Banking Law Prof Blog

JP Morgan and Regulatory Capture?

Did the NY Federal Reserve Bank and the Office of the Comptroller of the Currency (OCC) cave in to "push back" from JPMorgan Chase CEO Jamie Dimon?

LInk to article: http://www.nytimes.com/2012/05/26/business/regulators-role-at-jpmorgan-scrutinized.html?_r=1&nl=todaysheadlines&emc=edit_th_20120526 

(ag)May 26, 2012, in Banking, Volcker Rule, FRB, OCC, Financial Regulatory Reform, Dodd-Frank

My “Top 10” List of Bank Regulatory Issues for 2012

My “Top 10” List of Bank Regulatory Issues for 2012:

1.  Capital Requirements – In the wake of the financial crisis, Dodd-Frank calls for increased capital, especially for the biggest banks in the U.S.  Globally, stricter capital requirements have been adopted by the European Union member states. 
Bankers realize that it would be unpopular to publicly call for less capital, so they phrase their position as calling for “clarity” in regulatory capital requirements.  Of course, they do not want U.S. standards that will make them uncompetitive globally, nor do they want capital levels that will substantially reduce profitability.  
2.  Volcker Rule – JPMorgan Chase’s recent trading losses will undercut opposition from the banking industry and give regulators and Congress renewed focus on putting the teeth back in the Volcker Rule.  Using the words “portfolio hedging” should not obscure what is really trading for the bank’s own account.  There will be a “back to basics” push from those who still see “Too Big to Fail” as a compelling problem. 
3. Executive Compensation and Corporate Governance.  Public discomfort has not abated when it comes to excessive executive compensation for Wall Street bankers perceived to have played a major role in the financial crisis.  That being said, shareholders for the most part continue to deliver advisory approvals of executive compensation packages.
Good corporate governance is the hallmark of an institution that has procedural checks and balances in place.  It is nothing new for regulators to rightly insist that the board of directors is responsible for establishing appropriate policies and for making sure those policies are adhered to.  Important committees, such as audit and compensation, must be truly independent of management. 
4. CFPB – The agency continues to be a lightning rod for industry attack.  Congress may well revisit the scope of authority and limitations on funding for this agency if there is a change of administration this year.  On the other hand, consumers need a strong advocate to deal with predatory practices.  This should not be a partisan issue.
5. Community banks and regulatory burden - This is a very important concern.   As always, any requirement placed on large banks becomes aspirational and then expected for smaller banks.  Regulators should frequently remind themselves that excessive, unnecessary burdens on smaller banks will drive them out of the market and result in greater industry consolidation.  Compliance costs are staggering for a small bank.  The traditional mission of a bank is to take deposits and make loans within a community, and we need community banks to do that.
6. Risk management and Stress testing  - Financial institutions should have strong risk management programs and be conducting meaningful stress testing  even without a regulatory requirement.  If we hope to avoid a future financial crisis, financial institutions must give these internal programs high priority.
7. Mortgage foreclosure issues -  We have not seen the last of this issue.
8.  Lending issues – Our economy needs small business lending in order to recover from the recession.  Unfortunately, some government programs that support this are too complicated.  
Real estate valuation is sure to be a regulatory focus. 
Commercial real estate concentrations continue to be cited in enforcement actions.
Fair Lending compliance (RESPA, HMDA, TILA, ECOA) and Flood Insurance are always on the examiner’s check list.
9.  BSA/AML -  Money laundering concerns remain prominent on the regulators’ radar screen.
10. Charter conversions  -  My prediction is that we will see more regional banks convert from a national charter to a state charter.  The state regulator will not be less strict, but will be more accessible and more knowledgeable about local conditions. 

Issues to watch over the next three years:
• Mobile Banking
• Effective regulation of Non-bank Financial Institutions – or not
• Global economic conditions 
• Basel III and efforts to harmonize capital requirements, regulation, and enforcement

(ag) May 19, 2012, in Banking, Bank Compliance

Two New Federal Reserve Board Governors Confirmed by the Senate

Yesterday, the Senate confirmed both of President Obama’s nominees to serve on the Federal Reserve Board of Governors, bringing the board to a full seven members for the first time since April 2006. Nominations had been pending since December. 

