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Proposed Rule2026-15995

Extensions of Credit to Insiders

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Published

August 6, 2026

Issuing agencies

Federal Deposit Insurance Corporation

Abstract

The Federal Deposit Insurance Corporation (FDIC) is proposing to increase quantitative thresholds for certain extensions of credit to insiders of FDIC-supervised institutions, as restricted by the Federal Reserve Act and regulations promulgated thereunder. Specifically, the proposal would increase the thresholds for certain extensions of credit to executive officers not otherwise specifically authorized by statute from $100,000 to $400,000; and extensions of credit to insiders requiring prior approval by the board of directors from $500,000 to $2,000,000. The proposal would also establish an indexing methodology to periodically update such thresholds over time.

Full Text

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<title>Federal Register, Volume 91 Issue 150 (Thursday, August 6, 2026)</title>
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[Federal Register Volume 91, Number 150 (Thursday, August 6, 2026)]
[Proposed Rules]
[Pages 50730-50738]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-15995]

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Proposed Rules
Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 91, No. 150 / Thursday, August 6, 2026 /
Proposed Rules

[[Page 50730]]

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 337

RIN 3064-AG26

Extensions of Credit to Insiders

AGENCY: Federal Deposit Insurance Corporation.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Deposit Insurance Corporation (FDIC) is proposing
to increase quantitative thresholds for certain extensions of credit to
insiders of FDIC-supervised institutions, as restricted by the Federal
Reserve Act and regulations promulgated thereunder. Specifically, the
proposal would increase the thresholds for certain extensions of credit
to executive officers not otherwise specifically authorized by statute
from $100,000 to $400,000; and extensions of credit to insiders
requiring prior approval by the board of directors from $500,000 to
$2,000,000. The proposal would also establish an indexing methodology
to periodically update such thresholds over time.

DATES: Comments must be received on or before October 5, 2026.

ADDRESSES: Comments should be directed to the FDIC as follows:
You may submit comments to the FDIC, identified by RIN 3064-AG26,
by any of the following methods:
<bullet> FDIC website: <a href="https://www.fdic.gov/federal-register-publications">https://www.fdic.gov/federal-register-publications</a>. Follow instructions for submitting comments on the agency
website.
<bullet> Email: <a href="/cdn-cgi/l/email-protection#aae9c5c7c7cfc4ded9eacccec3c984cdc5dc">[email&#160;protected]</a>. Include RIN 3064-AG26 in the
subject line of the message.
<bullet> Mail: Jennifer M. Jones, Deputy Executive Secretary,
Attention: Comments--RIN 3064-AG26, Federal Deposit Insurance
Corporation, 550 17th Street NW, Washington, DC 20429.
<bullet> Hand Delivery to FDIC: Comments may be hand-delivered to
the guard station at the rear of the 550 17th Street NW building
(located on F Street) on business days between 7 a.m. and 5 p.m.
<bullet> Public Inspection: Comments received, including any
personal information provided, may be posted without change to <a href="https://www.fdic.gov/federal-register-publications">https://www.fdic.gov/federal-register-publications</a>. Commenters should submit
only information that the commenter wishes to make available publicly.
The FDIC may review, redact, or refrain from posting all or any portion
of any comment that it may deem to be inappropriate for publication,
such as irrelevant or obscene material. The FDIC may post only a single
representative example of identical or substantially identical
comments, and in such cases will generally identify the number of
identical or substantially identical comments represented by the posted
example. All comments that have been redacted, as well as those that
have not been posted, that contain comments on the merits of the
proposed rule will be retained in the public comment file and will be
considered as required under all applicable laws. All comments may be
accessible under the Freedom of Information Act.
Follow the search instructions on <a href="https://www.regulations.gov">https://www.regulations.gov</a> to
view public comments.
This proposal, all comments received, and a summary of not more
than 100 words of the proposed rule pursuant to the Providing
Accountability Through Transparency Act of 2023 are available at
<a href="https://www.fdic.gov/resources/regulations/federal-register-publications/">https://www.fdic.gov/resources/regulations/federal-register-publications/</a>.

FOR FURTHER INFORMATION CONTACT: Division of Risk Management
Supervision: Peter A. Martino, Senior Examination Specialist, 813-390-
8508, <a href="/cdn-cgi/l/email-protection#4515082437312c2b2a0523212c266b222a33">[email&#160;protected]</a>; Ryan C. Senegal, Chief, Examination Support
Section, 980-249-3863, <a href="/cdn-cgi/l/email-protection#227071474c4745434e6244464b410c454d54">[email&#160;protected]</a>. Legal Division: Gregory S.
Feder, Counsel, 202-898-8724, <a href="/cdn-cgi/l/email-protection#337475565756417355575a501d545c45">[email&#160;protected]</a>; Shane M. Bogusz, Senior
Attorney, 571-366-0212, <a href="/cdn-cgi/l/email-protection#d98a9bb6beacaaa399bfbdb0baf7beb6af">[email&#160;protected]</a>.

SUPPLEMENTARY INFORMATION:

I. Background

A. Overview of Sections 22(g) and (h) of the Federal Reserve Act

Sections 22(g) and (h) of the Federal Reserve Act (FRA), which are
codified at 12 U.S.C. 375a and 375b respectively, restrict extensions
of credit by banks that are members of the Federal Reserve System
(member banks) to executive officers, directors, principal
shareholders, and related interests of such persons (collectively,
insiders).\1\ Section 18(j)(2) of the Federal Deposit Insurance Act
(FDI Act) provides that sections 22(g) and (h) shall apply to every
insured bank that is not a member of the Federal Reserve System
(nonmember insured bank) \2\ in the same manner and to the same extent
as if the nonmember insured bank were a member bank.\3\ Sections 22(g)
and (h) provide the Board of Governors of the Federal Reserve System
(Federal Reserve Board) general rulemaking authority. The Federal
Reserve Board has implemented sections 22(g) and (h) through Regulation
O, 12 CFR part 215.\4\ Sections 22(g) and (h) also provide the FDIC
limited rulemaking authority, as described below.
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\1\ ``Insider'' is defined in the proposal to include executive
officers, directors, principal shareholders, and any of their
related interests. ``Executive officer'' currently is defined to
include employees with certain enumerated titles as well as persons
who participate or have the authority to participate (other than in
the capacity of a director) in the major policymaking functions of a
company or IDI, regardless of title. The Federal Reserve Board's
proposal (discussed in section II of this Supplementary Information)
would remove ``every vice president'', ``the cashier'', and ``the
secretary'' to modernize a list that has not changed since 1935
although the nature of those positions has changed. The chief
executive officer, chief financial officer, chief lending officer,
and chief investment officer would be added to the list, and it is
likely that people with these titles already are being treated as
executive officers.
\2\ In reviewing relevant legislative and regulatory history,
this Supplementary Information utilizes terms--e.g., nonmember
insured bank, State nonmember bank--as they are employed in the
subject legislation or regulation. However, the institutions
directly affected by this proposal are those for which the FDIC is
the appropriate Federal banking agency, namely (1) any State
nonmember insured bank, (2) any foreign bank having an insured
branch, and (3) any State savings association. See 12 CFR 337.3(d)
(providing that the FDIC's restrictions on extensions of credit to
insiders apply to all institutions for which the FDIC is the
appropriate Federal banking agency under the FDI Act); 12 U.S.C.
1813(q)(2) (defining ``appropriate Federal banking agency'').
\3\ 12 U.S.C. 1828(j)(2). Under section 11(b) of the Home
Owners' Loan Act, 12 U.S.C. 1468(b), sections 22(g) and (h) of the
Federal Reserve Act, 12 U.S.C. 375a, 375b, apply to savings
associations in the same manner and to the same extent as to member
banks.
\4\ 12 U.S.C. 375a and 375b; 12 CFR part 215.
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In general, under section 22(g)(1) of the FRA, no member bank may
extend credit in any manner to any of its own executive officers, and
no executive officer of any member bank may become

