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Reg W - Lending Limits

Answered by: 
Randy Carey

Question: 
We have two directors of the bank who have an LLC business together. This LLC is selling some property to a non-affiliate and the bank wants to finance the transaction. Because the funds of this transaction are going to be paid to the LLC which is an affiliate of the bank, do the Lending limits apply under Reg W, even though the loan will be to a non-affiliate?
Answer: 

Not under Regulation W, as the loan is not made to the director's LLC. However, since the directors will receive economic benefit from this loan transaction, it will be considered a Regulation O loan to the directors. See 215.3(f).

First published on BankersOnline.com 1/25/10

First published on 01/25/2010

Filed under: 
Lending
Filed under lending as: 
Directors

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