New Fed Governors are:  Harvard economist Jeremy Stein (Democrat) and former private-equity executive Jerome Powell (Republican). Stein previously served in the Obama administration in the Treasury Department and at the National Economic Council.  Powell served in the Treasury Department under President George H.W. Bush and is a visiting scholar at the Bipartisan Policy Center.

Link:  http://www.nytimes.com/2012/05/18/business/senate-confirms-fed-board-nominees.html

Link to Article suggesting that JPMorgan Chase's recent trading losses were a major factor in breaking the confirmation deadlock:  http://www.americanbanker.com/issues/177_96/stein-powell-federal-reserve-board-governors-1049402-1.html

(ag) May 18, 2012, in Banking, FRB, Congress, Volcker Rule

 

JP Morgan and the Volcker Rule

Here's some great commentary on the loss JP Morgan Chase incurred through trading for its own account, using FDIC insured deposits to fund these securities trading accounts instead of making loans.  Using the word "hedging" does not make it so.  

LInk to Joe Nocera's OpEd column in the NY Times:  http://www.nytimes.com/2012/05/15/opinion/nocera-make-banking-boring.html?ref=opinion

(ag) May 15, 2012, in Securities Law, Volcker Rule, Congress, Dodd-Frank, Banking

Compliance Costs for Community Banks

The Financial Institutions and Consumer Credit Subcommittee of the House Financial Services Committee held a hearing yesterday to consider “Rising Regulatory Compliance Costs and Their Impact on the Health of Small Financial Institutions.” 

Link to Hearing testimony from two banks, two credit unions, Law Professor Adam Levitin, and Center for Responsible Lending President Mike Calhoun:

 http://financialservices.house.gov/Calendar/EventSingle.aspx?EventID=293807

(ag) May 10, 2012, in Bank Compliance, Dodd-Frank, Reg Relief, Congress

Crisis, Scandal and Financial Reform During the New Deal

"Crisis, Scandal and Financial Reform During the New Deal" by Michael A. Perino

St. John's University School of Law Legal Studies Research Paper No. 12-0004 

Abstract:      This chapter in the forthcoming Oxford Handbook of the New Deal provides a brief overview of the major financial reform legislation passed during the first term of the Roosevelt administration.

After describing the structural flaws in the pre-New Deal regulatory landscape, the chapter illustrates how the stock market crash of 1929, the onset Great Depression, and the banking crisis of 1933 helped create the climate in which financial reform could pass. In particular, it highlights the crucial role that the Senate investigation of Wall Street — commonly known as the Pecora investigation, after its chief counsel, Ferdinand Pecora — played in building the clamor for financial reform.

The chapter then catalogs the major banking and securities legislation adopted during the Roosevelt administration’s first term and demonstrates the transient nature of the political moments that crises and scandals create. In the immediate aftermath of the crisis, reform proposals passed with little effective opposition. As the crisis receded, however, organized lobbying efforts grew more powerful and were often successful in diminishing reform proposals.

LInk:  http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2054806

(ag) May 9, 2012, in Banking, Congress, Financial Regulatory Reform, Books

AALS Call for Papers - Regulation of Financial Market Intermediaries

The AALS Section on Securities Regulation and the Section of Financial Institutions & Consumer Financial Services are pleased to announce that they are sponsoring a Call for Papers for their joint program on Friday, January 4th at the AALS 2013 Annual Meeting in New Orleans, Louisiana.   The topic of the program and call for papers is “The Regulation of Financial Market Intermediaries: The Making and Un-Making of Markets.”  

To be considered, papers must be submitted electronically to Erik Gerding at erik.gerding@colorado.edu.  The deadline for submission is August 10, 2012.  

More information:

The topic of the program and call for papers is “The Regulation of Financial Market Intermediaries: The Making and Un-Making of Markets.”  

