On December 27, 2024, the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board, and the Office of the Comptroller of the Currency extended a temporary no-action position tied to certain investment funds and their portfolio investments under Regulation O and Part 363. FIL-85-2024 is best read as a regulatory-relief update with an expiration date, not a permanent rewrite of the underlying banking rules. It gives banks more time to keep files, approvals, and internal controls aligned while the agencies decide whether anything broader should follow.
That distinction matters for counsel, compliance teams, and boards. The update can reduce immediate friction for some institutions, but it does not replace the baseline rule set, and it does not turn a conditional agency position into a forever rule. The safest way to use the relief is to treat it as a bridge period, document the reliance carefully, and make a clean plan for the date when the relief stops being available.
What FIL-85-2024 Does
The main practical point is straightforward: the agencies extended the existing no-action position through January 1, 2026. That extension replaced the prior sunset schedule and gave affected institutions a new, fixed window to keep their records and governance materials aligned with the current position.
For banks, the value is not abstract. Temporary regulatory relief can matter when an institution has private-fund exposure, board-level questions about related interests, or credit files that need to be easier to explain in an exam setting. If the bank has already been treating the affected exposures as a monitored exception rather than a free pass, the extension gives management more time to complete the work instead of rushing it.
- It extends relief. It does not create a new permanent safe harbor.
- It has a hard end date. The current extension runs through January 1, 2026.
- It remains conditions-based. The relief only works if the institution can actually support reliance on it.
- It sits on top of the baseline rules. Regulation O and Part 363 are still the starting point.
What It Does Not Change
FIL-85-2024 does not replace Regulation O. It does not replace Part 363. It does not erase the institution’s obligation to maintain reasonable records, board oversight, and clear approval trails. In other words, the extension helps with timing, but it does not change the basic compliance architecture that banks already rely on.
That is the point most likely to get overstated in internal summaries. If a memo says the bank is “covered” in a way that sounds permanent, the language is probably too broad. A cleaner description is that the institution is relying on a temporary no-action extension for a defined period while it continues to operate under the underlying framework. That wording keeps the file honest and makes future review easier.
This page also should stay separate from brokered-deposits material. The brokered-deposits pages completed recently deal with a different regulatory cluster, and this post should not re-teach those basics or merge the two issues. Here, the focus is the temporary relief itself, the records that support it, and the operational decisions that should happen before the sunset date.
Who Should Be Looking at This Now
The best audience is not just the lending team. It is the combination of counsel, compliance, credit, and board or committee leadership that has to answer a simple question: if the relief ends on January 1, 2026, what is already clean, what still needs support, and what should be fixed before the deadline arrives?
In practice, that means the bank should identify every file that depends on the extension and then decide whether the file is being managed as a temporary bridge, a documented exception, or a candidate for cleanup. The more sensitive the relationship, the more important that answer becomes. If the institution has private-fund exposure, controlled portfolio companies, or related-interest questions, the review should happen early enough to act on the result.
How Counsel and Compliance Should Use the Extension Window
The extension window is most useful when it is treated like project time. That means naming an owner, setting review dates, and making sure the institution is not waiting until the last quarter before expiry to figure out what the relief actually supports.
A good working model is simple: counsel owns the legal framing, compliance owns the control mapping, credit owns the transaction inventory, and the board or committee receives a concise summary of what is changing and what still needs to be addressed. That structure helps the bank answer exam questions without scrambling, and it prevents the temporary extension from being treated like an informal comfort memo.
- Inventory the covered relationships. Identify the funds, affiliates, insiders, and related interests that depend on the extension.
- Check approvals and exceptions. Confirm whether the file still matches the approval trail and any board actions already taken.
- Refresh the legal memo. The memo should state the December 27, 2024 context, the January 1, 2026 end date, and the baseline rules that still apply.
- Update training and talking points. Relationship managers and credit staff should know this is temporary relief, not a deregulation signal.
- Set a pre-expiry review date. Do not wait until the final month to reopen the file.
What Records Should Be Refreshed
If the bank is relying on the extension, the file should be easy to follow from start to finish. That usually means refreshing the documents that tell the story of why the relief applies and what internal controls support it.
