Banking Law Prof Blog

Full Disclosure or Caveat Emptor?

NY Times Columnist Floyd Norris points out that, fifty years ago, U.S. Supreme Court Justice Arthur Goldberg wrote that the securities laws "substitute a philosophy of disclosure for the philosophy of caveat emptor."  Norris suggests that the caveat emptor doctrine may be coming back into vogue, exemplified by the Madoff trustee's argument that some of the Madoff victims deserve to lose not only their fictitious profits but also their original investment because they were sophisticated investors and should have recognized the Ponzi scheme.

Link:  http://www.cnbc.com/id/41530597

(ag) Feb. 11, 2011, in Securities Law

Kevin Warsh to Leave the Federal Reserve Board of Governors

 
Federal Reserve Governor Kevin Warsh will leave the Board at the end of March.  The New York Times notes that his departure is significant because he has been the sole link to conservatives, Republicans in Congress and Wall Street.

Link to story:  http://www.nytimes.com/2011/02/11/business/economy/11fed.html

Link to Federal Reserve Press Release:

http://www.federalreserve.gov/newsevents/press/other/20110210a.htm

(ag) Feb. 11, 2011, in Economy, Federal Reserve

Executive Compensation Discussion in Washington, D.C.

On February 25, 2011, I will be attending a Business Briefing in Washington, D.C., with Professor Raghavendra Rau, Sir Evelyn de Rothschild Professor of Finance, Cambridge University Judge Business School. His topic is "Performance for pay? How does executive compensation translate into future stock price performance?"

(ag) Feb. 10, 2011, in Executive Compensation

 

Dodd-Frank Implementation

The Senate Banking Committee will conduct a hearing on "Oversight of Dodd-Frank Implementation: A Progress Report by the Regulators at the Half-Year Mark" on Thursday, February 17, 2011.

The witnesses will be:

• Ben S. Bernanke, Federal Reserve Board Chairman
• Sheila Bair, FDIC Chairman
• Mary Schapiro, SEC Chairman
• Gary Gensler, CFTC Chairman
• John Walsh, Acting Comptroller of the Currency

(ag) Feb. 10, 2011, in Financial Regulatory Reform

Will the NYSE end up in foreign hands?

Deutsche Boerse is negotiating to acquire NYSE Euronext in a deal that Reuters reports "would create the world's largest trading powerhouse and put a bastion of American capitalism into foreign hands."

Today's announcement came only hours after the London Stock Exchange said it had agreed to buy Canadian market operator TMX. 

(ag) Feb. 9, 2011, in Stock Exchanges  

 

Secondary Mortgage Market Reform in 2011

Bloomberg interviewed Congressman Barney Frank about overhauling Fannie Mae and Freddie Mac.  Here's a link to the interview:  http://www.bloomberg.com/video/66599338/

(ag) Feb. 9, 2011, in Secondary Mortgage Market

FDIC Overdraft Guidance - Web Seminar

Web Seminar Tuesday, February 8, 2011 12:30PM EST |

   
The FDIC’s new guidance on overdraft protection programs (FIL 81-2010) has left institutions, and technology vendors that support them, with many more questions than answers when it comes to implementation.

Sources say more clarification from the FDIC is likely, but the rules aren’t likely to be modified and the July 1 deadline will hold firm.

American Banker will bring together experts on the issue— a bank attorney, a banking professor, and a representative of the Independent Community Bankers of America—to discuss the guidance, and help banks interpret what many are criticizing as overly ambiguous language.

Panelists will give an overview of the guidance, and address the following topics, among others:

• What are the regulatory requirements regarding excessive use of ODP? What are the broader implications of the regulatory position on excessive use?
• How must check-clearing procedures be changed to pass muster? Is high-to-low payment processing dead?
• What are the additional changes that must be implemented (for example, daily fee limits and de minimus limits)?
• Are there “best practices” and contingency plans banks should put in place?

