BankBryanCave.com

Bank Bryan Cave

Regulatory Guidance

Main Content

Establishing a Sustainable Sales Culture

March 31, 2017

Authors

Robert Klingler

Establishing a Sustainable Sales Culture

March 31, 2017

by: Robert Klingler

the-bank-accountWalt Moeling joined us on March 29th for the latest episode of The Bank Account with a lively discussion of bank sales tactics.  In this regulatory environment, banks need to balance growth goals with expectations for scrutiny of their sales tactics.  Regulators, investors, the press and consumers are all paying more attention to bank sales tactics.

While none of us hopes to be asked whether we “want fries with that?” as we conduct business with a bank teller, looking out for potential bank products that could benefit the bank’s customers presents an opportunity for both the bank and the customer to be better off.

You can also follow us on Twitter with Walt (kind of) at @MoelingW, Jonathan at @HightowerBanks, and me

Read More

Interagency CRE Guidance Update

February 4, 2016

Authors

Jerry Blanchard

Interagency CRE Guidance Update

February 4, 2016

by: Jerry Blanchard

In the ancient world kings and emperors regularly sought advice from the Oracle at Delphi when making important decisions. The Oracle would respond to questions, sometimes in poetry, other times in prose, in a manner that sometimes required some interpreting. For example, King Croesus of Lydia asked about the wisdom of his taking on the Persian empire. The Oracle replied that “If you attack you will destroy a great kingdom.” Proving that one should always ask for details, Croesus lost the battle and the Persians, under Cyrus the Great, conquered his kingdom.

Some say that the closest thing we have to the Oracle at Delphi today is the triumvirate of the federal banking regulators, the Federal Reserve, the FDIC and the OCC. The “Oracle” prognosticates and bankers guide their business activities accordingly. Well, perhaps. There was that prediction back in 2006 called “Concentrations in Commercial Real Estate Lending, Sound

Read More

Georgia Garnishment Statute Held Unconstitutional

September 15, 2015

Authors

Bill Custer, Jerry Blanchard and Jennifer Dempsey

Georgia Garnishment Statute Held Unconstitutional

September 15, 2015

by: Bill Custer, Jerry Blanchard and Jennifer Dempsey

The recent opinion of Judge Marvin Shoob in the Strickland v. Alexander case has created a great deal of confusion among banks about their duties in responding to a summons of garnishment in Georgia.  In that opinion, Judge Shoob declared the Georgia garnishment statute to be unconstitutional on multiple grounds. Primary among the  grounds cited by Judge Shoob was the absence of any notice to the debtor of the existence of statutory exemptions which shield certain funds from garnishment or the procedures available to assert those exemptions.  It is unclear whether the decision will be appealed, modified, or cured by subsequent legislation.  Numerous esoteric questions have been raised by the legal community about the validity of the opinion, but those questions are beyond the scope of this post.

Whether Judge Shoob’s opinion is appealed, modified or cured by the Georgia General Assembly, banks currently face significant questions in its wake.  The

Read More

FDIC asks “You Actually Read that Footnote?”

August 5, 2014

Authors

Jerry Blanchard

FDIC asks “You Actually Read that Footnote?”

August 5, 2014

by: Jerry Blanchard

Revised Guidance on Third Party Payment Processors

The FDIC issued a “clarification” on July 28 to the effect that banks had gone overboard in their reaction to the FDIC’s expressed concerns about third party payment processors. The pressure the banks have been subjected to is related to “Operation Choke Point” where the Justice Department, with the assistance of the federal bank regulators, have attempted to block of the flow of funding to certain businesses such as payday lenders by attacking the ability of third party payment processors who deal with the targeted businesses to maintain deposit accounts  with commercial banks. The expressed regulatory reason for this was that banks were exposed to undue reputational risk by assisting such companies to stay in business. While the ability of some of the underlying companies to operate across state lines is currently being litigated by various parties across

Read More

S Corp Banks Swing for the Fences, Settle for a Single

July 22, 2014

Authors

Jonathan Hightower

S Corp Banks Swing for the Fences, Settle for a Single

July 22, 2014

by: Jonathan Hightower

On July 21, 2014, the FDIC issued a Financial Institutions Letter (FIL) on the impact of the capital conservation buffer restrictions under Basel III on S Corporation banks.  The guidance essentially states that, even though Basel III restricts an S Corporation bank’s ability to pay tax distributions if it does not maintain the full capital conservation buffer, the FDIC will generally approve requests to pay tax distributions if no significant safety and soundness are present.  The succinct guidance probably raises more questions than answers.  Among those questions are the following.

  • Would a bank that does not meet the capital conservation buffer requirements ever really be 1 or 2 rated and experiencing no adverse trends?
  • Does the FDIC believe Obamacare and the related net investment income tax will be repealed?  What about state income taxes?  The factor limiting the dividend request to 40% may ignore what is actually
    Read More

OCC Issues New Third-Party Relationship Risk Management Guidance

November 26, 2013

Authors

Bryan Cave

OCC Issues New Third-Party Relationship Risk Management Guidance

November 26, 2013

by: Bryan Cave

On October 30th, the OCC issued new guidance on third-party relationships and associated risk management. The Bulletin, OCC 2013-29, rescinded and replaced prior guidance on this subject (OCC Bulletin 2001-47 and OCC Advisory Letter 2000-9) but specifically retained numerous other OCC and interagency issues on third-party relationships as listed in Appendix B to the Bulletin.

