Which of the following transactions is subject to the provisions of Regulation O?

Regulation O governs extensions of credit from a bank to its "insiders," which include executive officers, directors, and principal shareholders, as well as their related interests. An extension of credit to a member of the bank's own board of directors falls directly under this definition. The regulation aims to prevent insiders from receiving credit on preferential terms compared to the general public. All loans to insiders must follow specific approval procedures and adhere to lending limits established by the regulation.

A. A time deposit is a liability of the bank to the director, not an extension of credit from the bank.
B. Regulation O specifically exempts reasonable travel and business expense advances that are settled in a timely manner.
C. Regulation O applies to a bank's own insiders, not directors of unaffiliated and noncorrespondent competitor banks.

1. Board of Governors of the Federal Reserve System. (2021). 12 CFR Part 215 - Loans to Executive Officers, Directors, and Principal Shareholders of Member Banks (Regulation O). Section 215.2(h) defines "Director," and Section 215.3(a) defines "Extension of credit."

2. Board of Governors of the Federal Reserve System. (2023). Bank Holding Company Supervision Manual. Section 3800.0, "Loans to Insiders (Regulation O)," page 1.

3. Fordham University School of Law. (2018). Fordham Journal of Corporate & Financial Law, Volume 23, Issue 4. Article discusses the scope and purpose of Regulation O, confirming its application to a bank's own directors.