The financial crisis witnessed numerous market failures involving an array of financial market intermediaries, including banks, broker dealers, and various kinds of investment funds (from money market mutual funds to hedge funds).  The crisis came at the end of a decades-long transformation of the U.S. financial services sector that blurred the boundaries between banking and securities businesses.  

During this period a range of new intermediaries emerged and connected individuals and firms seeking financing to investors in capital markets.  At the same time, capital markets became increasingly dominated by financial institutions and other institutional investors.  Intermediaries devised and “made markets” for new and often highly illiquid and opaque financial instruments.  Many of these new markets froze or crashed in the financial crisis.  

In response, Dodd-Frank and other financial reforms have imposed a grab bag of new rules on financial intermediaries. Yet the effects of these financial reforms remain unclear.  

Moreover, policymakers and scholars often disagree about the precise problems that these reforms are meant to address.  For example, the SEC’s headline-grabbing suit against Goldman Sachs over the ABACUS transactions focused on conflicts of interest for large financial conglomerates with different stakes in a transaction.  Meanwhile, other financial reforms have focused on the opacity of pricing in financial markets or on the solvency or liquidity risk faced by intermediaries.

The tangle of potential market failures has led to a range of policy responses.  Often banking and securities scholars seem to look at the same set of market practices through radically different lenses.  

Banking scholars focus on solvency crises and banking runs and debate the application of prudential rules on the risk-taking, leverage, and liquidity of intermediaries.

At the same time, securities scholars emphasize the problems of conflicts of interest and asymmetric information.  They then look to the traditional policy tools in their field such as disclosure, fiduciary duties, and corporate governance.  

The dearth of dialogue between these two fields creates the risk of confusion in identifying both problems and solutions for financial intermediaries and the markets in which they operate.  To move the discussion forward, scholars in both fields may have to move outside their comfort zones.  The study of financial institutions cannot be limited to deposit-taking banks.  Similarly, securities regulation involves more than securities offerings and litigation, but the regulation of broker-dealers, investment advisers and funds, and the regulation of trading and markets.

Form and length of submission:

• The submissions committee looks forward to reviewing any papers that address the foregoing topics.  
• Abstracts should be comprehensive enough to allow the review committee to meaningfully evaluate the aims and likely content of papers they propose. 
• Eligible law faculty  are invited to submit manuscripts or abstracts dealing with any aspect of the foregoing topics.
• Untenured faculty members are particularly encouraged to submit manuscripts or abstracts.  
• The initial review of the papers will be blind.  Accordingly the author should submit a cover letter with the paper.  However, the paper itself, including the title page and footnotes must not contain any references identifying the author or the author’s school.  The submitting author is responsible for taking any steps necessary to redact self-identifying text or footnotes.  
• Papers may be accepted for publication but must not be published prior to the Annual Meeting.

 (ag) May 8, 2012, in Banking, Securities Law

 

Recommended: THIS TIME IS DIFFERENT - EIGHT CENTURIES OF FINANCIAL FOLLY

Link to review:  http://www.nybooks.com/articles/archives/2010/may/13/our-giant-banking-crisis/?pagination=false

(ag) May 2, 2012, in Economy, Global Markets, Books

More Observations on Why It's a Good Thing Wal-Mart Did Not Receive a U.S. Bank Charter

 

1. Illegal activities at the holding company level, such as the Wal-Mart bribery scandal which involves violations of the U.S. Foreign Corrupt Practices Act, directly impact bank subsidiaries, both through reputation risk (which can, among other adverse consequences, translate into higher borrowing costs and loss of customers) and the legal risk that this is a corporate culture that tolerates massive legal violations and inadequate internal controls.  Such a corporate culture should concern bank and bank holding company regulators.
2. When a bank holding company gets into legal and financial trouble, it often becomes difficult or impossible for the bank subsidiary to continue as a viable entity.  The two banking subsidiaries of Lehman, Aurora Bank, FSB, and Woodlands Commercial Bank, suffered severe financial losses as a result of the mismanagement and collapse of the holding company. 

            *  Washington Mutual, Inc., is another example of a holding company in trouble, with problems that did bleed over into the federal thrift.  On September 15, 2008, the holding company received a credit rating downgrade, triggering a run on the subsidiary bank and leading within a matter of days to the bank’s demise.

