Notice of Proposed Rulemaking: Extensions of Credit to Insiders
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FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 337
RIN 3064-AG26
Extensions of Credit to Insiders
AGENCY: Federal Deposit Insurance Corporation.
ACTION: Notice of proposed rulemaking.
SUMMARY: The Federal Deposit Insurance Corporation (FDIC) is proposing to
increase quantitative thresholds for certain extensions of credit to insiders of FDIC-
supervised institutions, as restricted by the Federal Reserve Act and regulations
promulgated thereunder. Specifically, the proposal would increase the thresholds for
certain (1) extensions of credit to executive officers not otherwise specifically authorized
by statute from $100,000 to $400,000; and (2) extensions of credit to insiders requiring
prior approval by the board of directors from $500,000 to $2,000,000. The proposal
would also establish an indexing methodology to periodically update such thresholds
over time.
DATES: Comments must be received on or before [INSERT DATE 60 DAYS AFTER
DATE OF PUBLICATION IN THE FEDERAL REGISTER].
ADDRESSES: Comments should be directed to the FDIC as follows:
You may submit comments to the FDIC, identified by RIN 3064-AG26, by any of the
following methods:
•
FDIC Website: https://www.fdic.gov/federal-register-publications. Follow
instructions for submitting comments on the agency website.
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• Email: Comments@fdic.gov. Include RIN 3064-AG26 in the subject line of the
message.
• Mail: Jennifer M. Jones, Deputy Executive Secretary, Attention: Comments –
RIN 3064-AG26, Federal Deposit Insurance Corporation, 550 17th Street NW,
Washington, DC 20429.
• Hand Delivery to FDIC: Comments may be hand-delivered to the guard station at
the rear of the 550 17th Street NW building (located on F Street) on business days
between 7 a.m. and 5 p.m.
• Public Inspection: Comments received, including any personal information
provided, may be posted without change to https://www.fdic.gov/federal-register-
publications. Commenters should submit only information that the commenter
wishes to make available publicly
the guard station at
the rear of the 550 17th Street NW building (located on F Street) on business days
between 7 a.m. and 5 p.m.
• Public Inspection: Comments received, including any personal information
provided, may be posted without change to https://www.fdic.gov/federal-register-
publications. Commenters should submit only information that the commenter
wishes to make available publicly. The FDIC may review, redact, or refrain from
posting all or any portion of any comment that it may deem to be inappropriate
for publication, such as irrelevant or obscene material. The FDIC may post only a
single representative example of identical or substantially identical comments,
and in such cases will generally identify the number of identical or substantially
identical comments represented by the posted example. All comments that have
been redacted, as well as those that have not been posted, that contain comments
on the merits of the proposed rule will be retained in the public comment file and
will be considered as required under all applicable laws. All comments may be
accessible under the Freedom of Information Act.
Follow the search instructions on https://www.regulations.gov to view public comments.
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This proposal, all comments received, and a summary of not more than 100 words of the
proposed rule pursuant to the Providing Accountability Through Transparency Act of
2023 are available at https://www.fdic.gov/resources/regulations/federal-register-
publications/.
FOR FURTHER INFORMATION CONTACT: Division of Risk Management
Supervision: Peter A. Martino, Senior Examination Specialist, 813-390-8508,
PMartino@fdic.gov; Ryan C. Senegal, Chief, Examination Support Section, 980-249-
3863, RSenegal@fdic.gov. Legal Division: Gregory S. Feder, Counsel, 202-898-8724,
GFeder@fdic.gov; Shane M. Bogusz, Senior Attorney, 571-366-0212,
SBogusz@fdic.gov.
SUPPLEMENTARY INFORMATION:
I. Background
A
Division of Risk Management
Supervision: Peter A. Martino, Senior Examination Specialist, 813-390-8508,
PMartino@fdic.gov; Ryan C. Senegal, Chief, Examination Support Section, 980-249-
3863, RSenegal@fdic.gov. Legal Division: Gregory S. Feder, Counsel, 202-898-8724,
GFeder@fdic.gov; Shane M. Bogusz, Senior Attorney, 571-366-0212,
SBogusz@fdic.gov.
SUPPLEMENTARY INFORMATION:
I. Background
A. Overview of Sections 22(g) and (h) of the Federal Reserve Act
Sections 22(g) and (h) of the Federal Reserve Act (FRA), which are codified at 12
U.S.C. 375a and 375b respectively, restrict extensions of credit by banks that are
members of the Federal Reserve System (member banks) to executive officers, directors,
principal shareholders, and related interests of such persons (collectively, insiders).1
Section 18(j)(2) of the Federal Deposit Insurance Act (FDI Act) provides that sections
22(g) and (h) shall apply to every insured bank that is not a member of the Federal
1 “Insider” is defined in the proposal to include executive officers, directors, principal shareholders, and any
of their related interests. “Executive officer” currently is defined to include employees with certain
enumerated titles as well as persons who participate or have the authority to participate (other than in the
capacity of a director) in the major policymaking functions of a company or IDI, regardless of title. The
Federal Reserve Board’s proposal (discussed in section II of this Supplementary Information) would
remove “every vice president”, “the cashier”, and “the secretary” to modernize a list that has not changed
since 1935 although the nature of those positions has changed. The chief executive officer, chief financial
officer, chief lending officer, and chief investment officer would be added to the list, and it is likely that
people with these titles already are being treated as executive officers.
ove “every vice president”, “the cashier”, and “the secretary” to modernize a list that has not changed
since 1935 although the nature of those positions has changed. The chief executive officer, chief financial
officer, chief lending officer, and chief investment officer would be added to the list, and it is likely that
people with these titles already are being treated as executive officers.
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Reserve System (nonmember insured bank)2 in the same manner and to the same extent
as if the nonmember insured bank were a member bank.3 Sections 22(g) and (h) provide
the Board of Governors of the Federal Reserve System (Federal Reserve Board) general
rulemaking authority. The Federal Reserve Board has implemented sections 22(g) and (h)
through Regulation O, 12 CFR part 215.4 Sections 22(g) and (h) also provide the FDIC
limited rulemaking authority, as described below.
In general, under section 22(g)(1) of the FRA, no member bank may extend credit
in any manner to any of its own executive officers, and no executive officer of any
member bank may become indebted to that member bank, except by means of an
extension of credit which the bank5 is authorized to make under that section.6
Notwithstanding this general prohibition, the statute authorizes member banks to make
certain extensions of credit to executive officers, including certain mortgage loans and
educational loans.7 In addition, section 22(g)(4) provides for a general limitation on the
amount of credit under which a member bank may make extensions of credit not
otherwise specifically authorized under the statute to any executive officer of the bank
2 In reviewing relevant legislative and regulatory history, this Supplementary Information utilizes
terms—e.g., nonmember insured bank, State nonmember bank—as they are employed in the subject
legislation or regulation
n on the
amount of credit under which a member bank may make extensions of credit not
otherwise specifically authorized under the statute to any executive officer of the bank
2 In reviewing relevant legislative and regulatory history, this Supplementary Information utilizes
terms—e.g., nonmember insured bank, State nonmember bank—as they are employed in the subject
legislation or regulation. However, the institutions directly affected by this proposal are those for which the
FDIC is the appropriate Federal banking agency, namely (1) any State nonmember insured bank, (2) any
foreign bank having an insured branch, and (3) any State savings association. See 12 CFR 337.3(d)
(providing that the FDIC’s restrictions on extensions of credit to insiders apply to all institutions for which
the FDIC is the appropriate Federal banking agency under the FDI Act); 12 U.S.C. 1813(q)(2) (defining
“appropriate Federal banking agency”).
3 12 U.S.C. 1828(j)(2). Under section 11(b) of the Home Owners’ Loan Act, 12 U.S.C. 1468(b), sections
22(g) and (h) of the Federal Reserve Act, 12 U.S.C. 375a, 375b, apply to savings associations in the same
manner and to the same extent as to member banks.
4 12 U.S.C. 375a and 375b; 12 CFR part 215.
5 This Supplementary Information uses the term “bank” to refer generally to insured depository
institutions that are subject to sections 22(g) and (h) of the FRA.
6 12 U.S.C. 375a(1).
