The Fed wants to quadruple the Regulation O insider lending thresholds
A Federal Reserve proposal would raise the dollar limits in Regulation O for loans to insiders, some of them four times over, and index them every five years. The FDIC has proposed to match it. Comments are now due 4 November 2026.
Regulation O covers loans a member bank makes to its own insiders, meaning its executive officers, directors and principal shareholders, plus the insiders of its affiliates. Many of its dollar limits haven't moved in decades. On 4 August 2026 the Federal Reserve Board proposed to fix that (91 FR 49526). The FDIC followed with a companion proposal for its own banks, meant to "align the thresholds with those proposed by the Board."
Comments were first due 5 October. Both agencies pushed that back, and comments are now due 4 November 2026.
What would change
The proposal amends 12 CFR parts 215 and 225. The headline is a set of higher dollar thresholds:
| Threshold | Today | Proposed |
|---|---|---|
| Credit card debt excluded from "extension of credit" | $15,000 | $60,000 |
| Interest-bearing overdraft credit plan exception | $5,000 | $20,000 |
| Inadvertent overdraft exception for officers and directors | $1,000 | $4,000 |
| "Other purpose" exception for loans to executive officers | $100,000 | $400,000 |
| Insider credit that needs prior board approval | $500,000 | $2 million |
Some limits would also be set as the lesser of a percentage of capital or a dollar figure. Under the proposal, loans to an executive officer under the "other purpose" exception would be capped at the lesser of 2.5 percent of unimpaired capital and surplus or $400,000, and prior board approval would apply at the lesser of 5 percent or $2 million.
It would also keep the numbers from going stale again. The Board "would adjust the dollar-based thresholds of Regulation O every five years," in line with cumulative growth in nominal GDP over those five years. If growth is negative, nothing moves.
Who it reaches
Regulation O applies to Federal Reserve member banks. The FDIC's companion proposal, under its own part 337, would bring the same thresholds to FDIC-supervised banks. If both are adopted, most insured banks would be working from the new figures. Credit unions have their own insider lending rules and aren't covered.
What it could mean
For small banks this is one of the more useful proposals of the year. Mostly it gives back board time. A $500,000 approval trigger made sense once. Today it drags a director's perfectly ordinary mortgage onto the board agenda. At $2 million, or 5 percent of capital if that's lower, most community banks would still see the loans that deserve a second look and skip the ones that don't.
We'd argue the indexing matters more than the new figures. A fixed dollar limit gets tighter every year as prices rise, so banks end up doing more work under the same rule without anyone choosing that. Five-year steps are lumpy. Still, the next catch-up won't need a fresh rulemaking.
Don't change anything yet. This is a proposal, and today's limits apply until a final rule replaces them. What you can do now is find every place your procedures and board reports hard-code $500,000 or $100,000, so the switch takes an afternoon rather than a month. And if you have a view on the percentage caps, there's still time to send it in.