[[Page 50731]]

indebted to that member bank, except by means of an extension of credit
which the bank \5\ is authorized to make under that section.\6\
Notwithstanding this general prohibition, the statute authorizes member
banks to make certain extensions of credit to executive officers,
including certain mortgage loans and educational loans.\7\ In addition,
section 22(g)(4) provides for a general limitation on the amount of
credit under which a member bank may make extensions of credit not
otherwise specifically authorized under the statute to any executive
officer of the bank ``in an amount prescribed in a regulation of the
member bank's appropriate Federal banking agency.'' \8\
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\5\ This Supplementary Information uses the term ``bank'' to
refer generally to insured depository institutions that are subject
to sections 22(g) and (h) of the FRA.
\6\ 12 U.S.C. 375a(1).
\7\ 12 U.S.C. 375a(2), (3), (5).
\8\ 12 U.S.C. 375a(4).
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Furthermore, in general, under section 22(h)(1) of the FRA, no
member bank may extend credit to any of the bank's insiders except to
the extent permitted by subsequent provisions of the statute. One such
exception allows a bank to extend credit to an insider above a certain
aggregate dollar threshold upon the approval of the bank's board of
directors of the extension of credit.\9\ In particular, section
22(h)(3) provides that a member bank may extend credit to an insider in
an amount that, when aggregated with the amount of all other
outstanding extensions of credit by the bank to the person and that
person's related interests, would ``exceed an amount prescribed by
regulation of the appropriate Federal banking agency'' only if: (1) the
extension of credit has been approved in advance by a majority vote of
that bank's entire board of directors; and (2) the interested party has
abstained from participating, directly or indirectly, in the
deliberations or voting on the extension of credit.\10\
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\9\ 12 U.S.C. 375b(3).
\10\ Id.
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Under 12 U.S.C. 375b(3), ``appropriate Federal banking agency'' is
defined to have the same meaning as that term has in 12 U.S.C. 1813.
Under 12 U.S.C. 1813, ``appropriate federal banking agency'' is defined
to mean the FDIC in the case of (1) any State nonmember insured bank;
(2) any foreign bank having an insured branch; and (3) any State
savings association.\11\
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\11\ While 12 U.S.C. 375a does not include a definition for
``appropriate Federal banking agency'' by cross-reference to 12
U.S.C. 1813, it is appropriate to apply the same definition to 12
U.S.C. 375a in pari materia.
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B. Overview of 12 CFR Part 337.3

In 1975, the FDIC added, pursuant to notice and comment rulemaking,
a new Sec. 337.3 to its regulations to require that State nonmember
banks establish procedures and maintain records to ensure that bank
boards of directors supervise transactions with insiders effectively,
and from which FDIC examiners would be able to analyze insider
transactions during examinations.\12\ Boards of directors were required
to review and approve insider transactions involving assets or services
that had a fair market value greater than a specified amount that
varied based on the size of the bank.\13\ Certain transactions were
expressly excluded from the scope of Sec. 337.3: deposit account
activities (other than the payment of interest on time deposits in
amounts of $100,000 or more); safekeeping transactions; credit card
transactions; and activities undertaken in the capacity of securities
transfer agent or municipal securities dealer. Shortly thereafter, in
response to questions that arose after finalizing the rule, the FDIC
adopted amendments intended to clarify the FDIC's policy on insider
transactions.\14\
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\12\ See 41 FR 8946 (Mar. 2, 1976).
\13\ Insider transactions required review and approval if they
had a fair market value of more than $20,000 if the bank had not
more than $100 million in total assets; $50,000, if the bank had
more than $100 million and not more than $500 million in total
assets; or $100,000 if the bank had more than $500 million in total
assets. See id. at 8948-49.
\14\ See, e.g., 41 FR 18405 (May 4, 1976).
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With the enactment of the Financial Institutions Regulatory and
Interest Rate Control Act of 1978 (FIRIRCA),\15\ Congress added section
22(h) to the FRA.\16\ As a result, the FDIC rescinded Sec. 337.3
because (1) FIRIRCA made the regulation unnecessary insofar as the
statute related to loans and other extensions of credit and (2) the
FDIC intended to deal with insider transactions other than loans on a
supervisory basis.\17\
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\15\ Public Law 95-630, 92 Stat. 3641 (Nov. 10, 1978).
\16\ FIRIRCA, section 104, 92 Stat. 3644. Section 108 of FIRIRCA
made the provisions of section 22(h) applicable ``to every nonmember
insured bank in the same manner and to the same extent as if such
nonmember insured bank were a State member bank.''
\17\ 44 FR 18000 (Mar. 26, 1979).
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In 1982, Congress enacted the Garn-St. Germain Depository
Institutions Act of 1982 (Garn-St. Germain Act).\18\ Specifically, the
Garn-St. Germain Act amended section 22(g) of the FRA by striking the
$10,000 limitation on loans by a member bank to its executive officer
for purposes other than a residential mortgage or education of the
officer's children and amended section 22(h) of the FRA by striking the
aggregate limit of $25,000 beyond which a loan to an executive officer,
director, or principal shareholder of a bank must be approved in
advance by a disinterested majority of the bank's entire board of
directors. Instead, the Garn-St. Germain Act authorized the appropriate
Federal banking agencies to prescribe new limits by regulation.\19\
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\18\ See Public Law 97-320, 96 Stat. 1469 (1982); see also 47 FR
49347 (Nov. 1, 1982).
\19\ See 12 U.S.C. 375a(4); 375b(2).
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In 1982, in response to the Garn-St. Germain Act, the FDIC adopted
a new regulation promulgated at Sec. 337.3, which provided that
insured nonmember banks could make extensions of credit to insiders or
their related interests exceeding $25,000 only with the prior approval
of a majority of disinterested members of the board of directors.\20\
At the same time, the FDIC clarified that, aside from certain
provisions that applied only to member banks, Regulation O would apply
to insured nonmember banks to the same extent and in the same manner as
if they were member banks.\21\
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\20\ 47 FR 47002 (Oct. 22, 1982).
\21\ Id. at 47003.
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In 1983, the $25,000 threshold was revised to a threshold that
depended, in part, on the institution's capital and unimpaired
surplus.\22\ The FDIC reasoned that a sliding scale would more closely
align the prior approval requirement to the capital levels of a given
institution. The adjusted threshold provided that prior approval was
required for aggregate extensions of credit that exceeded the greater
of $25,000 or 5 percent of the bank's capital and unimpaired surplus.
Prior approval was required, in any event, if the aggregate extension
of credit exceeded $500,000. Accordingly, even banks with very low
levels of capital and unimpaired surplus could extend credit up to
$25,000 without prior board approval. In contrast, even banks with very
high levels of capital and unimpaired surplus could not extend credit
beyond $500,000 without prior board approval. Despite technical changes
to other aspects of Sec. 337.3(b), these thresholds have remained the
same since their adoption in 1983.\23\
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\22\ 48 FR 42969 (Sept. 21, 1983).
\23\ See 12 CFR 337.3(b); see also 85 FR 3232 (Jan. 21, 2020)
(inter alia, including State savings associations within the scope
of Sec. 337.3).
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Section 306 of the Federal Deposit Insurance Corporation
Improvement Act of 1991 (FDICIA),\24\ made section 22(g)

