Answer:
First, hopefully your institution has a policy to address such events, but under Reg O, this overdraft is an extension of credit that must follow specific requirements. Since this is an overdraft exceeding $1,000, it cannot be paid unless it is done in accordance with a pre-authorized, written, interest-bearing credit plan that specifies a method of repayment (like an overdraft line of credit); or a written, pre-authorized sweep arrangement. Otherwise (even if it was inadvertent), it must be returned, period. Any fees would need to be commensurate with your normal overdraft LOC / sweep arrangement fee structure.
What if the overdraft had been less than $1,000? Would you know how to handle it correctly? If you aren’t sure, or need a better understanding of exactly what must be done, tune into the upcoming webinar “The Ins & Outs of Insider Lending and Reg O” on March 26, 2024!
Learn more about Rebekah Leonard's
The Ins & Outs of Insider Lending and Reg O webinar.
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