Community Based, Nationally Recognized (sm)

Monthly Archives: October 2009

News Roundup — October 26, 2009 to October 30, 2009

By Stan Santos - Friday, October 30, 2009

Gift Cards

The Consumer Federation of America issued a press release on October 27, 2009 in relation to a survey that demonstrates the depth of consumer misunderstanding when it comes to gift cards. According to the survey results, approximately 33% of a representative sample of slightly over 1,000 adult Americans know how much gift cards cost and only 54% are aware that “six to 12 months after purchase, some of these gift cards charge a monthly fee”. Here is related article in the Washington Post published on October 25, 2009 in relation to the rise of prepaid cards as opposed to traditional bank accounts and credit cards.

(more…)

Email This Content Email This Content Posted in News Roundup. Tagged with , , , , , , .

October 2009 Client Alerts

By Stan Santos - Friday, October 30, 2009

FinCEN’s New Bank Secrecy Act Compliance Outreach Initiative Targeted at Depository Institutions With Assets Under $5 Billion

Yesterday FinCEN announced a new outreach initiative targeted at depository institutions with assets under $5 billion. The outreach initiative builds upon knowledge FinCEN previously gained from its meetings with larger financial institutions. As part of its ongoing outreach efforts, FinCEN is now seeking to engage smaller to moderate size depository institutions who are working to implement the four pillars of the Bank Secrecy Act regulatory regime: (1) policies, procedures and internal controls; (2) designation of a compliance officer; (3) ongoing training; and (4) independent testing.

For more information, please read the client alert published by Bryan Cave LLP’s Financial Institutions Client Service Group on October 15, 2009.

(more…)

Email This Content Email This Content Posted in Client Alerts. Tagged with , , , , , , , .

Fraudulent E-Mails Claiming to Be From the FDIC

By Rob Klingler - Thursday, October 29, 2009

We are aware of several fraudulent emails circulating purporting to be from the FDIC.  Subject lines include: “FDIC has officially named your bank a failed bank” and “FDIC Alert: you need to check your Bank Deposit Insurance Coverage.”

These e-mails and the associated Web site are fraudulent. Recipients should consider the intent of these e-mails as an attempt to collect personal or confidential information, some of which may be used to gain unauthorized access to on-line banking services or to conduct identity theft.

The FDIC does not issue unsolicited e-mails to consumers. Financial institutions and consumers should NOT follow the link in the fraudulent e-mail.

The FDIC has released a special alert confirming that these announcements are not from the FDIC.

The official FDIC website does contain useful information if you have questions about FDIC insurance; alternatively, we encourage you to contact your bank if you have questions about whether your deposited funds are insured.

(more…)

Email This Content Email This Content Posted in Bank Regulations, Troubled Institutions. Tagged with , .

REMINDER – Red Flags Rule Takes Effect Nov. 1

By Roy Hadley and Toby Butler - Tuesday, October 27, 2009

Barring some last minute legislative/regulatory activity, the FTC will expect companies to be red flags rule compliant as of November 1, 2009.  Companies should recognize that there is not a ”one size” approach to addressing identity theft risks in making a Red Flags Rule Plan.  Instead, the FTC expects each company’s plan to be tailored to its own needs and circumstances.   Click here for help on steps your company can take.

Email This Content Email This Content Posted in Bank Regulations. Tagged with , .

FDIC Pre-payment Assessment Update

By Krishna Walker - Tuesday, October 27, 2009

On September 29, 2009, the FDIC announced a proposed rule that would require institutions to prepay on December 30, 2009, an estimated quarterly risk-based assessments for the 4th quarter of 2009 and for all 2010, 2011, and 2012.   For a synopsis, see our prior summary of the proposed rule. Comments to the proposed rule are due by October 28, 2009.

Tax Treatment of Prepayments

The general rule is that prepayments that benefit more than one taxable period cannot be deducted in full, but must be deducted over the periods for which the benefits are obtained.  Thus, a payment of 3 years worth of insurance premiums cannot be deducted in a single tax year regardless of whether the institution is an S corporation or a C corporation.  The rule also is the same for cash method taxpayers, with one limited exception.  A cash method taxpayer can prepay up to 12 months of expenses and claim a deduction when paid.  For example, an institution could prepay its 2010 insurance premiums in December of 2009 and claim the deduction in 2009.  However, if the institution prepaid 3 years worth of insurance premiums in 2009, it could not deduct the entire amount paid.

(more…)

Email This Content Email This Content Posted in Bank Regulations. Tagged with , .

News Roundup — October 19, 2009 to October 23, 2009

By Stan Santos - Friday, October 23, 2009

Consumer Financial Protection Agency

On October 20, 2009, the House Financial Services Committee voted to give the federal government the power to block states from regulating large national banks in some circumstances. The compromise offered by Rep. Melvin Watt (D-NC) and Dennis Moore (D-KS) and approved by voice vote, grants the office of the comptroller of the currency the power to override state action only if it found that the state law in question “significantly” interferes with federal regulatory policies.

On October 22, 2009, the House Financial Services Committee passed by a vote of 39-29 a bill that would create the Consumer Financial Protection Agency. A summary of the bill can be read here. Early returns on the outcome of the preliminary legislative battle have been revealed in preparation for the debate in the months ahead.

