AGENDA
1:00 p.m.  Introduction and Housekeeping

1:15 p.m.  Hot Topics in Payments, Deposits and Operations
presented by Barkley Clark and Mark Hargrave

• Recent litigation on corporate account takeovers
• New FFIEC guidance on verification of customer identity
• Automated overdraft programs and high-to-low debit posting
• Remote deposit capture and mobile banking
• Consumer arbitration agreements
• Tips for improving your deposit agreement

2:15 p.m.  Stay Out of Trouble – Dealing With Your Borrower 
presented by Mark Shaiken and Brent Erwood

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
 presented by Karen Garrett

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?
presented by Kent Stallard

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
presented by Bob Monroe

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.

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.

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.

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.

Learn more about the conference here.

The Final Rules contain numerous revisions and clarifications, but perhaps the most controversial is the clarification regarding an issuer’s assessment of a consumer’s ability to repay his or her credit card obligations prior to opening a new account or increasing the credit line on an existing account. Issuers have traditionally requested information regarding “household income” on applications and used this information to determine a consumer’s ability to pay; however, the Final Rules clarify that an issuer must consider a consumer’s “independent ability” to repay. While this standard has long been used for consumers under the age of 21, until now, it has never been applied to consideration of household income for persons over the age of 21. The Final Rules do not prohibit an issuer from asking for household income, but do provide that an issuer may not rely on household income to determine a consumer’s ability to pay.

Specifically, the Final Rules provide: “Consideration of information regarding a consumer’s household income does not by itself satisfy the requirement in § 226.51(a) to consider the consumer’s independent ability to pay. For example, if a card issuer requests on its application forms that applicants provide their “household income,” the card issuer may not rely solely on the information provided by applicants to satisfy the requirements of § 226.51(a). Instead, the card issuer would need to obtain additional information about an applicant’s independent income (such as by contacting the applicant). However, if a card issuer requests on its application forms that applicants provide their income without reference to household income (such as by requesting “income” or “salary”), the card issuer may rely on the information provided by applicants to satisfy the requirements of § 226.51(a).”

The Final Rules also clarify numerous other provisions of the CARD Act, including:

• The applicability of the CARD Act to account numbers that access a line of credit;
• Assessment of penalty fees;
• Revocation of waived interest charges for promotional programs;
• Applicability of fee limits to application fees and other pre-account opening fees;
• Temporary rate and fee reductions;
• Rate Re-Evaluations;
• Check Disclosures; and
• Conforming and Nonconforming Payments

For more information on the legal compliance issues currently facing the financial services industry, please call one of our Banking & Financial Services attorneys.

The Federal Reserve Board has requested public comment  until July 22, 2011 on the proposed rules that will ultimately be finalized by the new Consumer Financial Protection Bureau.  

Highlights of the Proposed Ability-To-Repay Rules from the Federal Reserve are available here.

The Federal Reserve Press Release regarding the Proposed Rules is available here. 

The Notice of the Proposed Rule is available here.

The conference aims to address major compliance and risk requirements to meet stepped up regulatory and reporting obligations. Garrett is a featured panelist at a pre-conference workshop, “Credit Cards and Debit Cards: Demystifying New Regulations and Reforms,” on May 4, as well as a panelist for a breakout session addressing the new wave of consolidation among financial institutions on Friday, May 6. Other scheduled speakers and panelists include federal and state government regulators and in-house professionals who will address current compliance and risk management matters associated with new regulations and landmark legislation.

In light of the ongoing financial reform, the financial industry’s compliance function is facing an influx of change, including the creation of new regulators, the regulation of new markets, the bringing of new firms into the regulatory arena, and the provision of new rulemaking and enforcement powers to regulators. This has resulted in a complete revamp of each affected company’s compliance program. Financial institutions need to be increasingly vigilant to ensure their compliance controls are in place and implemented in a way to conform to the regulations and landmark legislation.

Garrett has significant experience representing financial institutions and boards of directors in compliance and risk management matters relating to product development, operations, card products, payments systems and other services. She also has worked on behalf of financial institutions with state and federal regulators on many matters, from acquisitions and mergers to failed bank transactions to issues involving the limits of banking powers.

For more information on the forum, visit American Conference Institute’s website.  

So much for the so-called “bailout.”

Click here to read the Treasury’s announcement.