Insider-Lending Laws and Compliance Considerations for Financial Institutions

Summary

This practice note provides an overview of the duties and requirements applicable to Federal Deposit Insurance Corporation (FDIC) insured depository institutions (IDIs) seeking to extend credit to insiders. Under federal banking laws and regulations, insiders generally comprise executive officers, directors, principal shareholders, and "related interests" of such persons. Federal insider-lending laws and regulations seek to limit conflict-of-interest-related risk and credit risk to IDIs by ensuring that all insider-credit transactions satisfy certain arm's-length requirements.