             *  Wachovia is yet another example of interrelated financial problems pervading both the bank and the bank holding company. 

             *  Yes, a bank and its bank holding company may be separate legal entities, but their financial viability is strongly linked. 

             *  Recognizing that Wal-Mart’s overall financial situation is apparently healthy, I note that it is so large and has such an extensive presence that allowing it to have a bank branch in each U.S. retail store could have created another systemically important institution (SIFI), with serious “too big to fail” ramifications.  Such a business model would also have yielded an instant, very powerful competitor for local community banks across the country.

3.  The fact that Wal-Mart and its senior management will be subject to heavy fines and prison time if the allegations are proved, clearly did not prevent these legal violations of the Foreign Corrupt Practices Act from occurring. 

4.  U.S. financial regulators have the power to investigate foreign subsidiaries, but all regulators concede that this is extremely difficult.  U.S. regulators had the power to deal with the newly-revealed Wal-Mart violations of the Foreign Corrupt Practices Act, but that did not prevent illegal bribes from being concealed for almost a decade.

5.  The fact is that Wal-Mart did not disclose these violations at the time it filed an application for federal deposit insurance, despite submitting that application under oath and penalty of perjury.

6.  The capable bank examiners I worked with would never shrug off their responsibility to search out potential violations on a theory that, when and if they came to light, they could be addressed through closing the bank.  Their approach was:  If there’s smoke, there could be fire.  That is also the policy underlying Suspicious Activity Reports.  Suspected wrongdoing merits a closer examination.

(ag) April 30, 2012, in Banking, "Too Big to Fail,"  BSA/AML, Economy, Enforcement, Examination, Industrial Loan Companies, Global Markets, Holding Companies, Securities Law, International Banking, Systemic Risk

Wal-Mart's Mexican Bribery Scandal: Why It's a Good Thing Wal-Mart Did Not Get a U.S. Bank Charter

Wal-Mart’s Mexican Bribery Scandal Explodes and the U.S. Financial System Dodges a Bullet:  Why It’s a Good Thing Wal-Mart Was Not Granted a Bank Charter in the U.S. 

By Ann Graham, Professor of Law and Director of Business Law Institute, Hamline University School of Law, St. Paul, MN 

This opinion appeared in the American Banker, April 24, 2012:  http://www.americanbanker.com/bankthink/good-thing-wal-mart-did-not-get-a-us-bank-charter-mexico-bribery-1048699-1.html

Wal-Mart stands accused of a major bribery scheme that cuts to the core of the way this international giant does business in Mexico – and demonstrates how little U.S. regulators and investors know about the company.  The New York Times broke the news this weekend about a systematic plan involving more than $24 Million in illegal bribes allegedly paid to Mexican officials to expedite the expansion of Wal-Mart stores into Mexico. 

Wal-Mart de Mexico is now the largest private employer in Mexico and 20% of Wal-Mart’s stores worldwide are now located in Mexico. 

But there’s a problem:  In 2005, senior Wal-Mart officials learned of the bribery scheme and covered up Wal-Mart’s subsequent internal investigations, hiding likely violations of Mexican law and the U.S. Foreign Corrupt Practices from U.S. and Mexican government agencies as well as Wal-Mart investors.  The U.S. Justice Department and the SEC are now investigating Wal-Mart.  A cover-up always makes things worse.  Heads are rolling.  If the allegations are proved, the Justice Department will likely assess large fines against the company and individuals will go to jail. 

Beyond providing governance and ethics lessons about a shocking corporate scandal, this Wal-Mart story illustrates why combining commerce and banking is such a bad idea.  There are special  functions we need banks to perform:  receiving insured deposits and making loans within a community, while serving as the highly regulated transmitter of monetary policy.  The policy decisions that make Wal-Mart profitable are not congruent with the objectives of banking as we know it in the U.S. 

Once a corporate conglomerate includes an insured financial institution in the U.S., that enterprise gains access to the safety-net of federal deposit insurance and loans at the Federal Reserve “window.”  A U.S. bank charter opens the door to “too big to fail” issues and potential taxpayer bailouts. Would we really want to protect Wal-Mart in that way? 