7 12 U.S.C. 375a(2), (3), (5).
al Reserve Act, 12 U.S.C. 375a, 375b, apply to savings associations in the same
manner and to the same extent as to member banks.
4 12 U.S.C. 375a and 375b; 12 CFR part 215.
5 This Supplementary Information uses the term “bank” to refer generally to insured depository
institutions that are subject to sections 22(g) and (h) of the FRA.
6 12 U.S.C. 375a(1).
7 12 U.S.C. 375a(2), (3), (5).
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“in an amount prescribed in a regulation of the member bank’s appropriate Federal
banking agency.”8
Furthermore, in general, under section 22(h)(1) of the FRA, no member bank may
extend credit to any of the bank’s insiders except to the extent permitted by subsequent
provisions of the statute. One such exception allows a bank to extend credit to an insider
above a certain aggregate dollar threshold upon the approval of the bank’s board of
directors of the extension of credit.9 In particular, section 22(h)(3) provides that a
member bank may extend credit to an insider in an amount that, when aggregated with
the amount of all other outstanding extensions of credit by the bank to the person and that
person’s related interests, would “exceed an amount prescribed by regulation of the
appropriate Federal banking agency” only if: (1) the extension of credit has been
approved in advance by a majority vote of that bank’s entire board of directors; and (2)
the interested party has abstained from participating, directly or indirectly, in the
deliberations or voting on the extension of credit.10
Under 12 U.S.C. 375b(3), “appropriate Federal banking agency” is defined to
have the same meaning as that term has in 12 U.S.C. 1813. Under 12 U.S.C. 1813,
“appropriate federal banking agency” is defined to mean the FDIC in the case of (1) any
State nonmember insured bank; (2) any foreign bank having an insured branch; and (3)
any State savings association.11
8 12 U.S.C. 375a(4).
9 12 U.S.C. 375b(3).
10 Id.
11 While 12 U.S.C
ral banking agency” is defined to
have the same meaning as that term has in 12 U.S.C. 1813. Under 12 U.S.C. 1813,
“appropriate federal banking agency” is defined to mean the FDIC in the case of (1) any
State nonmember insured bank; (2) any foreign bank having an insured branch; and (3)
any State savings association.11
8 12 U.S.C. 375a(4).
9 12 U.S.C. 375b(3).
10 Id.
11 While 12 U.S.C. 375a does not include a definition for “appropriate Federal banking agency” by cross-
reference to 12 U.S.C. 1813, it is appropriate to apply the same definition to 12 U.S.C. 375a in pari
materia.
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B. Overview of 12 CFR part 337.3
In 1975, the FDIC added, pursuant to notice and comment rulemaking, a new
§ 337.3 to its regulations to require that State nonmember banks establish procedures and
maintain records to ensure that bank boards of directors supervise transactions with
insiders effectively, and from which FDIC examiners would be able to analyze insider
transactions during examinations.12 Boards of directors were required to review and
approve insider transactions involving assets or services that had a fair market value
greater than a specified amount that varied based on the size of the bank.13 Certain
transactions were expressly excluded from the scope of § 337.3: deposit account
activities (other than the payment of interest on time deposits in amounts of $100,000 or
more); safekeeping transactions; credit card transactions; and activities undertaken in the
capacity of securities transfer agent or municipal securities dealer
ified amount that varied based on the size of the bank.13 Certain
transactions were expressly excluded from the scope of § 337.3: deposit account
activities (other than the payment of interest on time deposits in amounts of $100,000 or
more); safekeeping transactions; credit card transactions; and activities undertaken in the
capacity of securities transfer agent or municipal securities dealer. Shortly thereafter, in
response to questions that arose after finalizing the rule, the FDIC adopted amendments
intended to clarify the FDIC’s policy on insider transactions.14
With the enactment of the Financial Institutions Regulatory and Interest Rate
Control Act of 1978 (FIRIRCA),15 Congress added section 22(h) to the FRA.16 As a
result, the FDIC rescinded § 337.3 because (1) FIRIRCA made the regulation
unnecessary insofar as the statute related to loans and other extensions of credit and (2)
12 See 41 FR 8946 (Mar. 2, 1976).
13 Insider transactions required review and approval if they had a fair market value of more than $20,000 if
the bank had not more than $100 million in total assets; $50,000, if the bank had more than $100 million
and not more than $500 million in total assets; or $100,000 if the bank had more than $500 million in total
assets. See id. at 8948-49.
14 See, e.g., 41 FR 18405 (May 4, 1976).
15 Pub. L. No. 95-630, 92 Stat. 3641 (Nov. 10, 1978).
16 FIRIRCA, section 104, 92 Stat. 3644. Section 108 of FIRIRCA made the provisions of section 22(h)
applicable “to every nonmember insured bank in the same manner and to the same extent as if such
nonmember insured bank were a State member bank.”
00 million in total
assets. See id. at 8948-49.
14 See, e.g., 41 FR 18405 (May 4, 1976).
15 Pub. L. No. 95-630, 92 Stat. 3641 (Nov. 10, 1978).
16 FIRIRCA, section 104, 92 Stat. 3644. Section 108 of FIRIRCA made the provisions of section 22(h)
applicable “to every nonmember insured bank in the same manner and to the same extent as if such
nonmember insured bank were a State member bank.”
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the FDIC intended to deal with insider transactions other than loans on a supervisory
basis.17
In 1982, Congress enacted the Garn-St. Germain Depository Institutions Act of
1982 (Garn-St. Germain Act).18 Specifically, the Garn-St. Germain Act amended section
22(g) of the FRA by striking the $10,000 limitation on loans by a member bank to its
executive officer for purposes other than a residential mortgage or education of the
officer’s children and amended section 22(h) of the FRA by striking the aggregate limit
of $25,000 beyond which a loan to an executive officer, director, or principal shareholder
of a bank must be approved in advance by a disinterested majority of the bank’s entire
board of directors. Instead, the Garn-St. Germain Act authorized the appropriate Federal
banking agencies to prescribe new limits by regulation.19
In 1982, in response to the Garn-St. Germain Act, the FDIC adopted a new
regulation promulgated at § 337.3, which provided that insured nonmember banks could
make extensions of credit to insiders or their related interests exceeding $25,000 only
with the prior approval of a majority of disinterested members of the board of directors.20
At the same time, the FDIC clarified that, aside from certain provisions that applied only
to member banks, Regulation O would apply to insured nonmember banks to the same
extent and in the same manner as if they were member banks.21
In 1983, the $25,000 threshold was revised to a threshold that depended, in part,
on the institution’s capital and unimpaired surplus.22 The FDIC reasoned that a sliding
17 44 FR 18000 (Mar. 26, 1979)
, aside from certain provisions that applied only
to member banks, Regulation O would apply to insured nonmember banks to the same
extent and in the same manner as if they were member banks.21
In 1983, the $25,000 threshold was revised to a threshold that depended, in part,
on the institution’s capital and unimpaired surplus.22 The FDIC reasoned that a sliding
17 44 FR 18000 (Mar. 26, 1979).
18 See Pub. L. 97-320, 96 Stat. 1469 (1982); see also 47 FR 49347 (Nov. 1, 1982).
19 See 12 U.S.C. 375a(4); 375b(2).
20 47 FR 47002 (Oct. 22, 1982).
21 Id. at 47003.
22 48 FR 42969 (Sept. 21, 1983).
