Certified Regulatory Compliance Manager (CRCM) — Question 120

First National Bank has an employee benefit program whereby all bank employees who meet the bank's credit underwriting standards may obtain consumer loans for major purchases or expenses at a rate that is less than the bank's prime rate. Can the bank allow its executive officers to borrow under this program?

Answer options

• A. No. Executive officers may not have preferential interest rates under any circumstances.
• B. No. However, the related interests of the executive officers may take advantage of it.
• C. Yes. However, executive officers must secure their loans with collateral valued at 100 percent of the loan balance or more.
• D. Yes. Provided the program is available to everyone at the bank as an employee benefit, executive officers may also participate.

Correct answer: D

Explanation

The correct answer is D because the program is designed as an employee benefit available to all bank employees, including executive officers. Options A and B incorrectly state that executive officers cannot participate at all, while option C places unnecessary collateral requirements that are not stipulated in the program.