makes a loan and the executive officer purchased part of it, would it be covered. I am not sure that there is a staff opinion on that issue, hence I would pre-clear it with my EIC.