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scale would more closely align the prior approval requirement to the capital levels of a
given institution. The adjusted threshold provided that prior approval was required for
aggregate extensions of credit that exceeded the greater of $25,000 or 5 percent of the
bank’s capital and unimpaired surplus. Prior approval was required, in any event, if the
aggregate extension of credit exceeded $500,000. Accordingly, even banks with very low
levels of capital and unimpaired surplus could extend credit up to $25,000 without prior
board approval. In contrast, even banks with very high levels of capital and unimpaired
surplus could not extend credit beyond $500,000 without prior board approval. Despite
technical changes to other aspects of § 337.3(b), these thresholds have remained the same
since their adoption in 1983.23
Section 306 of the Federal Deposit Insurance Corporation Improvement Act of
1991 (FDICIA),24 made section 22(g) of the FRA applicable to nonmember insured
banks in the same manner and to the same extent as if the nonmember insured bank were
a member bank
pproval. Despite
technical changes to other aspects of § 337.3(b), these thresholds have remained the same
since their adoption in 1983.23
Section 306 of the Federal Deposit Insurance Corporation Improvement Act of
1991 (FDICIA),24 made section 22(g) of the FRA applicable to nonmember insured
banks in the same manner and to the same extent as if the nonmember insured bank were
a member bank. Section 306 also required the FDIC to set maximum limits on the
amount a nonmember insured bank could lend to executive officers.25 In 1992, the FDIC
amended § 337.3 to extend to insured nonmember banks certain sections of Regulation O
that previously had not applied to insured nonmember banks.26
A short time later, the FDIC adopted a new subsection (c) which restricted
extensions of credit to executive officers of insured nonmember banks, in a manner
consistent with the general prohibition on loans to executive officers set forth in section
23 See 12 CFR 337.3(b); see also 85 FR 3232 (Jan. 21, 2020) (inter alia, including State savings
associations within the scope of § 337.3).
24 Pub. L. No. 102-42, § 306(k), 105 Stat. 2236 (Dec. 19, 1991).
25 Id. § 306(m)(2).
26 57 FR 7647 (Mar. 4, 1992).
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22(g) of the FRA. As the appropriate Federal banking agency for insured State
nonmember banks, the FDIC established the limits for extensions of credit to an
executive officer of the bank for any purpose other than certain education and mortgage
loans at an amount that did not, in the aggregate, exceed the higher of 2.5 percent of the
bank’s capital and unimpaired surplus or $25,000, but in no event more than
$100,000.27,28 These limits were the same as those set for member banks in Regulation O.
As with § 337.3(b), this methodology scaled the relevant threshold to a bank’s levels of
capital and unimpaired surplus, while also setting a floor and ceiling for institutions with
relatively low and relatively high levels of capital and unimpaired surplus, respectively
$25,000, but in no event more than
$100,000.27,28 These limits were the same as those set for member banks in Regulation O.
As with § 337.3(b), this methodology scaled the relevant threshold to a bank’s levels of
capital and unimpaired surplus, while also setting a floor and ceiling for institutions with
relatively low and relatively high levels of capital and unimpaired surplus, respectively.
Despite subsequent technical changes to other aspects of § 337.3, the thresholds in
§ 337.3(c)(2) have remained the same since their adoption in 1992.
II. Overview of Proposed Rule
Under sections 22(g) and (h) of the FRA, the FDIC and Federal Reserve Board
have issued quantitative thresholds under which the agencies determine compliance with
the FRA and Regulation O.
However, many of these thresholds are outdated, and in some cases, have not
been revised in over 40 years. As relevant here, the Federal Reserve Board last revised the
thresholds for loans to executive officers not otherwise specifically authorized under
section 22(g) and for extensions of credit to insiders requiring prior approval by the board
27 57 FR 17847 (Apr. 28, 1992).
28 For executive officers, this restriction operates alongside the restrictions on extensions of credit for
insiders without prior board approval. Accordingly, even for extensions of credit to an executive officer
authorized by Regulation O, the extension of credit, when aggregated with the institution’s other extensions
of credit to that insider, must not exceed (1) the greater of $25,000 or 5 percent of the FDIC-supervised
institution’s unimpaired capital and unimpaired surplus, or (2) $500,000, unless the extension of credit
receives prior approval by a majority of the board of directors with the interested director(s) not
participating.
on of credit, when aggregated with the institution’s other extensions
of credit to that insider, must not exceed (1) the greater of $25,000 or 5 percent of the FDIC-supervised
institution’s unimpaired capital and unimpaired surplus, or (2) $500,000, unless the extension of credit
receives prior approval by a majority of the board of directors with the interested director(s) not
participating.
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of directors under section 22(h) in 1983.29 These outdated thresholds not only fail to
reflect current market realities but also impose unnecessary regulatory burden on
community banks and other institutions supervised by the agencies. Board approval
requirements for relatively small extensions of credit may divert the board’s attention
away from strategic goals and the management of material financial risk. Further, certain
limitations on extensions of credit to insiders may unduly impact community banks,
because community banks, relative to larger banks, may be more likely to be located in
areas where there are few or no other banks in the locality.
In recognition that these regulatory thresholds are misaligned with contemporary
markets, on [ ], 2026, the Federal Reserve Board published in the Federal Register a
notice of proposed rulemaking (FRB NPR) that would update these and other
thresholds,30 while also making additional revisions to Regulation O.31 In particular, the
FRB NPR would increase and streamline the threshold at § 215.4 (b) of Regulation O,32
governing extensions of credit to insiders requiring prior approval by the board of
directors, to the lower of 5 percent of the member bank’s unimpaired capital and
unimpaired surplus or $2,000,000, up from $500,000. The FRB NPR would make similar
revisions to the threshold at 12 CFR 215.5(c)(4), governing extensions of credit to
executive officers not otherwise specifically authorized, to the lower of 2.5 percent of the
29 See 48 FR 42804 (Sept. 20, 1983)
by the board of
directors, to the lower of 5 percent of the member bank’s unimpaired capital and
unimpaired surplus or $2,000,000, up from $500,000. The FRB NPR would make similar
revisions to the threshold at 12 CFR 215.5(c)(4), governing extensions of credit to
executive officers not otherwise specifically authorized, to the lower of 2.5 percent of the
29 See 48 FR 42804 (Sept. 20, 1983).
30 In addition to the thresholds that are the subject of this proposal, the FRB NPR would adjust the
thresholds at 12 CFR 215.3(b)(5) and (6); 12 CFR 215.4(b)(1), (b)(2), (d)(2) and (e)(2); 12 CFR
215.5(d)(4); 12 CFR 215.9(b)(1).
31[Citation.]
32 The FRB NPR also would reorganize the provisions of the current Regulation O so the requirements are
easier for the practitioner to locate and apply. Citations to the sections of Regulation O in this proposal are
to the sections as they currently are published in the Code of Federal Regulations.
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member bank’s unimpaired capital and unimpaired surplus or $400,000, up from
$100,000.
The FDIC believes it is appropriate to propose new thresholds concerning certain
(1) extensions of credit to executive officers not otherwise specifically authorized under
section 22(g); and (2) extensions of credit to insiders requiring prior approval by the
board of directors to align its thresholds with those proposed by the FRB.33
A. One-time Adjustment to Dollar-Based Thresholds in § 337.3
Consistent with the FRB NPR, the proposed rule would increase the dollar-based
limits of the two thresholds in § 337.3 to adjust for economic growth and inflation.
Specifically, the proposed rule would increase the threshold for loans to executive
officers not otherwise specifically authorized and the threshold for loans to insiders
requiring prior approval by the board of directors. The FDIC is proposing to update these
thresholds for economic growth and inflation utilizing seasonally adjusted U.S
in § 337.3 to adjust for economic growth and inflation.
Specifically, the proposed rule would increase the threshold for loans to executive
officers not otherwise specifically authorized and the threshold for loans to insiders
requiring prior approval by the board of directors. The FDIC is proposing to update these
thresholds for economic growth and inflation utilizing seasonally adjusted U.S. nominal
gross domestic product (nominal GDP),34 comparing the change in nominal GDP
between the fourth quarter of 2025 and the fourth quarter of 1994, which is when the
FDIC last considered updating one of the relevant thresholds for economic growth and
inflation.35 To simplify compliance, the FDIC is proposing to round the resulting figures
to simple whole numbers that are multiples of the current thresholds.36 Utilizing this
33 12 U.S.C. 375a(4); 12 U.S.C. 375b(3). For corresponding thresholds in Regulation O, see 12 CFR
215.5(c)(4) and 215.4(b).
34 Nominal GDP is calculated quarterly by the U.S. Bureau of Economic Analysis. See U.S. Bureau of
Economic Analysis, account code: A191RC, Gross Domestic Product [GDP], retrieved from FRED,
Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/GDP, June 25, 2026.
35 See 59 FR 66666, 66667 (Dec. 28, 1994) (declining to adjust threshold for inflation to ensure that insured
State nonmember banks remain “on an equal footing” with State member banks).
