Author Archive
Monday Regulatory Roundup: Here’s What’s Happening in Washington (2/20)
Prohibitions and Restrictions on Proprietary Trading and Certain
Interests in, and Relationships With, Hedge Funds and Covered Funds
AGENCY: Commodity Futures Trading Commission.
ACTION: Notice of proposed rulemaking.
SUMMARY: The Commodity Futures Trading Commission (“CFTC” or
“Commission”) is requesting comment on a proposed rule that would
implement Section 619 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (“Dodd-Frank Act”) which contains certain prohibitions
and restrictions on the ability of a banking entity and nonbank
financial company supervised by the Board of Governors of the Federal
Reserve System (the “Board”) to engage in proprietary trading and
have certain interests in, or relationships with, a hedge fund or
private equity fund (“CFTC Rule”).
On November 7, 2011, the Office of the Comptroller of the Currency,
Treasury (“OCC”); the Board; the Federal Deposit Insurance
Corporation (“FDIC”); and the Securities and Exchange Commission
(“SEC”) published a joint proposed rule implementing Section 619 of
the Dodd-Frank Act (the “Joint Release”).\1\ The CFTC is adopting the
entire text of the proposed common rules section from the Joint Release
(the “Joint Rule”) as part of its proposed rule.\2\ Similar to the
OCC, the Board, the FDIC, and the SEC in the Joint Release, the CFTC is
modifying the Joint Rule with CFTC-specific rule text. The CFTC Rule
also contains additional questions specific to the CFTC in Section III
and does not include Subpart E of the Joint Release because Subpart E
deals exclusively with the Board. The Commission solicits comments on
all aspects of this proposed rule.
DATES: Comments should be received on or before April 16, 2012.
Disclosure to Investors in System-wide and Consolidated Bank Debt
Obligations of the Farm Credit System
AGENCY: Farm Credit Administration.
ACTION: Proposed rule.
SUMMARY: The Farm Credit Administration (FCA, us, we, or our) proposes
to amend our regulations related to the Federal Farm Credit Banks
Funding Corporation (Funding Corporation) System Audit Committee (SAC)
and the Farm Credit System (System) annual report to investors. The
proposed rule would remove the provision that a two-thirds majority
vote of the Funding Corporation board of directors be required to deny
a request for resources by the SAC to engage independent legal counsel,
outside advisors or consultants. The proposed rule would instead
require appropriate funding to the SAC to perform these duties,
quarterly reporting by the SAC to the Funding Corporation board on
resources used, and annual reporting to investors.
DATES: Submit comments on or before April 16, 2012.
Defining Larger Participants in Certain Consumer Financial
Product and Service Markets
AGENCY: Bureau of Consumer Financial Protection.
ACTION: Proposed rule; request for public comment.
SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is
proposing a new regulation pursuant to
section 1024 of the Consumer Financial Protection Act of 2010. That
provision grants the Bureau authority to supervise certain nonbank
covered persons for compliance with Federal consumer financial laws and
for other purposes. The Bureau has the authority to supervise nonbank
covered persons of all sizes in the residential mortgage, private
education lending, and payday lending markets. In addition, the Bureau
has the authority to supervise nonbank “larger participant[s]” in
markets for other consumer financial products or services. The Bureau
must define such “larger participants” by rule, and such an initial
rule must be issued by July 21, 2012.
In this proposal, the Bureau proposes to define larger participants
in the markets for consumer debt collection and consumer reporting. The
Bureau intends that this proposal and subsequent initial rule will be
followed by a series of rulemakings covering additional markets for
consumer financial products and services. The Bureau also proposes to
include provisions in this proposal that will facilitate the
supervision of nonbank covered persons.
DATES: Comments must be received on or before April 17, 2012.
Monday Regulatory Roundup: Here’s What’s Happening in Washington (2/13)
Electronic Fund Transfers (Regulation E)
AGENCY: Bureau of Consumer Financial Protection.
SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is
proposing to amend Regulation E, which implements the Electronic Fund
Transfer Act, and the official interpretation to the regulation, which
interprets the requirements of Regulation E. The proposal is related to
a final rule, published elsewhere in today’s Federal Register, that
implements section 1073 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act regarding remittance transfers. The proposal
requests comment on whether a safe harbor should be adopted with
respect to the phrase “normal course of business” in the definition
of “remittance transfer provider.” This definition determines whether
a person is covered by the rule. The proposal also requests comment on
several aspects of the final rule regarding remittance transfers that
are scheduled in advance, including preauthorized remittance transfers.
In developing the final rule, the Bureau believes that these issues
would benefit from further public comment.
DATES: Comments must be received on or before April 9, 2012.
Monday Regulatory Roundup: Here’s What’s Going on in Washington (2/6)
Financial Derivatives Transactions To Offset Interest Rate Risk;
Investment and Deposit Activities
AGENCY: National Credit Union Administration.
SUMMARY: Through this Advance Notice of Proposed Rulemaking (“ANPR”),
the NCUA Board (Board) requests additional public comments to identify
the conditions for federal credit unions (FCUs) to engage in certain
derivatives transactions for the purpose of offsetting interest rate
risk (IRR).\1\ This ANPR follows an earlier Advance Notice of Proposed
Rulemaking (ANPR I) on derivatives transactions issued for comment (76
FR 37030, June 24, 2011). This ANPR asks additional questions regarding
the conditions under which NCUA may grant authority for an FCU to
engage in derivatives transactions independently.
DATES: Comments must be received on or before April 3, 2012.Compensation, Retirement Programs, and Related Benefits
Loan Workouts and Nonaccrual Policy, and Regulatory Reporting of
Troubled Debt Restructured Loans
AGENCY: National Credit Union Administration (NCUA).
SUMMARY: NCUA proposes to amend its regulations to require federally
insured credit unions (FICUs) to maintain written policies that address
the management of loan workout arrangements and nonaccrual policies for
loans, consistent with industry practice or Financial Institutions
Examination Council (FFIEC) requirements. The proposed rulemaking
includes guidelines set forth as an interpretive ruling and policy
statement (IRPS) and incorporated as an appendix to the rule that will
assist FICUs in complying with the rule, including the regulatory
reporting of troubled debt restructured loans (TDR loans or TDRs) in
FICU Call Reports. The NCUA Board (Board) believes this proposed
rulemaking and IRPS is timely considering the growth of these types of
loans during the recent economic stresses experienced in the financial
industry.
DATES: Send your comments to reach us on or before March 2, 2012. We
may not consider comments received after the above date in making our
decision on the proposed rule.
Compensation, Retirement Programs, and Related Benefits
AGENCY: Farm Credit Administration.
SUMMARY: The Farm Credit Administration (FCA, us, we, or our) proposes
to amend our regulations related to Farm Credit System (System) bank
and association disclosures to shareholders and investors. The proposed
rule would require reporting of supplemental retirement plans, a
discussion of the link between senior officer compensation and
performance, and timely and transparent reporting to shareholders of
significant events that occur between annual reporting periods. We
believe the proposed changes will provide full, transparent and
consistent disclosures to shareholders. The proposed rule would
identify the minimum responsibilities a compensation committee must
perform to ensure it continues to exercise good stewardship, and
require that System banks and associations provide for a nonbinding,
advisory vote on senior officer compensation in order to engage
shareholders in the management and control of their institution. Also,
the proposed rule would bifurcate existing annual reporting
requirements at Sec. 620.5 and make other conforming technical
changes.
DATES: Submit comments on or before March 23, 2012.
Insurance Coverage Fundamentals for Bankers: Cyber & Employment Exposures
Employment discrimination lawsuits have long been considered significant exposure risks for private employers, while cyber exposures are new in comparison. Technology advances and the growing number of communication channels increase the risk of both of these exposures. The ever-changing context demands that employers stay current to mitigate and manage these risks. Employment Practices Liability Insurance (EPLI) and Cyber Insurance are primary tools for managing these risks.
