On November 1, 2023, the Office of the Comptroller of the Currency (OCC) took the legal world by storm when it issued a profound detailed guidance–termed the Bulletin, to national banks and federal savings associations. The guidance speaks to sophisticated standards of risk management and the practices of safe and sound lending, particularly applicable to venture lending.
“Venture lending”, as used in this context, refers to the practice of lending to high-risk borrowers either in an early-, expansion-, or late stage of corporate development. Highly vigilant parties in law, finance, and corporate settings, such as yourselves, are aware of how this unique area of finance can prove to be both fruitful and dangerous, thereby appreciating the need for such guidance.
The Bulletin, importantly, excludes asset-based lending with full monitoring and controls. It’s a crucial detail that underscores the OCC’s nuanced understanding of the landscape and its complexities. For those unfamiliar, asset-based lending is a business loan secured by collateral. Relaxations in this area hint at the OCC’s trust in the risk management systems already in place for asset-based lending, a pertinent detail for those corporations and law firms involved in these practices.
The guidance itself is issued by a major regulatory body, the OCC, which sheds light on the significance of this event. The OCC supervises and regulates all national banks and federal savings associations, along with the federal branches and agencies of foreign banks. Thus its decisions and guidance can impact practices on a large scale.
Further details on the rules and their implications can be found in the full coverage on JD Supra, authored by Morrison & Foerster LLP, a well-respected law firm. Such guidance is typically followed by many questions, analyses, and interpretations. Engaging directly with this coverage could prove beneficial in grasping the immediate reactions and beginning to understand the potential impacts of the guidance.