36 For example, adjusting for growth in nominal GDP from Q4 1994 to Q4 2025 would entail increasing the
thresholds to 421 percent of their current levels ($31,422.53 / 7455.29 × 100 = 421). Instead of 421 percent,
the FDIC would use a multiplier of 400 percent to ensure that the thresholds are set at round numbers,
simplifying compliance.
remain “on an equal footing” with State member banks).
36 For example, adjusting for growth in nominal GDP from Q4 1994 to Q4 2025 would entail increasing the
thresholds to 421 percent of their current levels ($31,422.53 / 7455.29 × 100 = 421). Instead of 421 percent,
the FDIC would use a multiplier of 400 percent to ensure that the thresholds are set at round numbers,
simplifying compliance.
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approach for updating these thresholds for changes in inflation and economic growth—
which aligns with that proposed in the FRB NPR37—would ensure consistent standards
for national, State member, and State nonmember banks.38 This one-time adjustment
would increase the threshold for loans to executive officers not otherwise specifically
authorized from $100,000 to $400,000 and the threshold for loans to insiders requiring
prior approval by the board of directors from $500,000 to $2,000,000.
Following this adjustment, § 337.3(b) would provide that FDIC-supervised
institutions must comply with the prior approval requirements when aggregated
extensions of credit to any insider exceed the lower of 5 percent of the FDIC-supervised
institution’s unimpaired capital and unimpaired surplus or $2,000,000. Section
337.3(c)(2) would provide that loans to executive officers not otherwise specifically
authorized shall not exceed, in the aggregate, the lower of 2.5 percent of an FDIC-
supervised institution’s unimpaired capital and unimpaired surplus or $400,000.39 The
FDIC is proposing to update these thresholds in an effort to reduce regulatory burden and
to reflect changing economic conditions since the current thresholds were adopted.
B. Periodic Indexing of Dollar-Based Thresholds by Nominal GDP
The FRB NPR also proposes to automatically update the relevant dollar-based
thresholds for real economic growth and inflation on a going-forward basis
39 The
FDIC is proposing to update these thresholds in an effort to reduce regulatory burden and
to reflect changing economic conditions since the current thresholds were adopted.
B. Periodic Indexing of Dollar-Based Thresholds by Nominal GDP
The FRB NPR also proposes to automatically update the relevant dollar-based
thresholds for real economic growth and inflation on a going-forward basis. To ensure
that the dollar-based thresholds applicable to FDIC-supervised institutions continue to
37 [Citation.]
38 Because the Office of the Comptroller of the Currency’s regulations for nationally-chartered banks
incorporate Regulation O by reference, see 12 CFR 31.2(a), the thresholds applicable to national banks will
be automatically updated if the Federal Reserve Board adopts its proposed changes to Regulation O.
39 Section 22(g) of the FRA did not apply to insured nonmember banks until the enactment of FDICIA in
1991. When the FDIC promulgated a limit on loans to executive officers for purposes not authorized in
section 22(g), it adopted the same limits that were in use by the OCC and Federal Reserve Board. See 57
FR 17847.
13
align with those applicable to other banks, the FDIC proposes to make the same
automatic adjustments to the thresholds in its own regulations.
As noted, considerable time has passed without an adjustment to the dollar-based
thresholds for extensions of credit to executive officers not otherwise specifically
authorized under section 22(g) and extensions of credit to insiders requiring prior
approval by the board of directors under section 22(h). As a result, fixed thresholds have
become steadily more restrictive, reducing the effective amount that banks could lend to
their insiders, whether as a general matter or without triggering the board approval
requirement
fficers not otherwise specifically
authorized under section 22(g) and extensions of credit to insiders requiring prior
approval by the board of directors under section 22(h). As a result, fixed thresholds have
become steadily more restrictive, reducing the effective amount that banks could lend to
their insiders, whether as a general matter or without triggering the board approval
requirement. While a one-time adjustment to these dollar-based thresholds will reduce
burden for banks and restore these thresholds to the effective level intended by Congress,
it will not account for future imbalances caused by inflation or real economic growth. To
limit the need for future rulemaking, and to provide FDIC-supervised institutions with a
more predictable regulatory environment, the proposal would adopt an indexing
methodology to ensure the thresholds keep pace with changing economic conditions.
Consistent with the FRB NPR, the FDIC would update the dollar-based thresholds
addressed by this proposal every five years, utilizing nominal GDP.40 Every five years
following the effective date of the proposed rule, the FDIC would publish in the Federal
Register (1) the ratio of nominal GDP at the time of the last adjustment to nominal GDP
five years later and (2) the resulting updated thresholds. To simplify compliance, the
FDIC would round each threshold in the thousands to the nearest number with one
significant digit; and would round each threshold in the millions to the nearest number
40 The FDIC would look to the most current estimate of nominal U.S. GDP for a given year, published by
the Bureau of Economic Analysis on or before September 30th of the year in which the thresholds are to be
adjusted.
, the
FDIC would round each threshold in the thousands to the nearest number with one
significant digit; and would round each threshold in the millions to the nearest number
40 The FDIC would look to the most current estimate of nominal U.S. GDP for a given year, published by
the Bureau of Economic Analysis on or before September 30th of the year in which the thresholds are to be
adjusted.
14
with two significant digits. To address concerns about procyclicality during a prolonged
period of economic contraction, the proposal does not call for an adjustment if nominal
GDP declines during the intervening five years between scheduled updates. Providing
updates every five years will avoid the burden associated with frequent changes to
regulatory requirements while still ensuring that the thresholds do not become
significantly misaligned with economic conditions over time. By striking this balance on
the frequency of adjustments and by providing transparency and predictability on the
nature of those adjustments, the FDIC expects that the proposal will produce a more
durable regulatory framework that appropriately adapts to changing economic conditions.
Because this approach for future indexing of these thresholds is consistent with
that recently proposed in the FRB NPR,41 the FDIC’s proposal would ensure that
restrictions on extensions of credit to bank insiders do not vary based on a bank’s primary
federal regulator.
C. Streamlining the Calculation of Applicable Thresholds
Under Regulation O and the FDIC’s associated regulations, the federal banking
agencies currently utilize a three-pronged approach for the calculation of the applicable
threshold above which (1) a bank cannot, in the aggregate, extend further credit to an
executive officer, and (2) a bank must obtain approval from a majority of disinterested
board members for an extension of credit to an insider
nder Regulation O and the FDIC’s associated regulations, the federal banking
agencies currently utilize a three-pronged approach for the calculation of the applicable
threshold above which (1) a bank cannot, in the aggregate, extend further credit to an
executive officer, and (2) a bank must obtain approval from a majority of disinterested
board members for an extension of credit to an insider. Those three prongs are a dollar-
based minimum threshold, a sliding scale based on the size of the bank, and a dollar-
based maximum threshold. The three prongs establish a bounded requirement: the
applicable amount is the greater of (1) the fixed minimum or (2) the amount determined
41 [Citation.]
15
based on the bank’s capital, subject to (3) an overall maximum. In this case, the relevant
sliding scale threshold is 2.5 percent or 5 percent, respectively, of a bank’s unimpaired
capital and unimpaired surplus. The dollar-based minimum threshold means that any
bank, no matter how small its unimpaired capital and unimpaired surplus, may extend
credit up to $25,000 without triggering either restriction. Additionally, the dollar-based
maximum threshold means that no bank, no matter how large its unimpaired capital and
unimpaired surplus, may extend credit for a purpose not otherwise authorized to an
executive officer beyond $100,000, or for any purpose to any insider above $500,000
without obtaining prior board approval.
This three-pronged approach for calculating the relevant thresholds for a given
bank can present unnecessary administrative challenges. The FDIC proposes to eliminate
the minimum dollar-based threshold to streamline compliance for FDIC-supervised
institutions and to maintain consistency with the FRB NPR. Accordingly, the relevant
threshold for restricting extensions of credit to executive officers not otherwise
authorized by statute or regulation would be the lower of 2.5 percent of a bank’s
unimpaired capital and unimpaired surplus or $400,000
o eliminate
the minimum dollar-based threshold to streamline compliance for FDIC-supervised
institutions and to maintain consistency with the FRB NPR. Accordingly, the relevant
threshold for restricting extensions of credit to executive officers not otherwise
authorized by statute or regulation would be the lower of 2.5 percent of a bank’s
unimpaired capital and unimpaired surplus or $400,000. The relevant threshold for
restricting extensions of credit to insiders without prior board approval would be the
lower of 5 percent of a bank’s unimpaired capital and unimpaired surplus or
$2,000,000.42
Question 1: Do commenters agree with the FDIC’s approach to align the
thresholds in §337.3 and indexing methodology with the FRB, consistent with the FRB
42 The restrictions for extensions of credit without prior board approval would continue to apply in
conjunction with the restrictions on extensions of credit to executive officers, including those specifically
authorized.