Anti-Money Laundering

Some investors defrauded by Bernard Madoff added KPMG, JP Morgan Chase and The Bank of New York Mellon Corporation as co-defendants to a civil lawsuit filed in New York State Supreme Court on October 20, 2009. Additional details (via a Reuters article filed with the New York Times) can be viewed here.

(more…)

Email This Content Email This Content Posted in News Roundup. Tagged with , , , , , , , .

President Obama Announces Additional TARP Capital for Community Banks

By Rob Klingler - Wednesday, October 21, 2009

On October 21, 2009, President Obama announced the broad outlines of a new program to provide additional capital to community banks in an effort to spur lending to smaller business.

Actual facts about the new program are currently very sparse.  A review of the currently available information does provide some details that may be attractive to community banks that current have TARP CPP funds, as well as those that currently do not have funds.  However, it does not appear that there will be any change in the Treasury’s determination of which community banks are eligible for TARP funds; participating institutions appear to still need to be viable without the funds.

There are three basic sources of official information:

  1. the text of President Obama’s speech in Landover, Maryland;
  2. the press release announcing the speech; and
  3. a fact sheet on the President’s Small Business Lending Initiatives.

Known Facts

  • The funds will be available to “viable banks with less than $1 billion in assets.”  The announcement does not give any indication that the Treasury will alter its existing viability standards.
  • Participants will be required to submit a small business lending plan explaining how the additional capital will allow them to increase lending to small businesses, and will be required to submit quarterly reports detailing their small business lending activities.
  • The initial dividend rate will be 3% rather than the 5% required under the current TARP Capital Purchase Program.  The dividend will rise to 9% after five years, consistent with the existing TARP Capital Purchase Program.  Presumably, Subchapter S institutions will receive a comparable reduction in the rate paid on the subordinated debt.
  • The amount of capital is limited to 2% or the institution’s risk-weighted assets.  This is less than the 3% permitted under the existing TARP Capital Purchase Program, and less than the 5% currently permitted for institutions that are less than $500 million in total assets.
  • The Treasury is working to finalize program terms “in the coming weeks.”
  • The Treasury will also determine how to handle existing Capital Purchase Program participants to allow them to replace existing capital with investments under the new program (effectively reducing their dividend costs in exchange for a commitment to increase small business lending).
  • Community Development Financial Institutions (CDFIs), including CDFI credit unions, will be able to apply for funds with a dividend rate of 2% for eight years, after which it will increase to 9%.

(more…)

Email This Content Email This Content Posted in Small Business, TARP Capital. Tagged with , , , .

FinCEN Outreach to Community Banks

By Marilyn Barker - Tuesday, October 20, 2009

FinCEN has announced a new outreach effort targeted at depository institutions under $5 billion in total assets to determine how these institutions comply with the Bank Secrecy Act and the specific compliance hurdles they confront.   If your institution has assets under $5 billion, please see our client alert about FinCEN’s outreach proposal.

As part of its ongoing outreach efforts, FinCEN is now seeking to engage smaller to moderate size depository institutions who are working to implement the four pillars of the Bank Secrecy Act regulatory regime: (1) policies, procedures and internal controls; (2) designation of a compliance officer; (3) ongoing training; and (4) independent testing.

Email This Content Email This Content Posted in Bank Regulations, Client Alerts. Tagged with , , .

News Roundup — October 12, 2009 to October 16, 2009

By Stan Santos - Friday, October 16, 2009

Prepaid Cards

The latest issue of Selling Prepaid E-Magazine is now online. One of the top feature articles in this month’s issue is a story on the National Branded Prepaid Card Association‘s response to FinCEN‘s request for public commentary on input from the prepaid card industry concerning the definition of the term “stored-value”.

According to an economic study released on October 15, 2009, consumers who opt-in regarding network branded prepaid card usage could pay as much as 70% less in fees compared to more traditional checking and debit card accounts, making prepaid cards a far more cost-effective and valuable financial tool for many.

Consumer Financial Protection Agency

Broox Peterson points out a few flaws in the current draft of the CFPA bill, HR 3126, that may have been fixed in the markup that took place during a House Financial Services Committee hearing on October 14, 2009.

Data Security

WIRED finally sheds light on a series of hacker attacks that occurred in 2005 and in 2006 on Wal-Mart.

The White House’s official blog offers this look at what Americans can do to protect their online presence.

Over on ZDNet Australia, Simon Sharwood reports how National Australia Bank is currently contemplating adding another layer of security in order to offer its customers added peace of mind.

In a move that has the potential to make it MUCH more difficult for retailers to defend themselves against civil data breach lawsuits, the judge overseeing the Hannaford data breach case has reversed himself, resulting in the involvement of the Maine Supreme Court.

Rep. Yvette Clarke (D-NY) has urged President Obama to quickly appoint a cybersecurity czar, citing concerns a wide array of online threats against the public and private sectors.

A massive click fraud ring has recently been discovered operating in China that involved 200,000 different IP addresses and racked up more than $3 million worth of fraudulent clicks across 2,000 advertisers in a two-week period. Although the ring has now dissipated (or more likely, been folded into another scam), the danger of such schemes remains.

(more…)

Email This Content Email This Content Posted in News Roundup. Tagged with , , , , , .