In our institution we view this as a treatment that would be "more favorable" than that in which any normal person would be entitled. (So, yes) I don't believe that the reg specifically addresses this but I believe the law does.
It is not a violation of Regulation O since it is a deposit account. Cited for misuse of an insider position to the detriment of the bank is a definite possibility however.
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Thank you. It was a special circumstance. There was a financial problem (hardship) an the executive officer needed the money right away, but I will keep that in mind.