Insider-lending comments run to November 4, and thresholds are next

On October 2 the Federal Reserve extended the comment period on its Regulation O proposal by 30 days, to November 4, 2026. The FDIC extended its parallel proposal on extensions of credit to insiders to the same date. Regulation O limits loans to a bank’s executive officers, directors and principal shareholders. The Fed noted in July that it “has not been comprehensively updated since 1979.” The proposal would raise its dollar limits, index them to economic growth, and stop applying the rule to passive interests held through investment funds.

The insider-lending limits are among the most dated numbers a community bank lives with. Many board members are local business owners who also bank with the institution. A limit that never moves catches more of those relationships every year.

The broader threshold project

Vice Chair for Supervision Michelle Bowman described the next step at the Community Banking Research Conference on October 6. “Later this year, the Board will consider updates to fixed-dollar asset thresholds in the Board’s regulations to account for inflation and economic growth,” she said. “The proposal will increase static thresholds, with a mechanism to update them every five years.” She also said the agencies are working through the FFIEC to finalize the revisions to CAMELS.

Bowman also announced a reorganization of the Fed’s own supervision function. “Today, we begin to restructure the Federal Reserve’s supervision function,” she said. It will initially be realigned into five regions, each led by a regional leader accountable for all supervisory activity in that region.

A threshold set in 1979 and never indexed works as a slow tightening. The Fed now proposes to let it move.