[[Page 50732]]

of the FRA applicable to nonmember insured banks in the same manner and
to the same extent as if the nonmember insured bank were a member bank.
Section 306 also required the FDIC to set maximum limits on the amount
a nonmember insured bank could lend to executive officers.\25\ In 1992,
the FDIC amended Sec. 337.3 to extend to insured nonmember banks
certain sections of Regulation O that previously had not applied to
insured nonmember banks.\26\
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\24\ Public Law 102-42, 306(k), 105 Stat. 2236 (Dec. 19, 1991).
\25\ Id. Sec. 306(m)(2).
\26\ 57 FR 7647 (Mar. 4, 1992).
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A short time later, the FDIC adopted a new subsection (c) which
restricted extensions of credit to executive officers of insured
nonmember banks, in a manner consistent with the general prohibition on
loans to executive officers set forth in section 22(g) of the FRA. As
the appropriate Federal banking agency for insured State nonmember
banks, the FDIC established the limits for extensions of credit to an
executive officer of the bank for any purpose other than certain
education and mortgage loans at an amount that did not, in the
aggregate, exceed the higher of 2.5 percent of the bank's capital and
unimpaired surplus or $25,000, but in no event more than
$100,000.27 28 These limits were the same as those set for
member banks in Regulation O. As with Sec. 337.3(b), this methodology
scaled the relevant threshold to a bank's levels of capital and
unimpaired surplus, while also setting a floor and ceiling for
institutions with relatively low and relatively high levels of capital
and unimpaired surplus, respectively. Despite subsequent technical
changes to other aspects of Sec. 337.3, the thresholds in Sec.
337.3(c)(2) have remained the same since their adoption in 1992.
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\27\ 57 FR 17847 (Apr. 28, 1992).
\28\ For executive officers, this restriction operates alongside
the restrictions on extensions of credit for insiders without prior
board approval. Accordingly, even for extensions of credit to an
executive officer authorized by Regulation O, the extension of
credit, when aggregated with the institution's other extensions of
credit to that insider, must not exceed (1) the greater of $25,000
or 5 percent of the FDIC-supervised institution's unimpaired capital
and unimpaired surplus, or (2) $500,000, unless the extension of
credit receives prior approval by a majority of the board of
directors with the interested director(s) not participating.
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II. Overview of Proposed Rule

Under sections 22(g) and (h) of the FRA, the FDIC and Federal
Reserve Board have issued quantitative thresholds under which the
agencies determine compliance with the FRA and Regulation O.
However, many of these thresholds are outdated, and in some cases,
have not been revised in over 40 years. As relevant here, the Federal
Reserve Board last revised the thresholds for loans to executive
officers not otherwise specifically authorized under section 22(g) and
for extensions of credit to insiders requiring prior approval by the
board of directors under section 22(h) in 1983.\29\ These outdated
thresholds not only fail to reflect current market realities but also
impose unnecessary regulatory burden on community banks and other
institutions supervised by the agencies. Board approval requirements
for relatively small extensions of credit may divert the board's
attention away from strategic goals and the management of material
financial risk. Further, certain limitations on extensions of credit to
insiders may unduly impact community banks, because community banks,
relative to larger banks, may be more likely to be located in areas
where there are few or no other banks in the locality.
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\29\ See 48 FR 42804 (Sept. 20, 1983).
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In recognition that these regulatory thresholds are misaligned with
contemporary markets, on August 4, 2026, the Federal Reserve Board
published in the Federal Register a notice of proposed rulemaking (FRB
NPR) that would update these and other thresholds,\30\ while also
making additional revisions to Regulation O.\31\ In particular, the FRB
NPR would increase and streamline the threshold at Sec. 215.4 (b) of
Regulation O,\32\ governing extensions of credit to insiders requiring
prior approval by the board of directors, to the lower of 5 percent of
the member bank's unimpaired capital and unimpaired surplus or
$2,000,000, up from $500,000. The FRB NPR would make similar revisions
to the threshold at 12 CFR 215.5(c)(4), governing extensions of credit
to executive officers not otherwise specifically authorized, to the
lower of 2.5 percent of the member bank's unimpaired capital and
unimpaired surplus or $400,000, up from $100,000.
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\30\ In addition to the thresholds that are the subject of this
proposal, the FRB NPR would adjust the thresholds at 12 CFR
215.3(b)(5) and (6); 12 CFR 215.4(b)(1), (b)(2), (d)(2) and (e)(2);
12 CFR 215.5(d)(4); 12 CFR 215.9(b)(1).
\31\ 91 FR 49526 (Aug. 4, 2026).
\32\ The FRB NPR also would reorganize the provisions of the
current Regulation O so the requirements are easier for the
practitioner to locate and apply. Citations to the sections of
Regulation O in this proposal are to the sections as they currently
are published in the Code of Federal Regulations.
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The FDIC believes it is appropriate to propose new thresholds
concerning certain (1) extensions of credit to executive officers not
otherwise specifically authorized under section 22(g); and (2)
extensions of credit to insiders requiring prior approval by the board
of directors to align its thresholds with those proposed by the
FRB.\33\
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\33\ 12 U.S.C. 375a(4); 12 U.S.C. 375b(3). For corresponding
thresholds in Regulation O, see 12 CFR 215.5(c)(4) and 215.4(b).
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A. One-Time Adjustment to Dollar-Based Thresholds in Sec. 337.3

