Fed Proposes Tenfold Increase in Bank Insider Credit Limit

Regulation O has governed credit extended by banks to insiders since 1979, covering executive officers, directors and principal shareholders who could influence lending decisions. It is designed to curb self-dealing by requiring insider loans to carry substantially the same terms and underwriting as comparable transactions. Because its dollar thresholds have not been comprehensively updated, the rule has become a particular constraint for community banks seeking experienced local leaders.

The Federal Reserve Board on July 31, 2026, proposed raising the general credit limit for executive officers to $1 million from $100,000, a tenfold increase. The plan would index dollar thresholds to economic growth, address passive interests held through investment funds, codify statutory requirements and longstanding interpretations, and simplify the rule’s application. The Board said safeguards against preferential treatment would remain, with comments due 60 days after publication in the Federal Register.