May a member bank purchase a low-quality asset from an affiliate?

CFR · 2024-01-01 · US · Title 12

(a) (b) (1) The loan was not a low-quality asset at the time the member bank purchased its participation; (2) The renewal or extension of additional credit is approved, as necessary to protect the participating member bank's investment by enhancing the ultimate collection of the original indebtedness, by the board of directors of the participating member bank or, if the originating affiliate is a depository institution, by: (i) An executive committee of the board of directors of the participating member bank; or (ii) One or more senior management officials of the participating member bank, if: (A) The board of directors of the member bank approves standards for the member bank's renewals or extensions of additional credit described in this paragraph (b), based on the determination set forth in paragraph (b)(2) of this section; (B) Each renewal or extension of additional credit described in this paragraph (b) meets the standards; and (C) The board of directors of the member bank periodically reviews renewals and extensions of additional credit described in this paragraph (b) to ensure that they meet the standards and periodically reviews the standards to ensure that they continue to meet the criterion set forth in paragraph (b)(2) of this section; (3) The participating member bank's share of the renewal or extension of additional credit does not exceed its proportional share of the original transaction by more than 5 percent, unless the member bank obtains the prior written ap

official document · source cfr-2024 · id 12:§ 223.15