On Tuesday, March 16, 2010, Jerry Blanchard will be the guest speaker at the Community Bankers Association Financial Managers’ Forum (FMF) Dinner Series. Jerry will speak on the important topic “Managing Through an Enforcement Action.”
The 2010 FMF Dinner Series is held at the Villa Christina, 400 Summit Blvd., Atlanta, GA. The dinner schedule, along with the pricing is listed below. You may register online on the CBA’s website.
On Thursday, after now-former Ways and Means Chairman Charles Rangel (D-NY) indicated he would step aside temporarily, Rep. Pete Stark (D-CA), who was next in line behind Rangel, indicated that he would not pursue the Chairmanship. House Democrats installed Rep. Sander Levin (D-MI) as acting chairman of the powerful tax writing panel for the remainder of the year, or until Rangel is sufficiently cleared by the Ethics Committee. If Democrats retain their majority in the House, however, the Chairmanship of the Committee would reopen and sources indicate Massachusetts Rep. Richard Neal, Washington Rep. Jim McDermott, and Georgia Rep. John Lewis may challenge Levin for the top spot.
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Posted in Financial Services Update.
Tagged with Congressional Oversight, Federal Reserve, Regulatory Reform, Unemployment.
On February 3, 2010, the Treasury Department announced the final terms of the Community Development Capital Initiative (“CDCI”), a new TARP program that will invest lower-cost capital in certified Community Development Financial Institutions (“CDFIs”). A certified CDFI is a financial institution that works in markets that are underserved by traditional financial institutions and is certified by the Department of the Treasury’s CDFI Fund.
In order to become a certified CDFI, an institution must meet each of the following certification criteria:
Primarily Serve One or More of the following CDFI Designated Target Markets
1. Investment area, which includes, but is not limited to, geographic boundaries that (i) have a population poverty rate of at least 20%; (ii) have an unemployment rate 1.5 times the national rate; or (iii) are located within an Empowerment Zone or Enterprise Community.
2. Low-income targeted populations, which are comprised of populations with income of not more than 80% of the metropolitan area median family income, or, for rural areas, not more than the greater of 80% of either the area or statewide non-metropolitan median family income.
Bryan Cave LLP welcomes John ReVeal and Jonathan Hightower to the firm’s Financial Institutions group. Both Mr. ReVeal and Hightower returned to Bryan Cave on on March 1, 2010.
John ReVeal
As a former Powell Goldstein LLP partner, Mr. ReVeal brings a wealth of experience in regulation of state and federally chartered banks and savings institutions, credit card and prepaid card issuers, mortgage lenders, consumer finance companies and other providers of financial services and products.
“The D.C. market is ripe with opportunities in the banking and finance sectors, and under John’s direction, the D.C. office will certainly expand in these areas of business” said Walt Moeling, Atlanta partner and co-head of the Financial Institutions group. “We also look forward to having John’s nationally recognized expertise available to our financial services clients located throughout Bryan Cave’s footprint,” Moeling added.
Prior to re-joining Bryan Cave, Mr. ReVeal focused on financial institution regulation and transactions as a partner in another law firm, advising banks and savings institutions on consumer protection regulations, organizational and transactional matters, bank and thrift powers, federal preemption, exportation of rates and charges, and financial institution licensing issues. He facilitates the purchase and sale of banks, thrifts, and non-bank financial institutions. Mr. ReVeal also advises on consumer protection regulations.
Mr. ReVeal earned his Juris Doctor in 1990 from the University of California at Berkeley School of Law, attending his third year at Harvard Law School. He earned a Bachelor of Arts from the University of Washington in 1987.
Jonathan Hightower
A former Powell Goldstein LLP associate, Hightower re-joined the firm’s Financial Institutions group on March 1, 2010.
Prior to re-joining the Firm, Mr. Hightower focused on financial institution, corporate and regulatory matters in a Texas office of another law firm. Throughout his career, he has represented financial institutions in mergers and acquisitions, capital raising transactions and in all types of regulatory matters. Recently, his practice has focused on capital markets transactions and on advising financial institutions facing regulatory challenges. His corporate and securities work includes public and private debt and equity securities offerings and SEC reporting. Mr. Hightower also advises financial institutions on regulatory and compliance issues, tax planning, and compliance in corporate governance.
