FAQs
Employee Overdrafts
Question: In the past we have always appointed our CEO, President, EVP and SVP as executive officers for Reg O purposes. As long as the Board of Directors approves it, can we remove the SVP from the list of “executive officers?”
Answer: Possibly. Per Section 215.2 of Regulation O, the board can approve to exclude certain “officers” provided the individual does not participate in major policymaking functions of the bank. The officer must be “… excluded, by resolution of the board … from participation (other than in the capacity of a director).” The rule also specifies that the term executive officer, “… is not intended to include persons who may have official titles … but who do not participate in the determination of major policies of the bank …” Be sure to document the duties of the SVP and how the Board determined they do not participate in major policymaking functions.
Question: Is it correct that after July 1, 2017 overdraft restrictions no longer apply to all employees of a bank? Instead banks should follow Reg. O’s overdraft rules which apply to executive officers and directors of the bank or its affiliates only. Additionally, does that mean any other employees could elect to enroll in overdraft protection?
Answer: That is correct. Before July 1, 2017, Iowa law included all employees in its overdraft restriction provisions and that is why state-chartered bank employees could not enroll in overdraft protection. That section was removed from state law as of July 1, 2017. Therefore, employees who are not executive officers or directors of the bank (or an affiliate) are no longer subject to overdraft restrictions and are now eligible to participate in overdraft protection programs.