Consistent with the FRB NPR, the proposed rule would increase the
dollar-based limits of the two thresholds in Sec. 337.3 to adjust for
economic growth and inflation. Specifically, the proposed rule would
increase the threshold for loans to executive officers not otherwise
specifically authorized and the threshold for loans to insiders
requiring prior approval by the board of directors. The FDIC is
proposing to update these thresholds for economic growth and inflation
utilizing seasonally adjusted U.S. nominal gross domestic product
(nominal GDP),\34\ comparing the change in nominal GDP between the
fourth quarter of 2025 and the fourth quarter of 1994, which is when
the FDIC last considered updating one of the relevant thresholds for
economic growth and inflation.\35\ To simplify compliance, the FDIC is
proposing to round the resulting figures to simple whole numbers that
are multiples of the current thresholds.\36\ Utilizing this approach
for updating these thresholds for changes in inflation and economic
growth--which aligns with that proposed in the FRB NPR \37\--would
ensure consistent standards for national, State member, and State
nonmember banks.\38\ This one-time adjustment would increase the
threshold for loans to executive officers not otherwise specifically
authorized from $100,000 to $400,000 and the threshold for loans to
insiders requiring

[[Page 50733]]

prior approval by the board of directors from $500,000 to $2,000,000.
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\34\ Nominal GDP is calculated quarterly by the U.S. Bureau of
Economic Analysis. See U.S. Bureau of Economic Analysis, account
code: A191RC, Gross Domestic Product [GDP], retrieved from FRED,
Federal Reserve Bank of St. Louis; <a href="https://fred.stlouisfed.org/series/GDP">https://fred.stlouisfed.org/series/GDP</a>, June 25, 2026.
\35\ See 59 FR 66666, 66667 (Dec. 28, 1994) (declining to adjust
threshold for inflation to ensure that insured State nonmember banks
remain ``on an equal footing'' with State member banks).
\36\ For example, adjusting for growth in nominal GDP from Q4
1994 to Q4 2025 would entail increasing the thresholds to 421
percent of their current levels ($31,422.53/7455.29 x 100 = 421).
Instead of 421 percent, the FDIC would use a multiplier of 400
percent to ensure that the thresholds are set at round numbers,
simplifying compliance.
\37\ 91 FR 49526.
\38\ Because the Office of the Comptroller of the Currency's
regulations for nationally-chartered banks incorporate Regulation O
by reference, see 12 CFR 31.2(a), the thresholds applicable to
national banks will be automatically updated if the Federal Reserve
Board adopts its proposed changes to Regulation O.
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Following this adjustment, Sec. 337.3(b) would provide that FDIC-
supervised institutions must comply with the prior approval
requirements when aggregated extensions of credit to any insider exceed
the lower of 5 percent of the FDIC-supervised institution's unimpaired
capital and unimpaired surplus or $2,000,000. Section 337.3(c)(2) would
provide that loans to executive officers not otherwise specifically
authorized shall not exceed, in the aggregate, the lower of 2.5 percent
of an FDIC-supervised institution's unimpaired capital and unimpaired
surplus or $400,000.\39\ The FDIC is proposing to update these
thresholds in an effort to reduce regulatory burden and to reflect
changing economic conditions since the current thresholds were adopted.
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\39\ Section 22(g) of the FRA did not apply to insured nonmember
banks until the enactment of FDICIA in 1991. When the FDIC
promulgated a limit on loans to executive officers for purposes not
authorized in section 22(g), it adopted the same limits that were in
use by the OCC and Federal Reserve Board. See 57 FR 17847.
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B. Periodic Indexing of Dollar-Based Thresholds by Nominal GDP

The FRB NPR also proposes to automatically update the relevant
dollar-based thresholds for real economic growth and inflation on a
going-forward basis. To ensure that the dollar-based thresholds
applicable to FDIC-supervised institutions continue to align with those
applicable to other banks, the FDIC proposes to make the same automatic
adjustments to the thresholds in its own regulations.
As noted, considerable time has passed without an adjustment to the
dollar-based thresholds for extensions of credit to executive officers
not otherwise specifically authorized under section 22(g) and
extensions of credit to insiders requiring prior approval by the board
of directors under section 22(h). As a result, fixed thresholds have
become steadily more restrictive, reducing the effective amount that
banks could lend to their insiders, whether as a general matter or
without triggering the board approval requirement. While a one-time
adjustment to these dollar-based thresholds will reduce burden for
banks and restore these thresholds to the effective level intended by
Congress, it will not account for future imbalances caused by inflation
or real economic growth. To limit the need for future rulemaking, and
to provide FDIC-supervised institutions with a more predictable
regulatory environment, the proposal would adopt an indexing
methodology to ensure the thresholds keep pace with changing economic
conditions.
Consistent with the FRB NPR, the FDIC would update the dollar-based
thresholds addressed by this proposal every five years, utilizing
nominal GDP.\40\ Every five years following the effective date of the
proposed rule, the FDIC would publish in the Federal Register (1) the
ratio of nominal GDP at the time of the last adjustment to nominal GDP
five years later and (2) the resulting updated thresholds. To simplify
compliance, the FDIC would round each threshold in the thousands to the
nearest number with one significant digit; and would round each
threshold in the millions to the nearest number with two significant
digits. To address concerns about procyclicality during a prolonged
period of economic contraction, the proposal does not call for an
adjustment if nominal GDP declines during the intervening five years
between scheduled updates. Providing updates every five years will
avoid the burden associated with frequent changes to regulatory
requirements while still ensuring that the thresholds do not become
significantly misaligned with economic conditions over time. By
striking this balance on the frequency of adjustments and by providing
transparency and predictability on the nature of those adjustments, the
FDIC expects that the proposal will produce a more durable regulatory
framework that appropriately adapts to changing economic conditions.
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\40\ The FDIC would look to the most current estimate of nominal
U.S. GDP for a given year, published by the Bureau of Economic
Analysis on or before September 30th of the year in which the
thresholds are to be adjusted.
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Because this approach for future indexing of these thresholds is
consistent with that recently proposed in the FRB NPR,\41\ the FDIC's
proposal would ensure that restrictions on extensions of credit to bank
insiders do not vary based on a bank's primary federal regulator.
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\41\ 91 FR 49526.
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C. Streamlining the Calculation of Applicable Thresholds

Under Regulation O and the FDIC's associated regulations, the
federal banking agencies currently utilize a three-pronged approach for
the calculation of the applicable threshold above which (1) a bank
cannot, in the aggregate, extend further credit to an executive
officer, and (2) a bank must obtain approval from a majority of
disinterested board members for an extension of credit to an insider.
Those three prongs are a dollar-based minimum threshold, a sliding
scale based on the size of the bank, and a dollar-based maximum
threshold. The three prongs establish a bounded requirement: the
applicable amount is the greater of (1) the fixed minimum or (2) the
amount determined based on the bank's capital, subject to (3) an
overall maximum. In this case, the relevant sliding scale threshold is
2.5 percent or 5 percent, respectively, of a bank's unimpaired capital
and unimpaired surplus. The dollar-based minimum threshold means that
any bank, no matter how small its unimpaired capital and unimpaired
surplus, may extend credit up to $25,000 without triggering either
restriction. Additionally, the dollar-based maximum threshold means
that no bank, no matter how large its unimpaired capital and unimpaired
surplus, may extend credit for a purpose not otherwise authorized to an
executive officer beyond $100,000, or for any purpose to any insider
above $500,000 without obtaining prior board approval.
This three-pronged approach for calculating the relevant thresholds
for a given bank can present unnecessary administrative challenges. The
FDIC proposes to eliminate the minimum dollar-based threshold to
streamline compliance for FDIC-supervised institutions and to maintain
consistency with the FRB NPR. Accordingly, the relevant threshold for
restricting extensions of credit to executive officers not otherwise
authorized by statute or regulation would be the lower of 2.5 percent
of a bank's unimpaired capital and unimpaired surplus or $400,000. The
relevant threshold for restricting extensions of credit to insiders
without prior board approval would be the lower of 5 percent of a
bank's unimpaired capital and unimpaired surplus or $2,000,000.\42\
---------------------------------------------------------------------------

