Bank president signs on a non-profit account that just became overdrawn. Does Reg O apply?

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Question:

Our bank president is a signer on a local non-profit’s checking account. That non-profit just bounced a check – does Reg O come into play here? Can we pay the OD and waive the fee?

Answer:

Maybe, IF the bank president (presumably an Executive Officer under Reg O) does NOT have a controlling influence over that non-profit’s management of policies. This is a big if. By virtue of signing on their account, the bank president could have enough influence to trigger Reg O. You need to know more! If the bank president does hold controlling influence (per Reg O’s benchmarks), then the non-profit is a “related interest” of the bank president, and Reg O’s Overdraft limitations apply.

Join my upcoming webinar “The Ins & Outs of Insider Lending and Reg O” on March 26, 2024 to learn more!

Learn more about Rebekah Leonard's
The Ins & Outs of Insider Lending and Reg O webinar.