Regulation G

Regulation G is a federal banking regulation that requires insured depository institutions, their affiliates and subsidiaries to report on and publicly disclose their written agreements with nongovernmental entities or persons (NGEPs). The regulation applies to institutions that include state member banks, bank holding companies, and savings and loan holding companies.

Regulation G would cover, for example, an agreement for a bank to make more loans in the NGEP's community. The agreement must be submitted to the applicable federal banking agency and reported on annually. The regulation applies to cash payments, grants or other considerations (excluding loans) totaling more than $10,000 per calendar year. It also applies to loans totaling more than $50,000 per calendar year.

Regulation G governs the disclosure and reporting of agreements related to the Community Reinvestment Act (CRA) and fulfills requirements of the Gramm-Leach-Bliley Act. The CRA encourages banks to provide credit such as real estate lending in low and moderate income communities. The intent of the act is to ensure that banks provide adequate financial services to historically underserved communities and demographics while maintaining responsible banking standards. The Gramm-Leach-Bliley Act is a broad-based act designed to help update and modernize the financial industry.

Covered agreements that must be reported per Regulation G include any contract, arrangement or understanding that is in writing when the parties include one or more insured depository institutions or affiliates of an insured depository institution and one or more NGEP.

Regulation G applies if the agreement is made in connection with the fulfillment of the CRA. This includes agreements made with an NGEP that has issued CRA communications prior to entering into the agreement.

CRA communications are any written or oral comments issued to a federal banking agency regarding the sufficiency of a bank’s CRA performance, any affiliated insured depository institutions, or any CRA affiliate.

The rules governing covered agreements do not include individual loans secured by real estate. Covered agreements do not include specific contracts or commitments for loans nor do they include extensions of credit to individuals, businesses, farms or other entities. Regulation G’s definition of covered agreements does not apply if the funds in question are loaned at rates not substantially below market rates. Regulation G also does not apply if the loan application or documentation does not indicate the borrower intends to use the funds to make a loan or extension of credit to third parties.