16
NPR? What are the advantages and disadvantages? Are there other alternative
thresholds or indexing methodologies the FDIC should consider?
Question 2: Should the FDIC consider not using absolute dollar-based thresholds
and instead rely solely on thresholds set by a percent of unimpaired capital and
unimpaired surplus?
Question 3: Are there any compliance or related costs associated with the
proposed rule? If so, please describe.
Question 4: What alternatives to the elimination of the minimum dollar-based
aspect of the relevant thresholds would simplify administrative compliance for banks?
Question 5: What other simplifying or clarifying measure should the FDIC
consider adopting?43
III. Expected Effects
The proposed rule would increase the dollar-based thresholds associated with
limitations on extensions of credit to insiders, as defined at § 337.3(b) and (c)(2) of the
FDIC’s regulations
spect of the relevant thresholds would simplify administrative compliance for banks?
Question 5: What other simplifying or clarifying measure should the FDIC
consider adopting?43
III. Expected Effects
The proposed rule would increase the dollar-based thresholds associated with
limitations on extensions of credit to insiders, as defined at § 337.3(b) and (c)(2) of the
FDIC’s regulations. Currently, an FDIC-supervised institution may not extend credit to
an insider without board approval if the total amount of credit extended exceeds the
greater of $25,000 or 5 percent of the FDIC-supervised institution’s unimpaired capital
and unimpaired surplus or exceeds $500,000. If adopted, the proposed rule would
eliminate the $25,000 threshold, retain the 5 percent threshold, and increase the $500,000
threshold to $2,000,000, so that board approval would be required if the total amount of
credit extended exceeds the lower of 5 percent of the institution’s unimpaired capital and
unimpaired surplus or $2,000,000.
43 In addition, the FDIC will continue to review and consider any comments received pursuant to the
current EGRPRA review that relate to this proposal as part of any final rulemaking.
17
In addition, an FDIC-supervised institution may not extend to any executive
officer credit for any purpose not otherwise authorized if the total amount of credit
extended exceeds the greater of 2.5 percent of unimpaired capital and unimpaired surplus
or $25,000, or exceeds $100,000.44 If adopted, the proposal would eliminate the $25,000
threshold, retain the 2.5 percent threshold, and increase the $100,000 threshold to
$400,000, so that an institution may not extend credit for any purpose not authorized to
any executive officer if the total amount of credit exceeds the lower of 2.5 percent of
unimpaired capital and unimpaired surplus or $400,000
,000, or exceeds $100,000.44 If adopted, the proposal would eliminate the $25,000
threshold, retain the 2.5 percent threshold, and increase the $100,000 threshold to
$400,000, so that an institution may not extend credit for any purpose not authorized to
any executive officer if the total amount of credit exceeds the lower of 2.5 percent of
unimpaired capital and unimpaired surplus or $400,000.
To estimate the expected scope, benefits, and costs of the proposed changes, the
FDIC compared expected outcomes under the proposed rule to a baseline scenario in
which the dollar-based thresholds in the FDIC’s regulations remain at March 31, 2026
levels. Under both scenarios, this analysis uses all relevant regulations and financial
conditions data for all FDIC-supervised institutions as of the quarter ending March 31,
2026, to estimate the economic outcomes.
As of March 31, 2026, the FDIC supervised 2,700 IDIs.45 In contrast to the
baseline, the proposed rule would change outcomes for FDIC-supervised institutions
whose extensions of credit to insiders would exceed the current thresholds in § 337.3 but
not exceed the proposed thresholds (affected IDIs). To estimate this population, the FDIC
used data on the extension of credit to insiders, as reported on Schedule RC-M of the Call
Reports. As of March 31, 2026, 2,348 FDIC-supervised institutions reported insider
extensions of credit and 1,530 FDIC-supervised institutions reported extending credit to
at least one insider in an amount greater than the lower of 5 percent of unimpaired capital
44 12 CFR 337.3(c)(2).
45 FFIEC Reports of Condition and Income (Call Reports), March 31, 2026.
ted on Schedule RC-M of the Call
Reports. As of March 31, 2026, 2,348 FDIC-supervised institutions reported insider
extensions of credit and 1,530 FDIC-supervised institutions reported extending credit to
at least one insider in an amount greater than the lower of 5 percent of unimpaired capital
44 12 CFR 337.3(c)(2).
45 FFIEC Reports of Condition and Income (Call Reports), March 31, 2026.
18
and unimpaired surplus or $500,000. For 1,457 of these IDIs, $500,000 is less than 5
percent of unimpaired capital and unimpaired surplus. As such, the FDIC estimates that
up to 1,457 FDIC-supervised institutions could be directly affected by the proposed
dollar-based threshold increase from $500,000 to $2,000,000 in § 337.3(b). The number
of affected IDIs could be greater, as the estimated population does not include the
population of IDIs that would be separately affected by the proposed increase in
thresholds relating to extensions of credit to executive officers—a type of insider—in
§ 337.3(c)(2). The FDIC does not have data to estimate this separate population.
However, because insider loans to executive officers would be subject to the proposed
changes to both thresholds, the FDIC believes the estimated population of 1,457 likely
includes most IDIs affected by one or the other.
Notably, the $500,000 threshold is lower than 5 percent of unimpaired capital and
unimpaired surplus for 92 percent of the 2,348 FDIC-supervised IDIs that report insider
extensions of credit
insider loans to executive officers would be subject to the proposed
changes to both thresholds, the FDIC believes the estimated population of 1,457 likely
includes most IDIs affected by one or the other.
Notably, the $500,000 threshold is lower than 5 percent of unimpaired capital and
unimpaired surplus for 92 percent of the 2,348 FDIC-supervised IDIs that report insider
extensions of credit. This ranking has reversed over the previous 40 years because bank
capital has increased: on December 31, 1984—shortly after the threshold was adopted—
90 percent of FDIC-supervised IDIs were bound by the 5 percent of unimpaired capital
and unimpaired surplus capital threshold and only 10 percent by the $500,000
threshold.46 Under the proposed rule, 50 percent of FDIC-supervised IDIs would be
bound by the capital threshold and 50 percent by the $2,000,000 threshold.47 Therefore,
as compared to the baseline, the proposed dollar-based thresholds resemble more closely
the balance established by the original thresholds.
46 December 31, 1984 Call Report data. The 90 percent figure includes three percent of IDIs eligible to
extend up to $25,000 in insider credit without board approval because five percent of their capital was less
than $25,000. See 12 CFR 337.3(b).
47 March 31, 2026 Call Report data.
19
The FDIC expects that the proposed rule would have benefits for affected IDIs,
relative to the baseline. By raising the thresholds in § 337.3, the proposed rule would
directly benefit these institutions by lowering the number of insider loans that must be
approved by the board of directors and reducing the administrative burden therein. The
proposed rule also could improve the ability of these IDIs to retain qualified executive
officers and directors by reducing the opportunity cost of becoming an insider of these
IDIs, particularly for IDIs located in areas with limited banking options. The FDIC does
not have data to quantify these impacts
be
approved by the board of directors and reducing the administrative burden therein. The
proposed rule also could improve the ability of these IDIs to retain qualified executive
officers and directors by reducing the opportunity cost of becoming an insider of these
IDIs, particularly for IDIs located in areas with limited banking options. The FDIC does
not have data to quantify these impacts.
Insiders at affected IDIs would also benefit from the proposed higher thresholds.
In particular, the requirements of § 337.3 increase the costs of obtaining credit for
insiders at affected IDIs. For example, insiders may find it costly to establish
relationships with other lenders, particularly in areas where fewer options for outside
credit are available (e.g., rural areas). By increasing the dollar-based thresholds
mentioned above, the proposed rule would make it easier for insiders to obtain credit in
these circumstances. The FDIC does not have the information necessary to quantify the
effects described above, and while the effects may be material to insiders at certain
FDIC-supervised institutions, the FDIC expects the effects are likely to be modest in the
aggregate.
