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#725826 - 05/02/07 08:59 PM Reg. O - Prior Approval
KYBanker Offline
New Poster
Joined: Jan 2005
Posts: 18
Scenario:
Director is renewing an extension of credit and is beyond the threshold requiring prior board approval.

Questions:

- Does the renewal require prior Board or Board committee approval? I don't see how it falls under an exception of 215.3, but the argument is being made that it was approved the first time...

- If prior Board approval is required for the renewal, what are the implications of the common Bank practice of back-dating renewals? i.e. approval dated May 15th, loaded on May 16th, backdated to March 15th?

Also, does the requirement to re-approve revolving credit lines every 14 months apply to cashlines used only for overdraft in accordance with the exception?
What if the aggregate amount of cashlines used only for overdraft exceeds the $5000 limit?
_________________________
Opinions are mine and potentially mine alone.

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Lending Compliance
#725839 - 05/02/07 09:24 PM Re: Reg. O - Prior Approval KYBanker
SavannahOne Offline
Diamond Poster
Joined: Sep 2005
Posts: 1,163
Georgia
Does the renewal require prior Board or Board committee approval? - Yes.

If prior Board approval is required for the renewal, what are the implications of the common Bank practice of back-dating renewals? i.e. approval dated May 15th, loaded on May 16th, backdated to March 15th? - You are likely to get many opinions on this. It is definately a process/procedure problem, but as the funds are already out and you are not entering the renewal until after the approval, you should be okay. However, you'd better be able to document/prove that posted renewal date or you've got a big problem.

Also, does the requirement to re-approve revolving credit lines every 14 months apply to cashlines used only for overdraft in accordance with the exception? - In my opinion, no.

What if the aggregate amount of cashlines used only for overdraft exceeds the $5000 limit? - In my opinion, YES.

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