Please join us as underwriters of the Chubb Group of Insurance Companies, insurance brokers of Schifman, Remley & Associates, and Stinson attorneys discuss Employment and Cyber exposures facing banks, along with fundamentals of EPLI and Cyber Insurance available to banks. The panel will discuss contemporary trends and threats resulting from changing technologies and means of communications, along with key insurance issues.
In addition, featured panelist Mark Larrabee, President & CEO of Arvest Bank, will share his real-world perspective on some long-lived employment discrimination litigation and thoughts on new technology.
FEATURED PANELISTS
- Mark Larrabee, Arvest Bank
- George N. Allport, Chubb Group of Insurance Companies
- Robert A. Lippert, Chubb Group of Insurance Companies
- Randy Larsen, Schifman, Remley & Associates
- Bob Monroe, Stinson Morrison Hecker LLP
- Scott Hecht, Stinson Morrison Hecker LLP
WHEN
Wednesday, March 7
2 p.m. Registration
2:30 p.m. Program
4:30 p.m. Reception
Add event to calendar
WHERE
Stinson Morrison Hecker
1201 Walnut, Ste. 2900
Kansas City, MO Directions
RSVP
Please register online
by Friday, March 2
Register For Stinson’s Next Banking Seminar – November 10, 2011
| For the last year, bankers have been agonizing over the many challenges posed by the current economic environment and certain portions of the Dodd-Frank Act that affect community banks. This seminar will highlight aspects of Dodd-Frank and will also identify and analyze hot topics in more traditional areas such as payments and operations, lending and estate planning. It’s a nuts and bolts program aimed at all bankers.
AGENDA 1:15 p.m. Hot Topics in Payments, Deposits and Operations
2:15 p.m. Stay Out of Trouble – Dealing With Your Borrower This session will focus on the legal relationship between the bank and its borrowers and instances in which the nature of that relationship has resulted in liability to the bank. 3:00 p.m. Opportunities and Risks: Payroll Cards and Managing 3rd Party Risks Banks continue to search for new sources of revenue. Could payroll cards or prepaid cards be one of the answers? Of course, with every new product involving 3rd party service providers, the bank experiences risk. This risk must be understood and managed. 3:30 p.m. Break 3:45 p.m. When are Assets Creditor-Proof? The manner in which assets are owned can achieve important estate planning and tax-saving goals while impeding creditors. Legitimate use of tenancy by the entirety designations, “spendthrift” and discretionary trusts and closely-held limited liability entities, along with the making of gifts, provides significant asset protection benefits. Questionable structures and transfers, however, can be challenged. 4:15 p.m. Bank Consolidations and Dodd-Frank Branching Rules This session will (i) focus on current and future bank consolidations and (ii) cover structures, capital, pricing and regulatory hurdles. In addition, the Dodd-Frank interstate branching rules will be discussed. 4:45 p.m. Q&A Session 5:00 p.m. Cocktail Hour |
WHEN
November 10, 2011
12:30 p.m. Registration
1:00 p.m. Program
5:00 p.m. Reception
WHERE
Stinson Morrison Hecker
1201 Walnut, Suite 2900
Kansas City, MO 64106
directions
If you are unable to attend the seminar, but would like to receive a copy of the handouts, please click here.
RSVP
You can register online, by email or call 816.691.3479.
ASK A QUESTION
Submit a question or comment in advance. This will help us frame the program and discussion.
FDICs Deposit Insurance Fund is Back in the Black
The FDIC recently announced that after seven consecutive quarters of negative balances, the Deposit Insurance Fund is back in the black with a positive balance of $3.9 billion as of June 30, 2011. Further, the FDIC projects that total cost of FDIC-insured bank failures from 2011 through 2015 will be $19 billion, which is appoximately $4 billion less than the total cost of failures during 2010 alone.