The Bulletin states that the OCC expects a bank to have risk management processes that are commensurate with the level of risk and complexity of the relationship. It details the expected management of all aspects of third-party relationships and is more specific than prior guidance about the responsibility of a bank’s board of directors for overseeing the management processes. For example, the board must ensure an effective process is in place, approve the bank’s risk-based policies governing third-party management, review and approve plans for using third parties, approve contracts with third parties,

Read More

FDIC Sounds the Alarm (again) on Interest Rate Risks

October 9, 2013

Authors

Dan Wheeler

FDIC Sounds the Alarm (again) on Interest Rate Risks

October 9, 2013

by: Dan Wheeler

On October 8, 2013, the FDIC published Financial Institution Letter FIL-46-2013 to re-emphasize the importance of prudent interest rate risk management.  The FDIC’s tone was sharper than in the Advisory on Interest Rate Risk Management collectively published by the financial regulators over three years ago on January 6, 2010.

The FDIC identifies the nationwide trend of institutions reporting “a significantly liability-sensitive balance sheet position” and says in the letter that it “is increasingly concerned that certain institutions may not be sufficiently prepared or positioned for sustained increases in, or volatility of, interest rates.”  That is strong language!  The FDIC is clearly signaling its intent to focus intensely on the issue in upcoming examinations.

Some of the FDIC’s specific concerns about banks with a liability-sensitive balance sheets in a rising rate environment include:

  • Decline in net interest income;
  • Run-off of deposits;
  • Rate sensitive liabilities (e.g., deposits) re-pricing faster
    Read More

Regulators’ “No Stress” Message to Smaller Banks Only Tells Part of the Story

May 14, 2012

Authors

Jonathan Hightower

Regulators’ “No Stress” Message to Smaller Banks Only Tells Part of the Story

May 14, 2012

by: Jonathan Hightower

On May 14, 2012, the Federal Reserve, FDIC and the OCC released a joint statement confirming that that banking organizations with total consolidated assets of $10 billion and under will not be required to conduct formal stress tests.  Management of many smaller banking organizations had been concerned that the stress testing required of larger banks would “trickle down” in an informal sense to smaller banks.  With this regulatory statement, that concern is alleviated, at least in the official sense.

We continue to believe that the heightened (or perhaps renewed) emphasis on risk management by the regulators will affect banks of all sizes.  It is likely that regulators, directors, and shareholders of all banks will want to confirm that management has identified the key risk factors affecting the institution and that the board has established the institution’s tolerance for accepting those risks and implemented any appropriate mitigants.

We recommend that

Read More

GAO Opines that Enhanced CRE Guidance Needed

May 31, 2011

Authors

Robert Klingler

GAO Opines that Enhanced CRE Guidance Needed

May 31, 2011

by: Robert Klingler

On May 19, 2011, the Government Accountability Office published its report on the federal banking regulators’ 2006 interagency guidance on commercial real estate concentrations.  The GAO report concludes that federal banking regulators should enhance or supplement the 2006 CRE concentration guidance and take steps to better ensure that such guidance is consistently applied.

The GAO report indicates that the OCC and Federal Reserve agree with its recommendations, while the FDIC insists that it has already implemented strategies to supplement the 2006 guidance.  A closer review of the OCC and Federal Reserve positions, however, would seem to suggest that the OCC and Federal Reserve agree the 2006 guidance should be enhanced, but don’t seem to have any issue with the inconsistent application of the current guidance, and may even suggest that over-reaching application of the 2006 guidance is necessary since it, in their opinions, doesn’t go far enough.  Both the

Read More

Regulators Issue Statement on Lending to Creditworthy Small Businesses

February 8, 2010

Authors

Jerry Blanchard

Regulators Issue Statement on Lending to Creditworthy Small Businesses

February 8, 2010

by: Jerry Blanchard

On February 5, 2010, the federal banking regulators and the Conference of State Bank Supervisors issued an Interagency Statement on the Credit Needs of Creditworthy Small Business Borrowers.  The Statement builds upon principles set forth in the October 2009 Policy Statement on Prudent Commercial Real Estate Loan Workouts.  After noting the overall decline in loans to small businesses and the reasons for that decline the regulators suggested that lenders may have become overly cautious with respect to small business lending.  They encourage lenders to engage in prudent small business lending and that that examiners will not criticize lenders for working in prudent and constructive manner with small businesses.

The decline in small business lending has many reasons, not the least of which is that loan demand is actually down.  Lenders are also naturally cautious of lending to those businesses that are reliant solely on cash flow that has

Read More
The attorneys of Bryan Cave LLP make this site available to you only for the educational purposes of imparting general information and a general understanding of the law. This site does not offer specific legal advice. Your use of this site does not create an attorney-client relationship between you and Bryan Cave LLP or any of its attorneys. Do not use this site as a substitute for specific legal advice from a licensed attorney. Much of the information on this site is based upon preliminary discussions in the absence of definitive advice or policy statements and therefore may change as soon as more definitive advice is available. Please review our full disclaimer.