On July 8, 2022, the Federal Reserve Board (“Board”) updated “Question 3” of its frequently asked questions (FAQs) regarding Regulation O, “Loans to Executive Officers, Directors, and Principal Shareholders of Member Banks.” In the update, the Board clarified that a bank’s payment of premiums as part of a split-dollar life insurance arrangement is not an improper extension of credit to an insider if certain conditions are met.
The update explains a split-dollar life insurance arrangement as an arrangement under which the bank is entitled to receive a prenegotiated amount from the proceeds of the insurance policy upon the death of the insured or when the insured surrenders the policy. The FAQ notes that the arrangement can take many forms—the insurance policy can be owned by the bank, the employee, or a third party.
Certain conditions must be met in order for the split-dollar life insurance arrangement not to constitute an improper extension of credit. Specifically, the arrangement is not an extension of credit when “(i) the bank is not entitled to payment in an amount greater than the premiums paid by the bank (for example, the bank is not entitled to payment of the premiums plus some assessed interest), and (ii) the insider has no independent obligation to repay the premiums to the bank, other than out of the proceeds of the insurance policy.”
Reprinted with permission from the American Bar Association’s Business Law Today July Month-In-Brief: Business Regulation & Regulated Industries.
September 16, 2022
Member Aaron Kouhoupt (Cleveland) will participate in a CLE program on "How to Manage Payment Fraud Risks and Dispute Resolution Obligations" during the ABA Business Law Hybrid Section Annual Meeting on Friday, September 16, 2022.
McGlinchey is pleased to announce that experienced financial services compliance attorney Ben Gross has joined the firm as a Member (Partner) in California, associated with the Irvine office. Ben focuses his practice on compliance matters facing the mortgage servicing and origination and Fintech industries.
Lauren Ybarra (Dallas) will participate in a panel hosted by InsurTechATX and the Insurance Council of Texas on Thursday, September 1, 2022. They'll discuss the impact of technology on getting insurance to those who need it as well as where the industry is headed in "The Future of Insurance Distribution."
Continuing a recent trend of highlighting potential unfair and deceptive acts or practices (UDAAP) within the auto loan servicing industry, the Consumer Financial Protection Bureau (CFPB) recently issued a new blog post focusing on the Servicemembers Civil Relief Act (SCRA). Auto loan servicers and dealerships may want to review their SCRA policies and procedures to ensure they comply with the law and provide the requisite protection for active military members prior to repossessing collateral.
McGlinchey’s Commercial Law Bulletin is a biweekly update of recent, unique, and impactful cases in state and federal courts in the area of commercial litigation.
servicing portfolios. This quarter, the reporting banks serviced approximately 12.2 million first-lien residential mortgages, with an unpaid principal balance of $2.6T, representing 22% of all outstanding residential mortgage debt.
On June 23, 2022, Representatives Pallone, Rodgers, Schakowsky, and Bilirakis introduced the American Data Privacy and Protection Act, HR 8152. This Act represents an effort to create a comprehensive federal privacy law. Information that could be linked to a person or a device would be covered, and the Act would provide extra protections for sensitive covered data. The Act would not cover publicly available data or de-identified data.
January 31, 2022
On December 30, 2021, the Federal Reserve Board (Fed) published updates to its FAQs for Regulations H, O, W, and Y, as well as FAQs related to covered savings associations. These FAQs are staff interpretations and have not been approved by the Board.