The proposed rule would not impose any new or additional reporting
requirements on institutions or impose any direct costs. Indirect costs may include
increased risk to institutions, for example, if lending standards for insider loans—
especially those made without board approval—are effectively lower than for other loans.
The FDIC expects that these loans or extensions of credit pose little or no risk to
rule would not impose any new or additional reporting
requirements on institutions or impose any direct costs. Indirect costs may include
increased risk to institutions, for example, if lending standards for insider loans—
especially those made without board approval—are effectively lower than for other loans.
The FDIC expects that these loans or extensions of credit pose little or no risk to
20
institutions, as extensions of credit to insiders typically make up only a small percentage
of an FDIC-supervised institution’s total loans. Based on Call Report data as of March
31, 2026, the median FDIC-supervised institution reported that extensions of credit to
insiders made up only 0.6 percent of its total loans and leases. In addition, the proposed
$2,000,000 threshold represents only 5 percent of unimpaired capital and unimpaired
surplus at the median FDIC-supervised institution—a marginal increase from the 1.3
percent that $500,000 represents. The FDIC expects this marginal increase in risk would
be mitigated by supervisory and board oversight. For comparison, in December 1984,
$500,000 represented 18.5 percent of unimpaired capital and unimpaired surplus at the
median FDIC-supervised institution. Thus, the thresholds in the proposed rule represent
much less risk to capital than when they were adopted.
Given the analysis above, the FDIC concludes that the benefits of the proposed
rule are expected to exceed its costs. The FDIC invites comment on this analysis; in
particular, what are other economic effects of the proposed rule that the FDIC should
consider?
IV. Alternatives Considered
The FDIC considered several alternatives to the proposed rule that could meet the
objectives of this rulemaking. For the reasons described above, the FDIC views the
proposed rule as the most appropriate and effective means of achieving its objectives
with respect to determining compliance with the Federal Reserve Act and Regulation O
that the FDIC should
consider?
IV. Alternatives Considered
The FDIC considered several alternatives to the proposed rule that could meet the
objectives of this rulemaking. For the reasons described above, the FDIC views the
proposed rule as the most appropriate and effective means of achieving its objectives
with respect to determining compliance with the Federal Reserve Act and Regulation O.
For example, the FDIC considered several alternative approaches to update the
applicable thresholds. The FDIC considered utilizing measures such as the non-
seasonally adjusted Consumer Price Index for Urban Wage Earners and Clerical Workers
21
(CPI-W), particularly because the FDIC already uses that metric for adjusting several
other regulatory thresholds.48 However, if the FDIC were to adjust its thresholds using a
measure other than nominal GDP, there would likely be a steady divergence over time
between the thresholds applicable to FDIC-supervised institutions and institutions
supervised by the other federal banking agencies. Such inconsistency would introduce
inconsistent treatment for similarly situated institutions. Accordingly, this proposal
contemplates one-time and prospective adjustments using nominal GDP. The FDIC
invites comments on alternatives to the proposed rule.
V. Regulatory Analyses
A. Paperwork Reduction Act
The Paperwork Reduction Act of 199549 (PRA) states that no agency may
conduct or sponsor, nor is the respondent required to respond to, an information
collection unless it displays a currently valid Office of Management and Budget (OMB)
control number. The FDIC has reviewed this proposed rule and determined that it does
not create any information collection or revise any existing collection of information.
Accordingly, no PRA submissions to OMB will be made with respect to this proposed
rule.
B
ndent required to respond to, an information
collection unless it displays a currently valid Office of Management and Budget (OMB)
control number. The FDIC has reviewed this proposed rule and determined that it does
not create any information collection or revise any existing collection of information.
Accordingly, no PRA submissions to OMB will be made with respect to this proposed
rule.
B. Regulatory Flexibility Act
The Regulatory Flexibility Act50 (RFA) generally requires an agency, in
connection with a proposed rule, to prepare and make available for public comment an
initial regulatory flexibility analysis that describes the impact of the proposed rule on
48 See 90 FR 55789 (Dec. 4, 2025).
49 44 U.S.C. 3501–3521.
50 Id.
22
small entities.51 However, an initial regulatory flexibility analysis is not required if the
agency certifies that the proposed rule will not, if promulgated, have a significant
economic impact on a substantial number of small entities. The Small Business
Administration (SBA) has defined “small entities” to include banking organizations with
total assets of less than or equal to $850 million.52 Generally, the FDIC considers a
significant economic impact to be a quantified effect in excess of 5 percent of total
annual salaries and benefits or 2.5 percent of total noninterest expenses. The FDIC
believes that effects in excess of one or more of these thresholds typically represent
significant economic impacts for FDIC-supervised institutions. For the reasons discussed
below, the FDIC certifies that the proposed rule will not have a significant impact on a
substantial number of small entities.
As discussed in section II of this Supplementary Information, the proposed rule
would update certain thresholds relating to extensions of credit to insiders to account for
inflation and economic growth since the thresholds were originally adopted
the reasons discussed
below, the FDIC certifies that the proposed rule will not have a significant impact on a
substantial number of small entities.
As discussed in section II of this Supplementary Information, the proposed rule
would update certain thresholds relating to extensions of credit to insiders to account for
inflation and economic growth since the thresholds were originally adopted. Currently, an
FDIC-supervised institution may not extend credit to an insider without board approval if
the total amount of credit extended exceeds the greater of $25,000 or five percent of the
FDIC-supervised institution’s unimpaired capital and unimpaired surplus, or exceeds
$500,000. If adopted, the proposed rule would eliminate the $25,000 threshold, retain the
5 percent threshold, and increase the $500,000 threshold to $2,000,000, such that an
51 5 U.S.C. 601 et seq.
52 The SBA defines a small banking organization as having $850 million or less in assets, where an
organization’s “assets are determined by averaging the assets reported on its four quarterly financial
statements for the preceding year.” See 13 CFR 121.201 (as amended by 87 FR 69118, effective December
19, 2022). In its determination, the “SBA counts the receipts, employees, or other measure of size of the
concern whose size is at issue and all of its domestic and foreign affiliates.” See 13 CFR 121.103.
Following these regulations, the FDIC uses an insured depository institution’s affiliated and acquired
assets, averaged over the preceding four quarters, to determine whether the insured depository institution is
“small” for the purposes of RFA.
eipts, employees, or other measure of size of the
concern whose size is at issue and all of its domestic and foreign affiliates.” See 13 CFR 121.103.
Following these regulations, the FDIC uses an insured depository institution’s affiliated and acquired
assets, averaged over the preceding four quarters, to determine whether the insured depository institution is
“small” for the purposes of RFA.
23
FDIC-supervised institution may not extend credit to an insider without board approval if
the aggregate amount of credit extended exceeds the lower of 5 percent of the IDI’s
unimpaired capital and unimpaired surplus or $2,000,000. In addition, an FDIC-
supervised institution may not extend credit to any executive officer for a purpose other
than expressly authorized if the total amount of such credit extended exceeds the greater
of $25,000 or 2.5 percent of the IDI’s unimpaired capital and unimpaired surplus or
exceeds $100,000. If adopted, the proposal would eliminate the $25,000 threshold, retain
the 2.5 percent threshold, and increase the $100,000 threshold to $400,000, such that an
FDIC-supervised institution may not extend credit to any executive officer for a purpose
other than expressly authorized if the total amount of such credit extended exceeds the
lower of 2.5 percent of the IDI’s unimpaired capital and unimpaired surplus or $400,000.
To estimate the effects of the proposed rule on small IDIs, the FDIC compared expected
outcomes under the proposed rule to a baseline scenario in which the dollar-based
thresholds in the FDIC’s regulations remain at March 31, 2026 levels. Under both
scenarios, this analysis uses all relevant regulations and financial conditions data for all
small FDIC-supervised IDIs as of the quarter ending March 31, 2026, to estimate the
economic outcomes
mall IDIs, the FDIC compared expected
outcomes under the proposed rule to a baseline scenario in which the dollar-based
thresholds in the FDIC’s regulations remain at March 31, 2026 levels. Under both
scenarios, this analysis uses all relevant regulations and financial conditions data for all
small FDIC-supervised IDIs as of the quarter ending March 31, 2026, to estimate the
economic outcomes.
