The Federal Reserve Board announced Friday it will extend until November 4 the public comment period on its proposal to modernize Regulation O, the decades-old rulebook governing how much banks can lend to their own executive officers, directors and principal shareholders.
The extension follows requests from commenters who said they needed more time to review the proposal and prepare their input, according to a Federal Register notice cited in coverage by other outlets. The Fed and the FDIC are jointly behind the proposal, which would significantly raise the dollar thresholds that trigger board approval and other restrictions on insider credit.
Under the plan, the maximum amount a bank could extend to an executive officer for consumer-purpose loans — things like auto loans and unsecured personal loans — would jump from $100,000 to $400,000. The maximum aggregate amount of credit that can flow to an insider before the bank's board of directors must give prior approval would rise from $500,000 to $2 million. The rule would also include a new automatic adjustment mechanism, tying those thresholds to changes in nominal U.S. gross domestic product every five years so they don't go stale again.
The Fed's notice was blunt about why it granted the delay: commenters asked for it, and the agency said an extension "will provide an additional opportunity for interested parties to consider the proposal and prepare comments."
What the agency did not say is whether the volume of comments it has received so far is unusually high, or whether the feedback has been hostile. It also did not specify how many requests for an extension it fielded. What is known is that the November 4 deadline collides with the final stretch of the midterm election campaign, meaning the comment window now overlaps with the period when public attention to federal rulemaking is typically at its lowest.
The proposal lands at the FDIC as well as the Fed, meaning banks of all sizes will be affected. For community banks, the higher thresholds could mean fewer regulatory hoops to jump through when lending to insiders; for watchdog groups, the same change could mean less oversight of deals that put depositors' money at risk. Both the Fed and the FDIC have not yet signaled when a final rule might be adopted.
The comment period extension was first reported in broad strokes Friday, with the Federal Register notice providing the mechanical details. Anyone wishing to file comments can do so through the Fed's public comment portal until November 4. The agency has not announced whether it will hold any public hearings on the proposal, and a Fed spokesperson did not respond to a question about how many comments have been received to date.
Our Take
Here's what the fine print doesn't tell you: the Federal Reserve has spent years insisting it is the smartest room in Washington, yet it needed public pressure to give Americans more than a few weeks to weigh in on a rule that governs how bank insiders can borrow against depositors' cash.
August 4 was the original deadline. Now it's November 4 — the day after the midterm elections, when the political class will be nursing its hangover and the press will have moved on. That's not a coincidence, folks. It's the administrative state's favorite trick: bury the important stuff in the calendar.
The substance matters too. Raising the insider lending cap from $100,000 to $400,000 and the aggregate threshold from $500,000 to $2 million is a big deal for the bank officers who qualify. The Fed says it's just keeping pace with inflation. Maybe."
Republicans in Congress should demand the Fed explain exactly how this proposal protects depositors — not just how it protects bank executives from paperwork. And every American who has ever paid a fee or gotten a form letter from their bank should use this extra window to make their voice heard before November 4.
The comment portal is open. Use it.