Mr. Hightower received his J.D. with honors in 2004 from University of Georgia School of Law and his B.B.A. with honors in 2001 from the University of West Georgia.
SEC Publishes Interpretive Release on Climate Change Matters
Yesterday, the SEC published its interpretative release regarding disclosure requirements applicable to climate change matters. The release provides guidance on certain existing disclosure rules that may require a company to disclose the impact that business or legal developments related to climate change may have on its business.
For more information, please read the client alert published by Bryan Cave LLP’s Corporate Finance and Securities practice on February 3, 2010.
SEC Amends E-Proxy Rules to Provide Increased Flexibility
Yesterday the SEC approved amendments to the notice and access proxy, or “e-proxy,” rules. The amendments will provide increased flexibility for companies regarding the format and content of the notice.
For more information, please read the client alert published by Bryan Cave LLP’s Corporate Finance and Securities practice on February 23, 2010.
Federal Judge Shira Scheindlin of the Southern District of New York has ruled that it is not necessary for the litigants in a case now pending before her to retain and preserve all data backup tapes for eDiscovery: “I am not requiring that all backup tapes must be preserved. Rather, if such tapes are the sole source of relevant information (e.g., the active files of key players are no longer available), then such backup tapes should be segregated and preserved.”
For more information, please read the client alert published by Bryan Cave LLP’s Records Management team on February 9, 2010.
Senate Set to Begin Debate on New Jobs Bill
Soon after Senate passage of the first “jobs” bill, on Friday it was announced that the Senate had reached an agreement to begin consideration of a second “jobs” bill on Monday, March 1. Senate Finance Chairman Max Baucus is expected to offer a substitute amendment which will include the remaining items from the original Baucus/Grassley bill, namely extensions to tax credits, pensions amortization, unemployment insurance, COBRA, Small Business Administration stimulus extensions, state Medicaid aid, satellite television reauthorization, and a delay of cuts to physicians’ Medicare reimbursements.
White House Unveils New Rules on Financial Advisors
On Friday, Vice President Biden unveiled the annual report of the Middle Class Task Force which included new proposals designed to shield workers from potential conflicts of interest by financial advisers. Under the proposed rule, financial advisers may give advice only if they do not receive a commission for directing investments to funds with which they are affiliated. The rules will be available for public comment until May 5. The Department of Labor will then issue a final rule, which would apply to all financial institutions that both provide investment options such as 401(k)s to employers and offer financial advice to their employees
Geithner Pushes for Consumer Protection in Financial Reform Legislation
On Thursday, Treasury Secretary Timothy Geithner met with leading executives from the Chamber of Commerce, Private Equity Council, Financial Services Roundtable, American Bankers Association, Independent Community Bankers Association, Financial Services Forum, Managed Funds Association and SIFMA regarding the financial regulatory reform legislation currently pending in Congress. According to sources, Geithner reiterated that the Administration’s strong support fora new consumer protection entity with rulemaking and enforcement authority in the legislation. However, sources also said Geithner is no longer insisting on the creation of a stand-alone consumer protection agency and is open to having the new consumer regulator inside the Treasury Department. In response to this shift, the Chamber of Commerce announced this week it would oppose the new agency whether it becomes a stand-alone entity or if it is within an existing department.
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Posted in Financial Services Update.
Tagged with Consumer Protection, Greece, Jobs Bill.
With attorneys and staff worldwide, attorneys in Bryan Cave’s financial institutions practice often make the news. Sometimes media mentions highlight the firm’s involvement with notable clients, sometimes the individual accomplishments of attorneys and staff. Recent media mentions include:
Klingler in Buffalo News
Atlanta Associate Robert Klingler was quoted Feb. 21 in the Buffalo News on President Barack Obama’s pledge to direct $30 billion in repaid TARP funds to community banks, which could allow those banks to lend more to small businesses.