REGISTER NOW!  http://p.p0.com/YesConnect/HtmlMessagePreview?a=wCmnQesfBVkMVYGkJe0Coz

Moderator:

• Rebecca Sausner, Editor-in-Chief, Bank Technology News

Panelists:

• Cary Whaley, Vice President of Payments and Technology Policy, ICBA
  
• Jeremy T. Rosenblum, Vice Chair, Consumer Financial Services Group, Ballard Spahr LLP
• Ann Graham, Founding Director of Business Law Institute and Professor of Law, Hamline University School of Law
  

 

 

FDIC's Overdraft "Guidance"

FDIC FIL-81-2010 (Nov. 24, 2010) presents nine "supervisory expectations" that will be difficult to implement.  The effective date is July 1, 2011. 

One of the most controversial "expectations" is the requirement to monitor for excessive consumer use of an automated overdraft protection program, which FDIC says is six occasions in a rolling 12 month period.  Then the institution is supposed to contact that customer by phone or in person to discuss whether there are other less costly alternatives.

(ag) Feb. 6, 2011, in FDIC, Banking

SAFE Act Mortgage Loan Originator Registration Begins

REGULATORY COMPLIANCE ALERT:

The federal banking agencies (FRB, FDIC, OCC, OTS, NCUA, and the Farm Credit Administration) issued a press release announcing that the Nationwide Mortgage Licnesing System and Registry is now accepting registrations of mortgage loan originators as required by the Secure and Fair Enforcement for Mortgage Licensing Act (S.A.F.E. Act). 

Residential mortgage loan originators employed by banks, savings associations, credit unions, or Farm Credit System institutions must register and obtain a unique identifier by July 29, 2011.

Link:  http://www.fdic.gov/news/news/press/2011/pr11019.html

(ag) Feb. 5, 2011, in Lending Issues

JP Morgan and the Madoff Scandal

Irving Picard, the trustee seeking to recover funds for victims of the Madoff ponzi scheme, has filed suit alleging that JP Morgan Chase was "thoroughly complicit" and "at the very center of that fraud."

Link to WSF Story:  http://online.wsj.com/article/SB10001424052748703652104576122300990479090.html?mod=WSJ_WSJ_News_BlogsModule

(ag) Feb. 4, 2011, in Securities Law

SEC and Its Accounting Issues

 
SEC Chairman Mary Schapiro wants 800 additional employees to execute the SEC's Dodd-Frank responsibilities.  However, the New York Times reports that "the guarantor of the soundness of financial markets fails at basic accounting." 

Since 2004, when the SEC began producing audited statements, the Government Accountability Office (GAO) has found significant errors in almost every year.

Link to story:  http://www.nytimes.com/2011/02/03/business/03sec.html

(ag) Feb. 4, 2011, in Securities Law

SIGTARP Speaks About Too Big To Fail

 
Neil Barofsky, Special Inspector General for the Troubled Asset Relief Program (TARP), spoke tonight on CNBC, noting that we have not adequately addressed the "Too Big To Fail" problem.  The largest financial institutions in the U.S. economy have instead become even larger, more concentrated, and more interconnected, and more significant to our economy, creating distortion in the market and a high likelihood of future bailouts.

Transcript of CNBC Program:  http://www.cnbc.com/id/41240850?par=RSS

(ag) Feb. 2, 2011, in Economy, Too Big To Fail

SEC's New Executive Compensation Rules

On January 25, 2011, the SEC adopted rules implementing Dodd-Frank provisions that address shareholder approval of executive compensation and "golden parachutes."

Newly adopted rules are:

• Rule 14a-21(a), governing shareholder advisory votes on executive compensation or "Say on Pay" votes,
• Rule 14a-21(b), governing shareholder advisory votes on the frequency of Say on Pay votes  or "Say When on Pay" votes, and
• Rule 14a-21(c), governing shareholder advisory votes on executive compensation matters relating to certain transactions requiring shareholder approval  or "Say on Golden Parachute" votes.
• Other rules were amended to mandate disclosures relating to these three votes.

The Say on Pay and Say When on Pay rules become effective 60 days following publication of the rules in the Federal Register. The Say on Golden Parachute rules become effective for proxy statements filed on or after April 25, 2011.

Link to Executive Compensation and Golden Parachute Final Rule: http://www.sec.gov/rules/final/2011/33-9178.pdf

Looking back to proposed rule:  http://www.sec.gov/rules/proposed/2010/33-9153.pdf 

(ag) Feb. 1, 2011, in Executive Compensation, Securities Law