FDIC anticipates that the DIF will be approximately 1.15% of estimated insured deposits by 2018. The Dodd-Frank Wall Street Reform and Consumer Protection Act requires the DIF reserve ratio to reach 1.35% by September 30, 2020.
OCC Guidance: Third Party Service Providers in Prepaid Access Programs
On June 28, 2011, the OCC issued a bulletin titled “Description: Risk Management Guidance and Sound Practices” with respect to use of third party service providers for prepaid access programs (the Bulletin).
The Bulletin provides guidance on the risk management expectations of the OCC with respect to all prepaid programs, but especially for banks using third party service providers for their prepaid access programs. While the Bulletin is not binding per se, there is near certainty that the OCC will be examining banks based on the guidance provided in the Bulletin.
The Bulletin sets forth several areas of guidance, including:
- Objectives and risk parameters (including risk limits, program objectives and reporting, performance criteria, and board review of the program)
- Policies, procedures and due diligence (including acceptable and well understood policies and procedures, an exit strategy, detailed evaluation of the selection, and oversight of third party service providers). This section of the Bulletin also contains a complete list of required contract terms.
- Audit and compliance functions (including adequate personnel, testing of accounts with respect to fee disclosures, testing of BSA/AML and OFAC compliance)
- Parameters for reporting to the Board of Directors
While most of the general topics within the Bulletin were generally known to be areas where the OCC has previously indicated are areas of concern, the Bulletin drills down further into those areas with specific procedures and requirements that were not previously known or that were not previously a common practice within the industry. As a result, all banks regulated by the OCC which issue or sell payroll cards, gift cards or general spend prepaid cards should carefully review the Bulletin and begin implementation of the procedures and requirements contained within the Bulletin.
Even for banks that do not issue or sell prepaid cards, or are not national banks, the guidance offers insight into the expectations of the bank regulators on managing risk.
When Does a Manufactured Home Become Real Property in Missouri?
The Missouri legislature has removed some of the uncertainty of determining when a manufactured home (also sometimes known as a mobile home) ceases to be personal property and becomes real property. Effective March 1, 2011, the legislature established statutory procedures for converting manufactured homes into real property through a process of affixation, and for converting such real property back to personal property.
A “manufactured home” is defined in Section 700.010(6) RSMo as a “structure, transportable in one or more sections, which, in the traveling mode, is eight body feet or more in width or forty body feet or more in length, or, when erected on site, is three hundred twenty or more square feet, and which is built on a permanent chassis and designed to be used as a dwelling with or without a permanent foundation when connected to the required utilities, and includes the plumbing, heating, air-conditioning, and electrical systems contained therein. The term includes any structure that meets all of the [foregoing] requirements… except the size requirements and with respect to which the manufacturer voluntarily files a certification required by the United States Secretary of Housing and Urban Development and complies with the standards established under Title 42 of the United States Code.”
Previously, the only statutory criteria governing conversion of manufactured homes to real property were that the owner of a manufactured home attach it to a permanent foundation on real estate owned by the manufactured home owner and that the transporting apparatus be removed or modified, rendering the manufactured home impractical to reconvert to personal property. Consequently, disputes arose whether the manufactured home was actually converted to real property when the criteria were solely factual determinations. Under the new legislation found at Section 442.015 RSMo, in addition to the physical act of attachment, the owner of the real estate must file an affidavit of affixation with the office of the recorder of deeds in the county where the manufactured home is permanently affixed.
Once an affidavit of affixation is recorded, the statute requires that a certified copy of the affidavit of affixation be filed with the Missouri Department of Revenue together with an application for surrender of the manufacturer’s certificate of origin.
After the affidavit of affixation has been recorded and the certified copy is filed with the Missouri Department of Revenue, the manufactured home is deemed to be real estate for both taxation and conveyance purposes. Thereafter, title can be transferred by deed or other form of conveyance that is effective to transfer an interest in real estate, and a mortgage, deed of trust, lien or security interest also then can attach.
