Who regulates nonmember banks?

State-chartered banks may ultimately decide to refrain from membership under the Fed because regulation can be less onerous based on state laws and under the Federal Deposit Insurance Corporation (FDIC), which oversees non-member banks.

What is Reg O banking?

What Is Regulation O? Regulation O is a Federal Reserve regulation that places limits and stipulations on the credit extensions a member bank can offer to its executive officers, principal shareholders, and directors.

Does Reg O apply to deposits?

Loans fully secured by obligations of the U.S. government or agencies or loans secured by deposits held at the bank do not apply toward the limit. In addition, the loan must not involve more than the normal risk of repayment or present other unfavorable features.

What is a nonmember insured bank?

A nonmember bank is a commercial bank that is not part of the Federal Reserve System. A member bank, then, is a financial institution that is part of the Fed. Nonmember banks can include commercial banks, credit unions, and industrial banks.

Who does Reg O affect?

It covers, among other types of insider loans, extensions of credit by a member bank to an executive officer, director, or principal shareholder of the member bank; a bank holding company of which the member bank is a subsidiary; and any other subsidiary of that bank holding company.

Who is considered an insider under Reg O?

The term insider has a special definition for the purposes of Regulation O. A Regulation O insider is a principal shareholder,5 an executive officer,6 a director, or a related interest of any of these persons.

Does Reg O apply to all banks?

12 CFR 215.2 (Definitions) A1: Regulation O applies to FDIC-insured U.S. branches of foreign banks but does not apply to uninsured U.S. branches or to U.S. agencies of foreign banks.

Are all banks regulated?

National banks must be members of the Federal Reserve System; however, they are regulated by the Office of the Comptroller of the Currency (OCC). The Federal Reserve supervises and regulates many large banking institutions because it is the federal regulator for bank holding companies (BHCs).