Further on the “too big to fail” protections Congress and the regulators have been unable to eliminate, the Wal-Mart scandal highlights once again how global corporations’ wrongdoing in other countries can jeopardize their U.S. business profitability and reputations, because of interconnectedness on a grand scale.  

From 1999 to 2007 (the same period of time covered by the Mexican bribery scheme), Wal-Mart actively pursued the possibility of an FDIC-insured U.S. financial institution charter, first in Oklahoma, then in California, and finally in Utah.  As the U.S. bank regulators (FDIC, in particular) delayed and sent negative signals about the likelihood of obtaining a U.S. bank charter, Wal-Mart withdrew its application in 2007 and accelerated its banking expansion in Mexico. 

But for the delay resulting from the change in FDIC Chairmanship in 2006, Wal-Mart might very well have obtained an FDIC-insured industrial loan company charter.  Instead, Wal-Mart moved on to develop an extensive banking network in Mexico by placing bank branches in its retail stores. 

What if Wal-Mart’s phenomenal growth in the banking sector had occurred in the U.S.?  Even without a bank charter, Wal-Mart has not given up on a U.S. financial services presence; it offers pre-paid debit cards and check-cashing services through “Money Centers” in many of its U.S. stores. 

Wal-Mart recognizes the profit potential in providing banking services to a captive market of relatively unsophisticated, cash-strapped, low-to-moderate income shoppers.  At a minimum, the competitive advantage Wal-Mart can achieve through combining its banking and commercial locations, operations, and marketing could be a real threat to more traditional U.S. banks, especially community banks.  The banking industry has focused on this competitive threat.  

The most significant threat is the difficulty of effective examination and regulation of global financial entities that combine banking and commerce. 

Let us pose some hypothetical questions to illustrate some ways in which the U.S. financial system dodged a bullet in not granting Wal-Mart a bank charter. 

• If Wal-Mart now had a major banking presence in both the U.S. and Mexico, what would be the impact of this Mexican bribery scandal on the U.S. side of this conglomerate’s banking operations?  
• Could corporate problems in Mexico bleed off bank capital, leaving U.S. taxpayers at risk? 
• Could the Mexican operation also have money-laundering issues that would spill over the border? 
• If U.S. banking officials had acceded to Wal-Mart’s push for a U.S. bank charter, would U.S. bank regulators have been able to detect this fraud and financial risk occurring in Mexico?
• If Wal-Mart executives failed to disclose that they knew or should have known about the Mexican bribes at the same time Wal-Mart was applying for a U.S. bank charter, what else was concealed from U.S. regulators by this large, complex, international conglomerate?

 

(ag) March 26, 2012, in a Banking, Corporate Governance, Too Big to Fail, BSA/AML, Industrial Loan Companies

Financial Stability - The Job of the Fed

According to Federal Reserve Board Chairman Ben Bernanke, the Federal Reserve is adding maintaining Financial Stability as one of its key roles in addition to its traditional duty to balance Inflation concerns against Unemployment worries in establishing and executing Monetary Policy.  

In a speech entitled "Some Reflections on the Crisis and the Policy Response," Bernanke said, "Going forward, for the Federal Reserve as well as other central banks, the promotion of financial stability must be on an equal footing with the management of monetary policy as the most critical policy priorities."

Link to speech:  http://www.federalreserve.gov/newsevents/speech/bernanke20120413a.htm

(ag) April 24, 2012, in Economy, Economy/Interest Rates, Federal Reserve

 

Clawbacks and Ponzi Schemes

Here's a commentary on "The Drawbacks of Clawbacks," discussing whether clawback claims can prevail.  Analysis reviews both the Van den Berg and the Madoff Ponzi schemes.