If and when a manufactured home for which an affidavit of affixation has been recorded is detached or severed from the real estate to which it is affixed, the owner may record an affidavit of severance in the county real estate records where the affidavit of affixation is recorded. The statute directs the recorder of deeds to issue a certified copy of the affidavit of severance, which certified copy must be filed with the Director of Revenue. Section 700.111 RSMo also establishes a process for obtaining a new certificate of title after a manufactured home has been detached or severed from the real estate.
Forms of the both the affidavit of affixation (Form 5312) and the affidavit of severance (Form 5313) can be found on the website of the Missouri Department of Revenue at http://dor.mo.gov.
For a more in-depth version of this alert, see our website.
Special thanks to Marcia Charney of our Real Estate Division for preparing this article.
Stinson Lawyers Featured at ThinkBig Kansas City Conference
Scott Smalley, Steve Cosentino and Matt Salzman will be panelists at Tuesday’s ThinkBig Kansas City conference. Join Scott, Steve and Matt at the 8:30 breakout session titled: First to Market, First to Fund. ThinkBig Kansas City is a conference for entrepreneurs, investors and startups. The conference takes place at Kansas City Convention Center on Tuesday, May 24th at 8:00 AM.
Learn more about the conference here.
OCC Clarifies Its Approach to Preemption Post Dodd-Frank Act
In a letter to Senator Carper earlier this month, the Office of the Comptroller of the Currency (“OCC”) has provided important insights into its interpretation of the preemption provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) and the related changes the OCC plans to propose to its preemption regulations. The letter provides important details for what a national bank can expect from the OCC upon the effective date (July 21, 2011) of the Dodd-Frank Act, including:
- The OCC considers precedents that are consistent with the conflict preemption principles set forth in Barnett Bank of Marion County, N.A. v. Nelson, Florida Insurance Commissioner, et al., 517 U.S. 25 (1996) to be preserved under the Dodd-Frank Act. These include judicial decisions, interpretations, and the OCC’s rules, where preemption was premised on Barnett-based principles of conflict preemption. In its letter, the OCC specifically lists its preemption regulations on deposit-taking, lending and real estate lending (12 C.F.R. §§ 7.4007, 7.4008, 34.4) as OCC rules which were premised on Barnett-based principles and, therefore, will continue under the Dodd-Frank Act.
- Interpretation of the new Dodd-Frank Act provision regarding preemption of state consumer financial laws includes an analysis beyond the “prevent or significantly interfere” conflict preemption formulation. This is only the starting point, and to be complete, the analysis must consider all of the conflict preemption principles in the Barnett decision. A decision by the 11th Circuit in early May supports the OCC’s understanding, as the court cited other formulations of conflict preemption used in the Barnett decision for the conclusion that under the Dodd-Frank Act, the proper preemption test is conflict preemption (See Baptista v. JPMorgan Chase, N.A., No. 10-13105 (11th Cir. May 11, 2011)).
- Preemption of state law for national bank subsidiaries, agents and affiliates is eliminated under the Dodd-Frank Act and therefore, the OCC plans to rescind 12 C.F.R. § 7.4006, the OCC’s regulation regarding such preemption.
- The OCC will clarify that its regulations follow the conflict preemption principles of the Barnett decision by removing the “obstruct, impair or condition” formulation from its rules.
- The Dodd-Frank Act codified the Supreme Court’s decision regarding visitorial powers in Cuomo v. Clearing House Association, L.L.C., 129 S. Ct. 2710 (2009). Under the Dodd-Frank Act no limitation on visitiorial powers to which a national bank is subject may be construed to limit or restrict the authority of any state attorney general to bring an action against a national bank in a court of appropriate jurisdiction to enforce an applicable law and to seek relief as authorized by such law. Accordingly, the OCC plans to revise 12 C.F.R. § 7.4000 to provide that such an action by a state attorney general (or other chief law enforcement officer) is not an exercise of visitorial powers under 12 U.S.C. § 484.
A complete copy of the OCC letter is available here.
