Banking and Finance Law Daily Wrap Up, DIRECTORS, OFFICERS AND EMPLOYERS—Banking groups support Regulation O updates, differ on lending limit, (Nov 12, 2026)
Organizations Mentioned:ABA Securities Association | American Bankers Association | Independent Community Bankers of America
The ABA and ABASA seek a $2,000,000 executive-officer other-purpose loan threshold, while ICBA supports the proposed $400,000 limit.
The American Bankers Association (ABA) and ABA Securities Association (ABASA) called for a $2,000,000 executive-officer other-purpose loan threshold in a Nov. 4, 2026, joint comment letter in response to insider-lending proposals issued by the Federal Reserve Board and the Federal Deposit Insurance Corporation. The Independent Community Bankers of America (ICBA), in a separate letter to the Fed, supported the proposed $400,000 limit.
ABA, ABASA. The ABA and ABASA support updating dollar-based thresholds every five years using five years of cumulative nominal gross domestic product growth. They argue that indexing would keep the thresholds proportionate to the broader economy. They also support the Federal Reserve's proposed conditional exclusion of portfolio companies of Qualified Fund Complexes from insider treatment. The complexes themselves would remain insiders for lending to them. The associations object to the proposed exclusion of complexes that are, or are affiliated with, bank holding companies, savings and loan holding companies, or insured depository institutions.
They ask the Federal Reserve to clarify that affiliation with such a banking entity alone does not disqualify a mutual fund complex. The complex would still have to independently satisfy the final rule's substantive eligibility criteria and remain subject to, and compliant with, all other applicable laws and regulations.
ICBA. ICBA supports raising the other-purpose limit from $100,000 to $400,000. It argues that the proposal would reduce community-bank burdens without compromising safety and soundness. Restrictive insider-lending requirements can discourage qualified local business owners and community leaders from joining bank boards, the association says, particularly in smaller and rural communities with limited alternative credit providers.
Its requested revisions include targeted relief for well-capitalized, well-managed community banks, greater certainty about insider status, and a good-faith reliance safe harbor. It also seeks transition relief and interagency coordination.
The ICBA letter says the changes focus Regulation O on “preventing preferential lending and insider abuse rather than unnecessarily restricting ordinary, arm’s-length credit.”
ICBA urges prompt finalization. It recommends making burden-reducing provisions effective as soon as practicable, while giving community banks a 12-month implementation period for new compliance requirements. That period would cover correspondent recordkeeping, revised transaction classifications, new documentation, and systems or monitoring changes.
Better Markets comment. Better Markets also recently commented on the proposal (see Banking and Finance Law Daily, Nov. 10, 2026), recommending that the Fed adjust Regulation O insider-lending thresholds for inflation using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), all items, U.S. city average, not seasonally adjusted, and not nominal gross domestic product (GDP).
Companies: American Bankers Association; ABA Securities Association; Independent Community Bankers of America
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