Link:  http://www.lexology.com/library/detail.aspx?g=c4710a10-ac7c-4666-8b7f-8f60b86e8b49&utm_source=lexology+daily+newsfeed&utm_medium=html+email+-+international+developments&

(ag) April 20, 2012, in Bankruptcy, Securities

FTC Privacy Report: Industry Best Practices and Proposed Legislation

The Federal Trade Commission (FTC) has issued a final report entitled "Protecting Consumer Privacy in an Era of Rapid Change: Recommendations For Businesses and Policymakers," which sets forth best practices for businesses to protect the privacy of American consumers and give them greater control over the collection and use of their personal data. The FTC also recommends that Congress consider enacting general privacy legislation, data security and breach notification legislation, and data broker legislation.

Among other recommendations, the report addresses "Do Not Track" options for consumers with internet browsers and privacy issues with Mobile Servicers.

(ag) April 19, 2012, in Privacy

"Say on Pay" Yields "Just Say No" to Citigroup Executive Compensation

Under the new Dodd-Frank Act provisions for an advisory, non-binding shareholder vote (known as "say on pay") on executive compensation, a majority of Citigroup shareholders have voted against a $15 million executive compensation package for Citigroup's CEO Vikram S. Pandit.  

A New York Times DealBook article notes that this is "the first time that stock owners have united in opposition to outsized compensation at a financial giant."  Institutional investors such as CalPERS were among the shareholders voting against the executive compensation proposal.  Other large banks, such as Bank of America, could be next.

LInk to article:  http://dealbook.nytimes.com/2012/04/17/citigroup-shareholders-reject-executive-pay-plan/?nl=todaysheadlines&emc=edit_th_20120418

See also Hewlett-Packard shareholders' rejection of executive compensation, including that for CEO Meg Whitman.

(ag) April 18, 2012, in Dodd-Frank Act, Executive Compensation

BSA Compliance Issues - OCC's Cease and Desist Order Against Citibank

Check out Rachel Witkowski's American Banker article entitled "Regulators Gearing Up for New Bank Secrecy Push."  I provided background information for the article and here's a quote from the article:

"Once we get past the worst of the crisis, compliance issues are going to come to the forefront," says Ann Graham, director of the Business Law Institute at Hamline University in St. Paul, Minn. "There's no area of the bank that this doesn't cover."

Link to article:  http://www.americanbanker.com/issues/177_73/bank-secrecy-act-money-laundering-risk-management-1048439-1.html

A very high profile enforcement action calling attention to BSA Compliance is the OCC's Cease and Desist Order against Citibank, N.S., Sioux Falls, South Dakota.  Note that Citibank neither admits nor denies any wrongdoing by signing the Consent Order.

According to the OCC's Press Release, "the bank’s BSA compliance program had deficiencies with respect to

• internal controls, 
• customer due diligence, 
• the independent BSA and anti-money laundering audit function, 
• monitoring of its remote deposit capture and international cash letter instrument processing in connection with foreign correspondent banking, and 
• suspicious activity reporting." 

This is a heads-up to all banks to review BSA/AML policies, procedures, and implementation -- before the regulators come knocking on your door.

Link to Press Release:  http://www.occ.treas.gov/news-issuances/news-releases/2012/nr-occ-2012-57.html

Link to Cease & Desist Order:  http://www.occ.treas.gov/news-issuances/news-releases/2012/nr-occ-2012-57a.pdf

(ag) April 17, 2012, in Bank Compliance, BSA/AML, Enforcement, OCC

Know Your Regulator: Thomas J. Curry, Comptroller of the Currency

Last week, Thomas J. Curry was sworn in as the 30th Comptroller of the Currency.  The OCC has supervisory authority over more than 2,000 national banks and federal savings associations and 50 federal branches and agencies of foreign banks in the United States.

Curry previously served as a Director of the Federal Deposit Insurance Corporation (FDIC) since 2004. Curry served as the Commissioner of the Massachusetts Division of Banks from 1990 to 1991 and from 1995 to 2003.  In 2000, Curry served as the Chairman of the Conference of State Bank Supervisors (CSBS), and served two terms on the State Liaison Committee of the Federal Financial Institutions Examination Council (FFIEC).

 Curry was confirmed as Comptroller by the Senate in March, almost nine months after President Obama nominated him to replace former comptroller John Dugan, whose term expired August 2010.