As of March 31, 2026, the FDIC supervised 2,700 IDIs, of which 1,978 are “small
entities” for purposes of RFA.53 In contrast to the baseline, the proposed rule would
change outcomes for small FDIC-supervised institutions whose extensions of credit to
insiders would exceed the current thresholds in § 337.3 but not exceed the proposed
thresholds (affected small IDIs). To estimate this population, the FDIC uses data on the
53 FFIEC Reports of Condition and Income (Call Reports), March 31, 2026.
24
extension of credit to insiders, as reported on Schedule RC-M of the Call Reports. As of
March 31, 2026, 1,726 small FDIC-supervised institutions reported insider extensions of
credit and 1,029 reported extending credit to insiders in amounts exceeding the lower of
$500,000 or 5 percent of the institution’s unimpaired capital and unimpaired surplus.54
For 956 of these small FDIC-supervised IDIs, $500,000 is less than 5 percent of
unimpaired capital and unimpaired surplus.55 Thus, the FDIC estimates that 956 affected
small IDIs could be directly affected by the proposed dollar-based threshold increase
from $500,000 to $2,000,000 in § 337.3(b). The number of affected small IDIs could be
greater, as the estimated population does not include the population of small IDIs that
would be separately affected by the proposed increase in thresholds relating to extensions
of credit to executive officers—a type of insider—in § 337.3(c)(2). The FDIC does not
have data to estimate this separate population
rom $500,000 to $2,000,000 in § 337.3(b). The number of affected small IDIs could be
greater, as the estimated population does not include the population of small IDIs that
would be separately affected by the proposed increase in thresholds relating to extensions
of credit to executive officers—a type of insider—in § 337.3(c)(2). The FDIC does not
have data to estimate this separate population. However, because insider loans to
executive officers would be subject to the proposed changes to both thresholds, the FDIC
believes the estimated population of 956 likely includes most small IDIs affected by one
or the other.
The FDIC expects that the proposed rule would have modest benefits on affected
small IDIs, relative to the baseline. By raising the thresholds in § 337.3, the proposed rule
would directly benefit these institutions by lowering the number of insider loans that
must be approved by the board of directors and reducing the administrative burden
therein. The proposed rule could also improve the ability of affected small IDIs to retain
qualified executive officers and directors by reducing the opportunity cost of becoming
an insider of an affected small IDI, particularly for those located in areas with limited
54 Id.
55 Id.
25
banking options. The FDIC does not have data to quantify these impacts but believes they
would be modest.
The proposed rule would not impose any new or additional reporting
requirements on institutions or impose any direct costs. Indirect costs may include
increased risk to affected small IDIs, for example, if lending standards for insider loans—
especially those made without board approval—are effectively lower than for other loans.
The FDIC expects that these loans or extensions of credit pose little or no risk to
institutions, as extensions of credit to insiders typically make up only a small percentage
of an affected small IDI’s total loans
increased risk to affected small IDIs, for example, if lending standards for insider loans—
especially those made without board approval—are effectively lower than for other loans.
The FDIC expects that these loans or extensions of credit pose little or no risk to
institutions, as extensions of credit to insiders typically make up only a small percentage
of an affected small IDI’s total loans. Based on Call Report data as of March 31, 2026,
the median small FDIC-supervised IDI reported that extensions of credit to insiders made
up only 0.7 percent of its total loans and leases. In addition, the proposed $2,000,000
threshold represents only 6.9 percent of unimpaired capital and unimpaired surplus at the
median affected small IDI—a marginal increase from the 1.7 percent that $500,000
represents. The FDIC expects this marginal increase in risk would be mitigated by
supervisory and board oversight. For comparison, in March 2000, $500,000 represented
9.9 percent of unimpaired capital and unimpaired surplus at the median FDIC-supervised
small IDI. Thus, the thresholds in the proposed rule represent less risk to capital than
historically.
As mentioned previously, the FDIC does not have the data necessary to quantify
the impact of the proposed rule on affected small IDIs. However, based on the preceding
analysis the FDIC believes the proposed rule will be modestly beneficial to affected small
IDIs. While the proposed rule’s benefits may be material to certain affected small IDIs,
the FDIC does not believe the number of such small FDIC-supervised IDIs is substantial.
not have the data necessary to quantify
the impact of the proposed rule on affected small IDIs. However, based on the preceding
analysis the FDIC believes the proposed rule will be modestly beneficial to affected small
IDIs. While the proposed rule’s benefits may be material to certain affected small IDIs,
the FDIC does not believe the number of such small FDIC-supervised IDIs is substantial.
26
Thus, based on the foregoing, the FDIC certifies that the proposed rule will not
have a significant impact on a substantial number of small FDIC-supervised institutions.
The FDIC invites comments on all aspects of this analysis. The FDIC is particularly
interested in comments on any significant effects on small entities that the agency has not
identified.
C. Riegle Community Development and Regulatory Improvement Act of 1994
Pursuant to section 302(a) of the Riegle Community Development and Regulatory
Improvement Act of 1994, 12 U.S.C. 4802(a), in determining the effective date and
administrative compliance requirements for new regulations that impose additional
reporting, disclosure, or other requirements on insured depository institutions, the FDIC
will consider, consistent with principles of safety and soundness and the public interest:
(1) any administrative burdens that the proposed rule would place on depository
institutions, including small depository institutions and customers of depository
institutions; and (2) the benefits of the proposed rule. The FDIC requests comment on
any administrative burdens that the proposed rule would place on depository institutions,
including small depository institutions, and their customers, and the benefits of the
proposed rule that the FDIC should consider in determining the effective date and
administrative compliance requirements for a final rule.
D. Plain Language
Section 722 of the Gramm-Leach-Bliley Act56 requires the Federal banking
agencies to use plain language in all proposed and final rulemakings published in the
56 Pub. L
sitory institutions, and their customers, and the benefits of the
proposed rule that the FDIC should consider in determining the effective date and
administrative compliance requirements for a final rule.
D. Plain Language
Section 722 of the Gramm-Leach-Bliley Act56 requires the Federal banking
agencies to use plain language in all proposed and final rulemakings published in the
56 Pub. L. 106-102, section 722, 113 Stat. 1338, 1471 (1999), 12 U.S.C. 4809.
27
Federal Register after January 1, 2000. The FDIC invites your comments on how to
make this proposed rule easier to understand. For example:
• Has the FDIC organized the material to suit your needs? If not, how could the
proposed rule be more clearly stated?
• Are the requirements in the proposed rule clearly stated? If not, how could the
proposed rule be more clearly stated?
• Does the proposed rule contain language or jargon that is not clear? If so,
which language requires clarification?
• Would a different format (grouping and order of sections, use of headings,
paragraphing) make the proposed rule easier to understand? If so, what
changes to the format would make the proposed rule easier to understand?
• What else could the FDIC do to make the proposed rule easier to understand?
E. Providing Accountability Through Transparency Act of 2023
The Providing Accountability Through Transparency Act of 2023,
5 U.S.C. 553(b)(4), requires that a notice of proposed rulemaking include the internet
address of a summary of not more than 100 words in length of a proposed rule, in plain
language, that shall be posted on the internet website www.regulations.gov.
The FDIC propose to revise thresholds applicable to FDIC-supervised institutions
regarding compliance with 12 U.S.C. 375a(4) and 375b(3), which concern certain
extensions of credit to insiders.
The proposal and the required summary can be found at
https://www.fdic.gov/federal-register-publications
rule, in plain
language, that shall be posted on the internet website www.regulations.gov.
The FDIC propose to revise thresholds applicable to FDIC-supervised institutions
regarding compliance with 12 U.S.C. 375a(4) and 375b(3), which concern certain
extensions of credit to insiders.
The proposal and the required summary can be found at
https://www.fdic.gov/federal-register-publications. The summary states that the FDIC
proposes to revise quantitative thresholds for certain extensions of credit to insiders
28
applicable to FDIC-supervised institutions regarding compliance with 12 U.S.C. 375a(4)
and 375b(3).
