Regulatory Alerts2009-06-16
Correction of Apparent Legal Lending Limit Violations
The Office of Financial Institutions issued this advisory opinion to clarify acceptable methods for state-chartered banks and thrifts to correct apparent legal lending limit violations under the Louisiana Banking Law. Institutions may resolve these violations through loan sales, payment reductions, line of credit renegotiations, collateral assignments that increase lending limits, or capital transfers to boost statutory thresholds. Following mergers that create combined debt exceeding limits, management and the Board of Directors must apply reasonable judgment to document corrective actions while prohibiting additional lending to affected borrowers until compliance is achieved.
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