One of Silverton Bank’s line of business was making loans to bank directors secured by stock in the borrower’s bank or bank holding company. Upon the failure of Silverton the directors were informed that the FDIC did not have a then current intent to sell those loans as it was doing with all of the other assets held by Silverton.
Recently the contractor hired by the FDIC to manage those loans has indicated that there has been a change in plans and plans are being put in place to sell the loans through a DebtX auction. Many directors have concluded that it would be in their best financial interest to try and negotiate a discount on the loan prior to its being sold to a third party. While this may make short term financial sense, there is an issue lurking in the shadows that many directors are not aware of.
A senior FDIC official recently informed a group of bankers that the supervisory side of the FDIC would look disapprovingly on any directors who discounted their director loan with Silverton on the basis that to do so caused the FDIC insurance fund to suffer a loss. While it is difficult to predict how firmly the position may be held by the FDIC, the longer term consequences may be significant if that director seeks to become involved with another bank in the future. Thus, any director, particularly management directors, should carefully weigh all of their options and seek capable legal advice before seeking to discount their loan.
There may be strategies to minimize risk to the director but those require a case by case analysis of the facts and circumstances surrounding the loan. Please contact Jerry Blanchard (404.572.6804) or your regular Bryan Cave contact if you would like to discuss these strategies.
Senate Financial Regulatory Bill
On Friday, Senate Banking Committee Chairman Christopher Dodd indicated he would introduce a new financial regulation reform bill next week. The markup for the bill would therefore likely occur during the week of March 1-5. Dodd and Republican Senator Bob Corker, who announced last week that the pair would be working together on the bill, are spending this week together on a Congressional trip to South America. While there is bipartisan agreement on major issues including resolution authority, consumer protection remains one of the largest areas unresolved. The role of the Federal Reserve in the new financial regulatory scheme also remains a point of contention. In a change from the bill he introduced in November, Dodd is now likely to propose creating a council of regulators to monitor emerging risks, which would be chaired by the Treasury Secretary.
Fed Raises Discount Rate
On Thursday, the Federal Reserve Board of Governors raised the discount rate (the rate charged to banks for direct loans) by a quarter-point to 0.75 percent, effective Friday, February 19, 2010. It was the first increase in the discount rate since June 2006. The change was sooner than most analysts had predicted which indicated to many investors that the Fed would tighten monetary policy in the near future. Banks have generally been reducing their reliance on the discount rate over the past year. As of February 17th, banks had borrowed $14.1 billion as opposed to a year ago when borrowing stood at $65.1 billion.
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Tagged with Bernanke, Consumer Financial Protection Agency, Regulatory Reform.
On February 17, 2010, many banks and financial institutions will, for the first time, become directly subject to the privacy and security provisions of the Health Insurance Portability and Accountability Act (“HIPAA”), and to the enforcement powers of the United States Department of Health and Human Services (“HHS”). The Health Information Technology for Economic and Clinical Health Act (“HITECH Act”), passed as part of last year’s stimulus bill, extended HIPAA’s privacy and security provisions to business associates of covered entities. Many banks and financial institutions will fall into this category by virtue of their provision of so-called medical lockboxes or medical banking services to healthcare providers or other covered entities under HIPAA that require them to handle personal health information (“PHI”).
The HITECH Act also established strict reporting requirements, allowed for increased enforcement by HHS and state attorneys general, and provided for enhanced civil and criminal penalties and statutory damages for breaches and disclosures of unprotected PHI. A separate provision of the HITECH Act addresses entities that offer services to store individuals’ health information online, and places these “vendors” under the regulatory authority of the FTC. Among other things, the new law’s provisions affecting business associates and covered entities:
Under regulations announced by HHS on August 24, 2009, and effective February 22, 2010, there is a “risk of harm” threshold that triggers the breach notification provisions. HHS guidance also indicates that where PHI is properly encrypted as specified by HHS, notification to affected individuals may not be required because such information would not be “unsecured.”
