Regulatory Alerts2005-12-22 | ISGC-2005-023-DOBWashington State Department of Financial Institutions Interpretation of the Loans-to-One Borrower Rule Direct Benefit Test
The Washington State Department of Financial Institutions interprets WAC 208-512-260 to align the state's "Direct Benefit Test" with federal OCC standards by limiting attribution to the extent of loan proceeds actually used. This determination resolves statutory disparities by prioritizing legislative intent for competitive parity over the literal absence of qualifying language in the state rule. Washington State-chartered banks must adequately document how loan proceeds are used to benefit other persons, or face full loan attribution for lending limit purposes.
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