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#417696 - 09/01/05 07:57 PM Insiders and Overdraft Protection LOC
MoBoomer Offline
New Poster
Joined: Jul 2005
Posts: 16
Missouri
I received no response to my earlier post and I really need help, so let me state my question differently. Each of our directors have an ODP LOC with $5K limit. The rate is WSJP+0. Other employees can have the same account but with a 12% fixed rate. Regular customers can get it but at 18% fixed. The directors are getting a preferential rate, but is it a Reg O violation? Hope someone can help

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Lending Compliance
#417697 - 09/01/05 08:25 PM Re: Insiders and Overdraft Protection LOC
Dan Persfull Online
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
Yes it's a violation IMO. The ODP LOC is still an extension of credit, just not one that falls within the reporting requirments.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#417698 - 09/02/05 04:07 PM Re: Insiders and Overdraft Protection LOC
MoBoomer Offline
New Poster
Joined: Jul 2005
Posts: 16
Missouri
Dan, thank you for replying with your opinion. I don't know why I'm having such trouble with this. 215.3(b)(6) seems to say that the $5K int-bearing ODP LOC (that meets the provisions of 215.4(e), which it does) is NOT considered an extension of credit under Reg O. It seems to mean then that the 215.4 prohibitions don't apply. I'm new to the bank and don't want to rush in to tell them that they need to change the terms of all of their directors' ODP loans. Especially since they went through a FDIC exam less than a year ago and this issue wasn't even discussed. Anyone else want to put their 2 cents in? Thanks again Dan.

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#417699 - 09/02/05 04:32 PM Re: Insiders and Overdraft Protection LOC
Dan Persfull Online
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
I'm not a Reg. O expert so if I'm wrong hopefully someone will correct me. My take on 215.(b)(6) is that any "overdrafts/indebtedness" incurred by virtue of a ODPA of $5,000 or less would not be considered an extension of credit as an overdraft would be if paid without such a plan.

Again, if this is a wrong assumption I'm sure someone will correct me.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#417700 - 09/02/05 06:06 PM Re: Insiders and Overdraft Protection LOC
MoBoomer Offline
New Poster
Joined: Jul 2005
Posts: 16
Missouri
Thanks again Dan. I guess we need a Reg O "expert" to come forward. Any takers out there? Help me avoid embarrassment or worse yet, a nasty Reg O violation.

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