\42\ The restrictions for extensions of credit without prior
board approval would continue to apply in conjunction with the
restrictions on extensions of credit to executive officers,
including those specifically authorized.
---------------------------------------------------------------------------

Question 1: Do commenters agree with the FDIC's approach to align
the thresholds in Sec. 337.3 and indexing methodology with the FRB,
consistent with the FRB NPR? What are the advantages and disadvantages?
Are there other alternative thresholds or indexing methodologies the
FDIC should consider?
Question 2: Should the FDIC consider not using absolute dollar-
based thresholds and instead rely solely on thresholds set by a percent
of

[[Page 50734]]

unimpaired capital and unimpaired surplus?
Question 3: Are there any compliance or related costs associated
with the proposed rule? If so, please describe.
Question 4: What alternatives to the elimination of the minimum
dollar-based aspect of the relevant thresholds would simplify
administrative compliance for banks?
Question 5: What other simplifying or clarifying measure should the
FDIC consider adopting? \43\
---------------------------------------------------------------------------

\43\ In addition, the FDIC will continue to review and consider
any comments received pursuant to the current EGRPRA review that
relate to this proposal as part of any final rulemaking.
---------------------------------------------------------------------------

III. Expected Effects

The proposed rule would increase the dollar-based thresholds
associated with limitations on extensions of credit to insiders, as
defined at Sec. 337.3(b) and (c)(2) of the FDIC's regulations.
Currently, an FDIC-supervised institution may not extend credit to an
insider without board approval if the total amount of credit extended
exceeds the greater of $25,000 or 5 percent of the FDIC-supervised
institution's unimpaired capital and unimpaired surplus or exceeds
$500,000. If adopted, the proposed rule would eliminate the $25,000
threshold, retain the 5 percent threshold, and increase the $500,000
threshold to $2,000,000, so that board approval would be required if
the total amount of credit extended exceeds the lower of 5 percent of
the institution's unimpaired capital and unimpaired surplus or
$2,000,000.
In addition, an FDIC-supervised institution may not extend to any
executive officer credit for any purpose not otherwise authorized if
the total amount of credit extended exceeds the greater of 2.5 percent
of unimpaired capital and unimpaired surplus or $25,000, or exceeds
$100,000.\44\ If adopted, the proposal would eliminate the $25,000
threshold, retain the 2.5 percent threshold, and increase the $100,000
threshold to $400,000, so that an institution may not extend credit for
any purpose not authorized to any executive officer if the total amount
of credit exceeds the lower of 2.5 percent of unimpaired capital and
unimpaired surplus or $400,000.
---------------------------------------------------------------------------

\44\ 12 CFR 337.3(c)(2).
---------------------------------------------------------------------------

To estimate the expected scope, benefits, and costs of the proposed
changes, the FDIC compared expected outcomes under the proposed rule to
a baseline scenario in which the dollar-based thresholds in the FDIC's
regulations remain at March 31, 2026 levels. Under both scenarios, this
analysis uses all relevant regulations and financial conditions data
for all FDIC-supervised institutions as of the quarter ending March 31,
2026, to estimate the economic outcomes.
As of March 31, 2026, the FDIC supervised 2,700 IDIs.\45\ In
contrast to the baseline, the proposed rule would change outcomes for
FDIC-supervised institutions whose extensions of credit to insiders
would exceed the current thresholds in Sec. 337.3 but not exceed the
proposed thresholds (affected IDIs). To estimate this population, the
FDIC used data on the extension of credit to insiders, as reported on
Schedule RC-M of the Call Reports. As of March 31, 2026, 2,348 FDIC-
supervised institutions reported insider extensions of credit and 1,530
FDIC-supervised institutions reported extending credit to at least one
insider in an amount greater than the lower of 5 percent of unimpaired
capital and unimpaired surplus or $500,000. For 1,457 of these IDIs,
$500,000 is less than 5 percent of unimpaired capital and unimpaired
surplus. As such, the FDIC estimates that up to 1,457 FDIC-supervised
institutions could be directly affected by the proposed dollar-based
threshold increase from $500,000 to $2,000,000 in Sec. 337.3(b). The
number of affected IDIs could be greater, as the estimated population
does not include the population of IDIs that would be separately
affected by the proposed increase in thresholds relating to extensions
of credit to executive officers--a type of insider--in Sec.
337.3(c)(2). The FDIC does not have data to estimate this separate
population. However, because insider loans to executive officers would
be subject to the proposed changes to both thresholds, the FDIC
believes the estimated population of 1,457 likely includes most IDIs
affected by one or the other.
---------------------------------------------------------------------------

\45\ FFIEC Reports of Condition and Income (Call Reports), March
31, 2026.
---------------------------------------------------------------------------

Notably, the $500,000 threshold is lower than 5 percent of
unimpaired capital and unimpaired surplus for 92 percent of the 2,348
FDIC-supervised IDIs that report insider extensions of credit. This
ranking has reversed over the previous 40 years because bank capital
has increased: on December 31, 1984--shortly after the threshold was
adopted--90 percent of FDIC-supervised IDIs were bound by the 5 percent
of unimpaired capital and unimpaired surplus capital threshold and only
10 percent by the $500,000 threshold.\46\ Under the proposed rule, 50
percent of FDIC-supervised IDIs would be bound by the capital threshold
and 50 percent by the $2,000,000 threshold.\47\ Therefore, as compared
to the baseline, the proposed dollar-based thresholds resemble more
closely the balance established by the original thresholds.
---------------------------------------------------------------------------

\46\ December 31, 1984 Call Report data. The 90 percent figure
includes three percent of IDIs eligible to extend up to $25,000 in
insider credit without board approval because five percent of their
capital was less than $25,000. See 12 CFR 337.3(b).
\47\ March 31, 2026 Call Report data.
---------------------------------------------------------------------------

