Would Reg O apply to a loan where an executive Officer's wife cosigns for their child?

How old is the child, what is the loan for, are you in a community property state, does the wife have her own assets and income?

We are a marital property state (WI), the loan was not for education and the wife does have her own assets and income. You might have me on the marital property situation

If the source of repayment for the loan ultimately comes from the Executive Officer, ie. the wife or child has no other source of income to pay the debt, and the child is till part of the 'household', then it would be subject to Reg O.

"EXTENSION OF CREDIT"--Loans to Spouse of Executive Officer in Community Property State

A member bank proposes to extend a loan that exceeds the limitations on loans to executive officers in Regulation O to the spouse of an executive officer in a community property state. The spouse has no separate property, and the loan proceeds will be applied to a business that is community property and that is managed by the spouse. The loan would not be deemed to be made to the executive officer if the spouse is creditworthy; the proceeds of the loan were not transferred to, or used for the direct benefit of, the executive officer; and the loan was repaid from the separate income of the spouse. Even though either spouse in a community property state may obligate the entire community and the executive officer appears to be indirectly obligated because the assets of the community would be attachable for repayment of the debt, the loan would not be an extension of credit to the executive officer since there is no evidence that the Congress or the Board intended to treat loans to spouses of executive officers differently in community property states and non-community property states.

Also, if the loan were made in good faith directly to the business for business purposes and repayment of the loan were to be made out of the income of the business, the loan would not be construed as an extension of credit to the executive officer; however, as community property, the business would qualify as a controlled company or related interest of the executive officer. On this basis, the extension of credit would be subject to the prior-approval requirement and the preferential-lending and aggregate lending limit restrictions of Regulation O. STAFF OP. of May 23, 1980.

Authority: FRA § 22(g), 12 USC 375a; 12 CFR 215.2(a), 215.3(a)(8), 215.3(f), 215.5, and 215.4(a), (b), and (c).