EO Signer on Various Accounts

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Question:

Our Executive Officers sign on accounts for churches and other types of accounts, but they are not owners of the accounts. Is this a Reg O violation to overdraw those accounts and do they have to be charged an overdraft fee?

Answer:

The Reg O prohibition on executive officer and director overdrafts applies to accounts that they own and not to accounts on which they are authorized signers. Check out footnote 3 of the regulation, in Section 215.4(e). If the executive officer overdraws his or her own account, you could be looking at a violation. If one of the accounts you've described goes overdrawn, it's not a Reg O problem unless for some reason that entity is a heavy borrower of the bank. Overdrafts have to be counted against the bank's legal lending limit and the insider lending limits in Reg O.

First published on BankersOnline.com 2/11/08