The FDIC expects that the proposed rule would have benefits for
affected IDIs, relative to the baseline. By raising the thresholds in
Sec. 337.3, the proposed rule would directly benefit these
institutions by lowering the number of insider loans that must be
approved by the board of directors and reducing the administrative
burden therein. The proposed rule also could improve the ability of
these IDIs to retain qualified executive officers and directors by
reducing the opportunity cost of becoming an insider of these IDIs,
particularly for IDIs located in areas with limited banking options.
The FDIC does not have data to quantify these impacts.
Insiders at affected IDIs would also benefit from the proposed
higher thresholds. In particular, the requirements of Sec. 337.3
increase the costs of obtaining credit for insiders at affected IDIs.
For example, insiders may find it costly to establish relationships
with other lenders, particularly in areas where fewer options for
outside credit are available (e.g., rural areas). By increasing the
dollar-based thresholds mentioned above, the proposed rule would make
it easier for insiders to obtain credit in these circumstances. The
FDIC does not have the information necessary to quantify the effects
described above, and while the effects may be material to insiders at
certain FDIC-supervised institutions, the FDIC expects the effects are
likely to be modest in the aggregate.
The proposed rule would not impose any new or additional reporting
requirements on institutions or impose any direct costs. Indirect costs
may include increased risk to institutions, for example, if lending
standards for insider loans--especially those made without board
approval--are effectively lower than for other loans. The FDIC expects
that these loans or extensions of credit pose little or no risk to
institutions, as extensions of credit to insiders typically make up
only a small percentage of an FDIC-supervised institution's total
loans. Based on Call Report data as of March 31, 2026, the median FDIC-
supervised institution reported that extensions of credit to insiders
made up only 0.6 percent of its total loans and leases. In addition,
the

[[Page 50735]]

proposed $2,000,000 threshold represents only 5 percent of unimpaired
capital and unimpaired surplus at the median FDIC-supervised
institution--a marginal increase from the 1.3 percent that $500,000
represents. The FDIC expects this marginal increase in risk would be
mitigated by supervisory and board oversight. For comparison, in
December 1984, $500,000 represented 18.5 percent of unimpaired capital
and unimpaired surplus at the median FDIC-supervised institution. Thus,
the thresholds in the proposed rule represent much less risk to capital
than when they were adopted.
Given the analysis above, the FDIC concludes that the benefits of
the proposed rule are expected to exceed its costs. The FDIC invites
comment on this analysis; in particular, what are other economic
effects of the proposed rule that the FDIC should consider?

IV. Alternatives Considered

The FDIC considered several alternatives to the proposed rule that
could meet the objectives of this rulemaking. For the reasons described
above, the FDIC views the proposed rule as the most appropriate and
effective means of achieving its objectives with respect to determining
compliance with the Federal Reserve Act and Regulation O.
For example, the FDIC considered several alternative approaches to
update the applicable thresholds. The FDIC considered utilizing
measures such as the non-seasonally adjusted Consumer Price Index for
Urban Wage Earners and Clerical Workers (CPI-W), particularly because
the FDIC already uses that metric for adjusting several other
regulatory thresholds.\48\ However, if the FDIC were to adjust its
thresholds using a measure other than nominal GDP, there would likely
be a steady divergence over time between the thresholds applicable to
FDIC-supervised institutions and institutions supervised by the other
federal banking agencies. Such inconsistency would introduce
inconsistent treatment for similarly situated institutions.
Accordingly, this proposal contemplates one-time and prospective
adjustments using nominal GDP. The FDIC invites comments on
alternatives to the proposed rule.
---------------------------------------------------------------------------

\48\ See 90 FR 55789 (Dec. 4, 2025).
---------------------------------------------------------------------------

V. Regulatory Analyses

A. Paperwork Reduction Act

The Paperwork Reduction Act of 1995 \49\ (PRA) states that no
agency may conduct or sponsor, nor is the respondent required to
respond to, an information collection unless it displays a currently
valid Office of Management and Budget (OMB) control number. The FDIC
has reviewed this proposed rule and determined that it does not create
any information collection or revise any existing collection of
information. Accordingly, no PRA submissions to OMB will be made with
respect to this proposed rule.
---------------------------------------------------------------------------

\49\ 44 U.S.C. 3501-3521.
---------------------------------------------------------------------------

B. Regulatory Flexibility Act

The Regulatory Flexibility Act \50\ (RFA) generally requires an
agency, in connection with a proposed rule, to prepare and make
available for public comment an initial regulatory flexibility analysis
that describes the impact of the proposed rule on small entities.\51\
However, an initial regulatory flexibility analysis is not required if
the agency certifies that the proposed rule will not, if promulgated,
have a significant economic impact on a substantial number of small
entities. The Small Business Administration (SBA) has defined ``small
entities'' to include banking organizations with total assets of less
than or equal to $850 million.\52\ Generally, the FDIC considers a
significant economic impact to be a quantified effect in excess of 5
percent of total annual salaries and benefits or 2.5 percent of total
noninterest expenses. The FDIC believes that effects in excess of one
or more of these thresholds typically represent significant economic
impacts for FDIC-supervised institutions. For the reasons discussed
below, the FDIC certifies that the proposed rule will not have a
significant impact on a substantial number of small entities.
---------------------------------------------------------------------------

\50\ Id.
\51\ 5 U.S.C. 601 et seq.
\52\ The SBA defines a small banking organization as having $850
million or less in assets, where an organization's ``assets are
determined by averaging the assets reported on its four quarterly
financial statements for the preceding year.'' See 13 CFR 121.201
(as amended by 87 FR 69118, effective December 19, 2022). In its
determination, the ``SBA counts the receipts, employees, or other
measure of size of the concern whose size is at issue and all of its
domestic and foreign affiliates.'' See 13 CFR 121.103. Following
these regulations, the FDIC uses an insured depository institution's
affiliated and acquired assets, averaged over the preceding four
quarters, to determine whether the insured depository institution is
``small'' for the purposes of RFA.
---------------------------------------------------------------------------

As discussed in section II of this SUPPLEMENTARY INFORMATION, the
proposed rule would update certain thresholds relating to extensions of
credit to insiders to account for inflation and economic growth since
the thresholds were originally adopted. Currently, an FDIC-supervised
institution may not extend credit to an insider without board approval
if the total amount of credit extended exceeds the greater of $25,000
or five percent of the FDIC-supervised institution's unimpaired capital
and unimpaired surplus, or exceeds $500,000. If adopted, the proposed
rule would eliminate the $25,000 threshold, retain the 5 percent
threshold, and increase the $500,000 threshold to $2,000,000, such that
an FDIC-supervised institution may not extend credit to an insider
without board approval if the aggregate amount of credit extended
exceeds the lower of 5 percent of the IDI's unimpaired capital and
unimpaired surplus or $2,000,000. In addition, an FDIC-supervised
institution may not extend credit to any executive officer for a
purpose other than expressly authorized if the total amount of such
credit extended exceeds the greater of $25,000 or 2.5 percent of the
IDI's unimpaired capital and unimpaired surplus or exceeds $100,000. If
adopted, the proposal would eliminate the $25,000 threshold, retain the
2.5 percent threshold, and increase the $100,000 threshold to $400,000,
such that an FDIC-supervised institution may not extend credit to any
executive officer for a purpose other than expressly authorized if the
total amount of such credit extended exceeds the lower of 2.5 percent
of the IDI's unimpaired capital and unimpaired surplus or $400,000. To
estimate the effects of the proposed rule on small IDIs, the FDIC
compared expected outcomes under the proposed rule to a baseline
scenario in which the dollar-based thresholds in the FDIC's regulations
remain at March 31, 2026 levels. Under both scenarios, this analysis
uses all relevant regulations and financial conditions data for all
small FDIC-supervised IDIs as of the quarter ending March 31, 2026, to
estimate the economic outcomes.
As of March 31, 2026, the FDIC supervised 2,700 IDIs, of which
1,978 are ``small entities'' for purposes of RFA.\53\ In contrast to
the baseline, the proposed rule would change outcomes for small FDIC-
supervised institutions whose extensions of credit to insiders would
exceed the current thresholds in Sec. 337.3 but not exceed the
proposed thresholds (affected small IDIs). To estimate this population,
the FDIC uses data on the extension of credit to insiders, as reported
on Schedule RC-M of the Call Reports. As of March 31, 2026, 1,726 small
FDIC-supervised institutions reported insider extensions of credit and
1,029 reported extending credit to insiders in amounts exceeding

