As borrowers have increasingly complex business structures and relationships with related parties, it is a good time to review the laws and regulations relating to legal lending limits. This is the regulators’ way of discouraging concentrations of loans that have interrelated risks. In this program, we will review the lending limit rules that apply to California state-chartered banks, national banks, credit unions, and savings associations. Certain loans between related parties must be combined and aggregated for lending limit purposes!

 

The concept of limiting the aggregate amount a regulated depository institution may lend to one borrower or a group of borrowers has been embraced by lawmakers and regulators as a means of managing an institution’s loan concentrations of risk to one borrower or a group of related borrowers. As a general matter, regulators aggressively enforce the lending limit rules. Violations of these rules can subject a regulated institution, as well as its directors and senior officers, to severe penalties and other sanctions.

 

 

The Fair Credit Reporting Act principally regulates consumer reports (often called “credit reports”) and consumer reporting agencies (credit bureaus) but also regulates financial institutions that use credit reports and furnish information to credit bureaus. The main question financial institutions used to have about FCRA was, “When can we pull somebody’s credit report?” While still relevant, this question has recently been surpassed by concerns about the accuracy of information institutions furnish (report) to credit bureaus. State and federal laws require that the information be “accurate” but what does that mean? (Yes, there’s a regulation on point.) A related question is how to respond to a consumer’s dispute of information your institution reported. Can you just delete it and forget about it, or must you try to correct it? We will discuss this in our May 2026 Webinar. There will be plenty of hypotheticals to illustrate the rules and time for questions and answers.