Board Essentials Module 4: Restrictions on Loans to Directors
Restrictions on Loans to Directors
There are restrictions
on loans made to a credit union’s directors and their related interests. Since preferential treatment of directors is
prohibited, a loan to a director (or the director’s immediately family or
business enterprise) must be based on the same terms and underwriting criteria
as loans to other members. In addition,
if the director serves as a borrower, co-signer, or guarantor, loans aggregated
in excess of certain thresholds must be approved in advance by a majority of
the entire board, and the interested director must abstain. Regulators require strict compliance with
these rules, so it’s imperative that all directors understand the restrictions.
Duration 30-minutes
Presented By
Spencer Fane LLP
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