[[Page 50736]]

the lower of $500,000 or 5 percent of the institution's unimpaired
capital and unimpaired surplus.\54\ For 956 of these small FDIC-
supervised IDIs, $500,000 is less than 5 percent of unimpaired capital
and unimpaired surplus.\55\ Thus, the FDIC estimates that 956 affected
small IDIs could be directly affected by the proposed dollar-based
threshold increase from $500,000 to $2,000,000 in Sec. 337.3(b). The
number of affected small IDIs could be greater, as the estimated
population does not include the population of small IDIs that would be
separately affected by the proposed increase in thresholds relating to
extensions of credit to executive officers--a type of insider--in Sec.
337.3(c)(2). The FDIC does not have data to estimate this separate
population. However, because insider loans to executive officers would
be subject to the proposed changes to both thresholds, the FDIC
believes the estimated population of 956 likely includes most small
IDIs affected by one or the other.
---------------------------------------------------------------------------

\53\ FFIEC Reports of Condition and Income (Call Reports), March
31, 2026.
\54\ Id.
\55\ Id.
---------------------------------------------------------------------------

The FDIC expects that the proposed rule would have modest benefits
on affected small IDIs, relative to the baseline. By raising the
thresholds in Sec. 337.3, the proposed rule would directly benefit
these institutions by lowering the number of insider loans that must be
approved by the board of directors and reducing the administrative
burden therein. The proposed rule could also improve the ability of
affected small IDIs to retain qualified executive officers and
directors by reducing the opportunity cost of becoming an insider of an
affected small IDI, particularly for those located in areas with
limited banking options. The FDIC does not have data to quantify these
impacts but believes they would be modest.
The proposed rule would not impose any new or additional reporting
requirements on institutions or impose any direct costs. Indirect costs
may include increased risk to affected small IDIs, for example, if
lending standards for insider loans--especially those made without
board approval--are effectively lower than for other loans. The FDIC
expects that these loans or extensions of credit pose little or no risk
to institutions, as extensions of credit to insiders typically make up
only a small percentage of an affected small IDI's total loans. Based
on Call Report data as of March 31, 2026, the median small FDIC-
supervised IDI reported that extensions of credit to insiders made up
only 0.7 percent of its total loans and leases. In addition, the
proposed $2,000,000 threshold represents only 6.9 percent of unimpaired
capital and unimpaired surplus at the median affected small IDI--a
marginal increase from the 1.7 percent that $500,000 represents. The
FDIC expects this marginal increase in risk would be mitigated by
supervisory and board oversight. For comparison, in March 2000,
$500,000 represented 9.9 percent of unimpaired capital and unimpaired
surplus at the median FDIC-supervised small IDI. Thus, the thresholds
in the proposed rule represent less risk to capital than historically.
As mentioned previously, the FDIC does not have the data necessary
to quantify the impact of the proposed rule on affected small IDIs.
However, based on the preceding analysis the FDIC believes the proposed
rule will be modestly beneficial to affected small IDIs. While the
proposed rule's benefits may be material to certain affected small
IDIs, the FDIC does not believe the number of such small FDIC-
supervised IDIs is substantial.
Thus, based on the foregoing, the FDIC certifies that the proposed
rule will not have a significant impact on a substantial number of
small FDIC-supervised institutions. The FDIC invites comments on all
aspects of this analysis. The FDIC is particularly interested in
comments on any significant effects on small entities that the agency
has not identified.

C. Riegle Community Development and Regulatory Improvement Act of 1994

Pursuant to section 302(a) of the Riegle Community Development and
Regulatory Improvement Act of 1994, 12 U.S.C. 4802(a), in determining
the effective date and administrative compliance requirements for new
regulations that impose additional reporting, disclosure, or other
requirements on insured depository institutions, the FDIC will
consider, consistent with principles of safety and soundness and the
public interest: (1) any administrative burdens that the proposed rule
would place on depository institutions, including small depository
institutions and customers of depository institutions; and (2) the
benefits of the proposed rule. The FDIC requests comment on any
administrative burdens that the proposed rule would place on depository
institutions, including small depository institutions, and their
customers, and the benefits of the proposed rule that the FDIC should
consider in determining the effective date and administrative
compliance requirements for a final rule.

D. Plain Language

Section 722 of the Gramm-Leach-Bliley Act \56\ requires the Federal
banking agencies to use plain language in all proposed and final
rulemakings published in the Federal Register after January 1, 2000.
The FDIC invites your comments on how to make this proposed rule easier
to understand. For example:
---------------------------------------------------------------------------

\56\ Public Law 106-102, section 722, 113 Stat. 1338, 1471
(1999), 12 U.S.C. 4809.
---------------------------------------------------------------------------

<bullet> Has the FDIC organized the material to suit your needs? If
not, how could the proposed rule be more clearly stated?
<bullet> Are the requirements in the proposed rule clearly stated?
If not, how could the proposed rule be more clearly stated?
<bullet> Does the proposed rule contain language or jargon that is
not clear? If so, which language requires clarification?
<bullet> Would a different format (grouping and order of sections,
use of headings, paragraphing) make the proposed rule easier to
understand? If so, what changes to the format would make the proposed
rule easier to understand?
<bullet> What else could the FDIC do to make the proposed rule
easier to understand?

E. Providing Accountability Through Transparency Act of 2023

The Providing Accountability Through Transparency Act of 2023, 5
U.S.C. 553(b)(4), requires that a notice of proposed rulemaking include
the internet address of a summary of not more than 100 words in length
of a proposed rule, in plain language, that shall be posted on the
internet website <a href="http://www.regulations.gov">www.regulations.gov</a>.
The FDIC propose to revise thresholds applicable to FDIC-supervised
institutions regarding compliance with 12 U.S.C. 375a(4) and 375b(3),
which concern certain extensions of credit to insiders.
The proposal and the required summary can be found at <a href="https://www.fdic.gov/federal-register-publications">https://www.fdic.gov/federal-register-publications</a>. The summary states that the
FDIC proposes to revise quantitative thresholds for certain extensions
of credit to insiders applicable to FDIC-supervised institutions
regarding compliance with 12 U.S.C. 375a(4) and 375b(3).

