Capital Briefs: Fed Eases Rule on LoansTo Bank Affiliates' Execs

The Federal Reserve Board on Monday made it substantially easier for banks to extend credit to top officials at affiliates.

In amending Regulation O, the Fed said banks do not have to seek approval by the holding company's board to make loans to directors of affiliates.

The Fed included two significant caveats: Executives and directors may not participate in setting policies for the bank, and their affiliates may not account for more than 10% of the holding company's consolidated assets.

The Fed previously had exempted executives of affiliates from Regulation O's restrictions. But it was unable to exempt directors until Congress changed the law last year. The change is effective April 1.

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