Banking agencies continue ‘no-action’ relief for Reg O application to bank investment funds

Temporary “no-action” relief under Regulation O for companies that manage funds investing in banking organizations was extended further in a revised statement Friday by the three federal banking regulators.

The Federal Reserve, Federal Deposit Insurance Corp. (FDIC), and Office of the Comptroller of the Currency (OCC) last year issued an interagency statement providing for such relief with an expiration date of Jan. 1, 2022. Friday’s revised statement continues this relief until the earlier of Jan. 1, 2023, or the effective date of a final Fed Board rule to include a revision to Reg O on the treatment of extensions of credit by a bank to fund complex-controlled portfolio companies that are bank insiders.

Reg O places limits and stipulations on the credit extensions a member bank can offer to its executive officers, principal shareholders, and directors. It covers insider loans and extensions of credit to executive officers, directors, or principal shareholders of a bank; a bank holding company of which the bank is a subsidiary; and any other subsidiary of that bank holding company.

Eligiblity criteria for the “no-action” relief are detailed in Friday’s revised statement.

OCC Bulletin 2021-64