F. Executive Order 12866 (as amended)
Executive Order 12866, titled “Regulatory Planning and Review,” as amended,
requires the Office of Information and Regulatory Affairs (OIRA), Office of
Management and Budget to determine whether a proposed rule is a “significant
regulatory action” prior to the disclosure of the proposed rule to the public. If OIRA finds
the proposed rule to be a “significant regulatory action,” Executive Order 12866 requires
an agency to conduct a cost-benefit analysis of the proposed rule. Executive Order 12866
defines “significant regulatory action” to mean a regulatory action that is likely to: (1)
have an annual effect on the economy of $100 million or more or adversely affect in a
material way the economy, a sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or State, local, or tribal governments or
communities; (2) create a serious inconsistency or otherwise interfere with an action
taken or planned by another agency; (3) materially alter the budgetary impact of
entitlements, grants, user fees, or loan programs or the rights and obligations of recipients
thereof; or (4) raise novel legal or policy issues arising out of legal mandates, the
President’s priorities, or the principles set forth in Executive Order 12866
erious inconsistency or otherwise interfere with an action
taken or planned by another agency; (3) materially alter the budgetary impact of
entitlements, grants, user fees, or loan programs or the rights and obligations of recipients
thereof; or (4) raise novel legal or policy issues arising out of legal mandates, the
President’s priorities, or the principles set forth in Executive Order 12866.
OIRA has determined that this proposed rule is not a significant regulatory action
under section 3(f)(1) of Executive Order 12866 and, therefore, is not subject to review
under Executive Order 12866.
The FDIC’s analysis conducted in connection with Executive Order 12866 is also
included above under the “Expected Effects” section of this document.
29
G. Executive Order 14192
Executive Order 14192, titled “Unleashing Prosperity Through Deregulation,”
requires that an agency, unless prohibited by law, identify at least 10 existing regulations
to be repealed when the agency publicly proposes for notice and comment or otherwise
promulgates a new regulation with total costs greater than zero. Executive Order 14192
further requires that new incremental costs associated with new regulations shall, to the
extent permitted by law, be offset by the elimination of existing costs associated with at
least 10 prior regulations. The FDIC expects the proposed rule, if finalized, will be
neither a regulatory action nor a deregulatory action under Executive Order 14192
because it simply implements an economic growth and inflation adjustment to the
existing regulatory framework.
List of Subjects
12 CFR Part 337
Banks, banking, Reporting and recordkeeping requirements, Savings associations,
Securities.
FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Chapter III
Authority and Issuance
For the reasons set forth in the preamble, the FDIC proposes to amend part 337 of
chapter III of title 12 of the Code of Federal Regulations as follows:
PART 337—UNSAFE AND UNSOUND BANKING PRACTICES
1
CFR Part 337
Banks, banking, Reporting and recordkeeping requirements, Savings associations,
Securities.
FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Chapter III
Authority and Issuance
For the reasons set forth in the preamble, the FDIC proposes to amend part 337 of
chapter III of title 12 of the Code of Federal Regulations as follows:
PART 337—UNSAFE AND UNSOUND BANKING PRACTICES
1. The authority citation for part 337 continues to read as follows:
Authority: 12 U.S.C. 375a(4), 375b, 1463, 1464, 1468, 1816, 1818(a), 1818(b),
1819, 1820(d), 1821(f), 1828(j)(2), 1831, 1831f, 1831g, 5412.
30
2. Revise and republish § 337.3 to read as follows:
§ 337.3 Limits on extensions of credit to executive officers, directors, and principal
shareholders of FDIC-supervised institutions.
(a) With the exception of 12 CFR 215.20 (c), (d)(3), and (d)(4), FDIC-supervised
institutions are subject to the restrictions contained in Federal Reserve Board Regulation
O (12 CFR part 215) to the same extent and to the same manner as though they were
member banks.
(b) For purposes of complying with § 215.12 of Federal Reserve Board
Regulation O (12 CFR 215.12), no FDIC-supervised institution may extend credit or
grant a line of credit to any of its executive officers, directors, or principal shareholder or
any related interest of any such person in an amount that, when aggregated with the
amount of all other extensions of credit to that person and to all related interests of that
person, exceeds the lower of 5 percent of the FDIC-supervised institution’s unimpaired
capital and unimpaired surplus, or $2,000,000, multiplied by the GDP growth adjustment,
unless:
(1) The extension of credit has been approved in advance by a majority of the
entire board of directors of that bank; and
(2) The interested party has abstained from participating directly or indirectly in
the voting.
xceeds the lower of 5 percent of the FDIC-supervised institution’s unimpaired
capital and unimpaired surplus, or $2,000,000, multiplied by the GDP growth adjustment,
unless:
(1) The extension of credit has been approved in advance by a majority of the
entire board of directors of that bank; and
(2) The interested party has abstained from participating directly or indirectly in
the voting.
(c) * * * * *
(2) An FDIC-supervised institution is authorized to extend credit to any executive
officer of the institution for any other purpose not specified in § 215.20(d) of Federal
Reserve Board Regulation O (12 CFR 215.20(d)) if the aggregate amount of extensions
31
of credit to that executive officer under this paragraph (c)(2) does not exceed at any one
time the lower of 2.5 per cent of the FDIC-supervised institution’s unimpaired capital and
unimpaired surplus or $400,000, multiplied by the GDP growth adjustment, provided,
however, that no such extension of credit shall be subject to this limit if the extension of
credit is secured by:
(i) a perfected security interest in bonds, notes, certificates of indebtedness, or
Treasury bills of the United States or in other such obligations fully guaranteed as to
principal and interest by the United States;
(ii) unconditional takeout commitments or guarantees of any department, agency,
bureau, board, commission or establishment of the United States or any corporation
wholly owned directly or indirectly by the United States; or
(iii) Extensions of credit secured by a perfected security interest in a segregated
deposit account in the lending bank.
* * * * *
(4)
d interest by the United States;
(ii) unconditional takeout commitments or guarantees of any department, agency,
bureau, board, commission or establishment of the United States or any corporation
wholly owned directly or indirectly by the United States; or
(iii) Extensions of credit secured by a perfected security interest in a segregated
deposit account in the lending bank.
* * * * *
(4)
(i) In general. The FDIC will publish a GDP growth adjustment every five
years starting with [the effective date of a final rule] for the dollar-based thresholds set
forth in paragraphs (b) and (c)(2) of this section.
(ii) Rounding. When adjusting thresholds under paragraph (a) of this
section, each threshold shall be rounded based on the size of the threshold
(e.g., thousands, millions) to the nearest number with two significant digits, such
that:
(A) Each threshold in the thousands shall be rounded to the nearest
number with one significant digit; and
32
(B) Each threshold in the millions shall be rounded to the nearest
number with two significant digits.
(iii) Exception. Notwithstanding paragraph (i) of this subsection, the FDIC
will not publish an updated GDP growth adjustment if the five-year cumulative
growth of nominal U.S. GDP is negative.
* * * * *
3. In § 337.3(d), replace the word “Definition” with “Definitions” and add a
definition for “GDP growth adjustment” in alphabetical order, to read as follows:
* * * * *
GDP growth adjustment means the most recent multiplier published by the FDIC
equal to the ratio of:
(1) The nominal United States gross domestic product in the 4th quarter of the
calendar year prior to publication of the multiplier, as reflected by the most current
estimates published by the Bureau of Economic Analysis on or before September 30th of
the year of the publication of the multiplier, or a comparable value; to
most recent multiplier published by the FDIC
equal to the ratio of:
(1) The nominal United States gross domestic product in the 4th quarter of the
calendar year prior to publication of the multiplier, as reflected by the most current
estimates published by the Bureau of Economic Analysis on or before September 30th of
the year of the publication of the multiplier, or a comparable value; to
(2) The nominal United States gross domestic product in the 4th quarter of the
calendar year prior to [the effective date of a final rule], as reflected by the most current
estimates published by the Bureau of Economic Analysis.
* * * * *
Federal Deposit Insurance Corporation.
By order of the Board of Directors.
Dated at Washington, DC, on [ Date ].
Jennifer M. Jones,
Deputy Executive Secretary.
BILLING CODE 6714-01-P
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.