F. Executive Order 12866 (as Amended)

Executive Order 12866, titled ``Regulatory Planning and Review,''
as amended, requires the Office of Information and Regulatory Affairs
(OIRA), Office of Management and Budget to determine whether a

[[Page 50737]]

proposed rule is a ``significant regulatory action'' prior to the
disclosure of the proposed rule to the public. If OIRA finds the
proposed rule to be a ``significant regulatory action,'' Executive
Order 12866 requires an agency to conduct a cost-benefit analysis of
the proposed rule. Executive Order 12866 defines ``significant
regulatory action'' to mean a regulatory action that is likely to: (1)
have an annual effect on the economy of $100 million or more or
adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or tribal governments or
communities; (2) create a serious inconsistency or otherwise interfere
with an action taken or planned by another agency; (3) materially alter
the budgetary impact of entitlements, grants, user fees, or loan
programs or the rights and obligations of recipients thereof; or (4)
raise novel legal or policy issues arising out of legal mandates, the
President's priorities, or the principles set forth in Executive Order
12866.
OIRA has determined that this proposed rule is not a significant
regulatory action under section 3(f)(1) of Executive Order 12866 and,
therefore, is not subject to review under Executive Order 12866.
The FDIC's analysis conducted in connection with Executive Order
12866 is also included above under the ``Expected Effects'' section of
this document.

G. Executive Order 14192

Executive Order 14192, titled ``Unleashing Prosperity Through
Deregulation,'' requires that an agency, unless prohibited by law,
identify at least 10 existing regulations to be repealed when the
agency publicly proposes for notice and comment or otherwise
promulgates a new regulation with total costs greater than zero.
Executive Order 14192 further requires that new incremental costs
associated with new regulations shall, to the extent permitted by law,
be offset by the elimination of existing costs associated with at least
10 prior regulations. The FDIC expects the proposed rule, if finalized,
will be neither a regulatory action nor a deregulatory action under
Executive Order 14192 because it simply implements an economic growth
and inflation adjustment to the existing regulatory framework.

List of Subjects in 12 CFR Part 337

Banks, banking, Reporting and recordkeeping requirements, Savings
associations, Securities.

Federal Deposit Insurance Corporation

12 CFR Chapter III

Authority and Issuance

For the reasons set forth in the preamble, the FDIC proposes to
amend part 337 of chapter III of title 12 of the Code of Federal
Regulations as follows:

PART 337--UNSAFE AND UNSOUND BANKING PRACTICES

0
1. The authority citation for part 337 continues to read as follows:

Authority: 12 U.S.C. 375a(4), 375b, 1463, 1464, 1468, 1816,
1818(a), 1818(b), 1819, 1820(d), 1821(f), 1828(j)(2), 1831, 1831f,
1831g, 5412.

0
2. Revise and republish Sec. 337.3 to read as follows:

Sec. 337.3 Limits on extensions of credit to executive officers,
directors, and principal shareholders of FDIC-supervised institutions.

(a) With the exception of 12 CFR 215.20 (c), (d)(3), and (d)(4),
FDIC-supervised institutions are subject to the restrictions contained
in Federal Reserve Board Regulation O (12 CFR part 215) to the same
extent and to the same manner as though they were member banks.
(b) For purposes of complying with Sec. 215.12 of Federal Reserve
Board Regulation O (12 CFR 215.12), no FDIC-supervised institution may
extend credit or grant a line of credit to any of its executive
officers, directors, or principal shareholder or any related interest
of any such person in an amount that, when aggregated with the amount
of all other extensions of credit to that person and to all related
interests of that person, exceeds the lower of 5 percent of the FDIC-
supervised institution's unimpaired capital and unimpaired surplus, or
$2,000,000, multiplied by the GDP growth adjustment, unless:
(1) The extension of credit has been approved in advance by a
majority of the entire board of directors of that bank; and
(2) The interested party has abstained from participating directly
or indirectly in the voting.

* * * * *
(2) An FDIC-supervised institution is authorized to extend credit
to any executive officer of the institution for any other purpose not
specified in Sec. 215.20(d) of Federal Reserve Board Regulation O (12
CFR 215.20(d)) if the aggregate amount of extensions of credit to that
executive officer under this paragraph (c)(2) does not exceed at any
one time the lower of 2.5 per cent of the FDIC-supervised institution's
unimpaired capital and unimpaired surplus or $400,000, multiplied by
the GDP growth adjustment, provided, however, that no such extension of
credit shall be subject to this limit if the extension of credit is
secured by:
(i) a perfected security interest in bonds, notes, certificates of
indebtedness, or Treasury bills of the United States or in other such
obligations fully guaranteed as to principal and interest by the United
States;
(ii) unconditional takeout commitments or guarantees of any
department, agency, bureau, board, commission or establishment of the
United States or any corporation wholly owned directly or indirectly by
the United States; or
(iii) Extensions of credit secured by a perfected security interest
in a segregated deposit account in the lending bank.
* * * * *
(4) (i) In general. The FDIC will publish a GDP growth adjustment
every five years starting with [the effective date of a final rule] for
the dollar-based thresholds set forth in paragraphs (b) and (c)(2) of
this section.
(ii) Rounding. When adjusting thresholds under paragraph (a) of
this section, each threshold shall be rounded based on the size of the
threshold (e.g., thousands, millions) to the nearest number with two
significant digits, such that:
(A) Each threshold in the thousands shall be rounded to the nearest
number with one significant digit; and
(B) Each threshold in the millions shall be rounded to the nearest
number with two significant digits.
(iii) Exception. Notwithstanding paragraph (i) of this subsection,
the FDIC will not publish an updated GDP growth adjustment if the five-
year cumulative growth of nominal U.S. GDP is negative.
* * * * *
3. In Sec. 337.3(d), replace the word ``Definition'' with
``Definitions'' and add a definition for ``GDP growth adjustment'' in
alphabetical order, to read as follows:
* * * * *
GDP growth adjustment means the most recent multiplier published by
the FDIC equal to the ratio of:
(1) The nominal United States gross domestic product in the 4th
quarter of the calendar year prior to publication of the multiplier, as
reflected by the most current estimates published by the Bureau of
Economic Analysis on or before September 30th of the year of the
publication of the multiplier, or a comparable value; to

[[Page 50738]]

(2) The nominal United States gross domestic product in the 4th
quarter of the calendar year prior to [the effective date of a final
rule], as reflected by the most current estimates published by the
Bureau of Economic Analysis.
* * * * *

Federal Deposit Insurance Corporation.

By order of the Board of Directors.

Dated at Washington, DC, on August 4, 2026.
Jennifer M. Jones,
Deputy Executive Secretary.
[FR Doc. 2026-15995 Filed 8-5-26; 8:45 am]
BILLING CODE 6714-01-P

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