At a minimum, the institution should review the reliance memo, board materials, committee minutes, approval records, exception logs, and any internal analysis that explains how the affected exposure was mapped. If staff members have been using shorthand labels that made sense internally but would be hard to explain later, now is the time to fix them. Good records should let a new reviewer understand the issue without needing the original deal team in the room.
For banks that manage multiple overlapping compliance frameworks, this is also a useful moment to make sure the temporary relief is not buried in the wrong folder. The record should be easy to find, easy to cite, and easy to revisit before the extension ends.
Decision Support for Boards
Boards do not need a long technical memo. They need a short, accurate one that explains what changed, why the bank is relying on the extension, and what management is doing to prepare for the end of the relief. The board packet should give directors enough detail to understand the risk without making them parse the entire regulatory history.
A strong board summary will say three things. First, the extension is temporary and conditions-based. Second, the bank is still operating under Regulation O and Part 363 as the baseline framework. Third, management has a date-driven plan to revisit the files before January 1, 2026. That structure keeps oversight focused on action rather than abstract policy discussion.
Boards should also be wary of language that implies the issue has been solved permanently. If the bank will need another review before expiration, say that directly. If some files may need to be repapered, reduced, or exited, say that too. Clear timing is more useful than overly optimistic phrasing.
What to Do Before Expiry
The most valuable work happens before the relief runs out. Institutions should not wait for the calendar to force the issue. Instead, they should decide in advance which files are clean, which ones need additional support, and which ones should be unwound or restructured if the agency posture changes again.
That review usually breaks into a few practical questions: Is the institution’s reliance well documented? Are the approvals still current? Would an examiner understand why the bank treated the relief as applicable? And if the agencies do nothing new before January 1, 2026, what happens next? Those are the questions that turn a temporary agency position into an actual operating plan.
- Identify which loans, investments, or counterparties depend on the extension.
- Confirm whether any files require fresh board or committee attention before expiry.
- Decide whether any records should be re-papered now instead of later.
- Assign a date for a final pre-expiry review well ahead of January 1, 2026.
Common Ways Banks Misread Temporary Relief
The biggest mistake is assuming temporary relief means the underlying rule no longer matters. That is backwards. The rule still matters, and the relief only changes how long the bank can continue to rely on the agencies’ current no-action posture.
Another common mistake is to let the extension sit in one compliance silo. If legal knows about it but credit does not, or if the board deck mentions it once and then drops it, the bank will end up with a partial record. A partial record is usually the kind that creates work later, especially when the sunset date comes back into view.
The final mistake is ignoring the date. Temporary relief is only helpful if the institution can actually work backward from the sunset date. The closer the expiration gets, the more the bank should think in terms of cleanup, final review, and decision points rather than open-ended monitoring.
Suggested 30-Day Action Plan
Over the next 30 days, the bank should do three things. First, confirm which files rely on FIL-85-2024. Second, make sure the legal and compliance summary is current and dated. Third, put the pre-expiry review on the calendar so the institution is not trying to assemble the record at the last minute.
That short plan is usually enough to keep the topic moving. It also helps management speak in a practical way: what is covered, what needs work, who owns the file, and when the next review happens. For most institutions, that is far more useful than a long policy narrative.
How This Should Be Framed Internally
The cleanest internal framing is this: FIL-85-2024 gives the bank temporary regulatory relief through January 1, 2026, but it does not displace Regulation O or Part 363. The bank is using the extra time to organize the file, refresh records, and prepare for the possibility that the agencies may change course again.
That framing is accurate, durable, and easy to hand to examiners if needed. It also keeps the institution focused on the operational question rather than the politics of the rulemaking. For banks, that is usually the better place to spend energy.
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Frequently Asked Questions
Does FIL-85-2024 make Regulation O go away?
No. It extends a no-action position for a defined period, but it does not repeal or replace the underlying rule.
Who should care most about this update?
Compliance teams, credit officers, counsel, and directors at institutions that have fund-complex exposure or other insider-credit questions.
What should be preserved for review?
Keep the original reliance memo, board materials, approval records, and any internal notes showing why the institution treated the extension as applicable.