(ag) April 14, 2012, in OCC

 

CFPB and Up-Front Credit Card Fees

The Consumer Financial Protection Bureau (CFPB) may be picking its battles -- and apparently, this is not one it chooses to take on right now.  The CFPB has proposed a rule that would reverse a Federal Reserve requirement to include up-front credit card fees when determining whether a credit card issuer has exceeded the Dodd-Frank Act's statutory limitations on credit card fees in the first year.

The Washington Post describes the problem with “fee-harvester cards," targeted at consumers with poor credit histories, set up with low limits, high fees and interest rates of up to 36 percent.

"Congress tried to rein in those costs three years ago as part of its sweeping retooling of the credit card industry by capping the fees an issuer can charge at 25 percent of the card’s limit during its first year of use. For example, a card offered by First Premier bank with a $300 credit limit comes with a $75 annual fee — within the boundary set by Congress.

But the card also comes with a $95 processing fee that avoids the law by requiring consumers to pay it up front, before opening the account. In 2010, the Federal Reserve tried to extend the cap to include those charges. First Premier sued, saying the Fed overstepped its authority. In September, the U.S. District Court in South Dakota granted First Premier a preliminary injunction that prevented the rule from taking effect while the legal challenge continued."

The CFPB's proposal to exempt up-front fees from the Dodd-Frank Act Congressional restriction would settle this litigation.

Link to CFPB Press Release:  http://www.consumerfinance.gov/pressreleases/consumer-financial-protection-bureau-seeks-public-comment-on-amendment-to-credit-card-act-rule/

Link to Washington Post article:  http://www.washingtonpost.com/business/economy/consumer-financial-protection-bureau-wants-to-reverse-ban-on-high-credit-card-fees/2012/04/12/gIQAz3BwDT_story.html

COMMENT PERIOD on the CFPB's Proposed Rule CLOSES:  July 11, 2012

(ag) April 13, 2012, in Consumer Protection, CFPB, Credit Cards

Good News for Securities Lawyers -- and a Good Sign for the Economy

Going public with an initial public offering (IPO) is once again a viable possibility.  The IPO market is on the rebound.

Link:  http://dealbook.nytimes.com/2012/04/11/i-p-o-market-rebounds-as-companies-resume-plans/?nl=business&emc=edit_dlbkpm_20120411

(ag) April 11, 2012, in Securities Law

Executive Compensation and the JOBS Act

Great summary of the JOBS Act Exemption from Executive Compensation Reporting Requirements courtesy of the Haynes and Boone, LLP, E-Benefits Newsletter:  

"The JOBS Act, which was signed into law on April 5th, exempts an “emerging growth company” from certain executive compensation reporting requirements.

An “emerging growth company” is an issuer with total annual gross revenues of less than $1 billion until (1) the company has total annual gross revenues of $1 billion or more (subject to indexing), (2) the fifth anniversary of the first sale of common equity securities pursuant to a registration statement, (3) the company has issued more than $1 billion in non-convertible debt within a 3-year period, OR (4) when the company is deemed to be a “large accelerated filer.”

However, a company that first sold common equity securities pursuant to a registration statement on or before December 8, 2011, cannot be an emerging growth company.

An emerging growth company is exempt from rules requiring shareholder advisory votes on executive compensation and golden parachute payments. Such a company also will be exempt from disclosure requirements regarding (i) the relationship between executive compensation paid and the financial performance of the company, and (ii) the ratio between CEO compensation and median employee compensation, once such rules have been implemented. In addition, an emerging growth company can elect to apply the reduced disclosures that are allowed for small reporting companies The SEC is also required to review Regulation S-K to determine which requirements can be simplified for emerging growth companies."

(ag) April 10, 2012, in Executive Compensation

New Law Review Article on UCC Article 9

UCC profs and scholars will want to take a look at this new article posted on SSRN:  "Testing the Reach of UCC Article 9: The Question of Tax Credit Collateral as the Future of Secured Financing" by Christopher K. Odinet,

Link:  http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1997516

(ag) April 9, 2012, in Lending Issues