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.
(Click here for a print version of this client alert.)
Loan Sale Tips
The volume of purchase and sale of performing and non-performing real estate loans has picked up dramatically over the past year as banks seek to shrink their balance sheets as their capital base falls and other banks and investors seek to take advantage of the sale of assets from failing banks. What are the typical features of such agreements and what are the interests of buyers and sellers in such transactions?
Sellers
The bank which is selling a loan, whether it is performing or non-performing, seeks to cut itself off from the borrower and the collateral just as if it had never made the loan to begin with. To evidence such a transaction, the seller would essentially like to enter into the equivalent of a quit claim or limited warranty deed containing very few warranties and representations. The structure of such an agreement would typically provide for the following items:
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Under the Treasury Rules, new executive compensation rules will govern all financial institutions that participate in the TARP Capital program. The provisions generally apply as long as the Treasury holds an equity or debt position, including warrants and the common stock underlying the warrants, in the institution. To be eligible to participate in TARP Capital, financial institutions must meet the following standards:
- certify that incentive compensation for senior executive officers (“SEO”) does not encourage unnecessary and excessive risks that would threaten the value of the institution;
- require that SEO bonus and incentive compensation be subject to “clawback” if the payment was based on materially inaccurate financial statements or performance metrics;
- prohibit any golden parachute payment to an SEO; and
- agree to deduct no more than $500,000 for an SEO’s compensation.
Powell Goldstein’s preliminary analysis of these standards are included in our Client Alert, titled “Treasury Issues Executive Compensation Rules for the TARP Capital Purchase Program.”
Our October 14, 2008 Client Alert provided our initial thoughts on the TARP Capital Purchase program. While some of our concerns and questions have been subsequently answered, many questions remain.
