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FDIC Issues New Guidance Relating to the Brokered Deposit/Interest Rate Restrictions

November 4, 2009

Authors

Michael Shumaker

FDIC Issues New Guidance Relating to the Brokered Deposit/Interest Rate Restrictions

November 4, 2009

by: Michael Shumaker

As we have discussed earlier, the FDIC has revised the brokered deposit/interest rate restrictions to create a presumption in favor of a “national deposit rate” starting January 1, 2010. Under this new rule, financial institutions that are less than well capitalized will be barred from paying in excess of 75 basis points above the national rate unless the institution is able to persuade the FDIC that the institution’s local market rate is above the national rate. As noted earlier, we anticipate that the presumption in favor of the national rate will be difficult to overcome.

On November 3, 2009, the FDIC issued Financial Institution Letter 62-2009 and Frequently Asked Questions that provide new guidance for financial institutions that would prefer to use a prevailing rate for their local market area instead of the new national rate. As described in its publication, the FDIC envisions a two-step

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Red Flags Rule Compliance is Delayed to June 10, 2010 in a Last Minute Decision

November 2, 2009

Authors

Bryan Cave

Red Flags Rule Compliance is Delayed to June 10, 2010 in a Last Minute Decision

November 2, 2009

by: Bryan Cave

The FTC announced over the weekend that, at the request of members of Congress, the compliance date for the Red Flags Rule is now delayed to June 1, 2010. This gives companies additional time to prepare their required Red Flags Rule Plans. The FTC has said it will continue to provide guidance on the development and implementation of these Plans, especially for companies who want to voluntarily adopt identity theft protection measures for the benefit of their customers and business reputation (Click here for the FTC’s Red Flags Rule website). This delay does not affect any other agency oversight or other federal regulations relating to data security and identity theft.

On a related note, a federal court (District of Columbia) issued the first ruling regarding the application of the Red Flags Rule on October 30, 2009. That decision held that the FTC may not apply the Red Flags

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Policy Statement on Prudent Commercial Real Estate Loan Workouts

November 1, 2009

Authors

Jerry Blanchard

Policy Statement on Prudent Commercial Real Estate Loan Workouts

November 1, 2009

by: Jerry Blanchard

Regulators and financial institutions have been trying for some time now to come to an understanding of what type of how workout strategies affect the classification of loans and the corresponding impact on estimates of loan losses. On October 30 the federal banking regulators published guidance on prudent commercial real estate loan workouts that addresses these issues. The guidance addresses some of the most contentious areas of disagreement between banks and examiners.  One of those areas is the impact of a decline in value of collateral in situations where the borrower or guarantors have the ability to service the loan. The new guidance tells examiners that renewed or restructured loans to borrowers who have the ability to repay their debts according to reasonable modified terms will not be subject to adverse classification solely because the value of the underlying collateral has declined to an amount that is less than

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October 2009 Client Alerts

October 30, 2009

Authors

Bryan Cave

October 2009 Client Alerts

October 30, 2009

by: Bryan Cave

FinCEN’s New Bank Secrecy Act Compliance Outreach Initiative Targeted at Depository Institutions With Assets Under $5 Billion

Yesterday FinCEN announced a new outreach initiative targeted at depository institutions with assets under $5 billion. The outreach initiative builds upon knowledge FinCEN previously gained from its meetings with larger financial institutions. As part of its ongoing outreach efforts, FinCEN is now seeking to engage smaller to moderate size depository institutions who are working to implement the four pillars of the Bank Secrecy Act regulatory regime: (1) policies, procedures and internal controls; (2) designation of a compliance officer; (3) ongoing training; and (4) independent testing.

For more information, please read the client alert published by Bryan Cave LLP’s Financial Institutions Client Service Group on October 15, 2009.

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Fraudulent E-Mails Claiming to Be From the FDIC

October 29, 2009

Authors

Robert Klingler

Fraudulent E-Mails Claiming to Be From the FDIC

October 29, 2009

by: Robert Klingler

We are aware of several fraudulent emails circulating purporting to be from the FDIC.  Subject lines include: “FDIC has officially named your bank a failed bank” and “FDIC Alert: you need to check your Bank Deposit Insurance Coverage.”

These e-mails and the associated Web site are fraudulent. Recipients should consider the intent of these e-mails as an attempt to collect personal or confidential information, some of which may be used to gain unauthorized access to on-line banking services or to conduct identity theft.

The FDIC does not issue unsolicited e-mails to consumers. Financial institutions and consumers should NOT follow the link in the fraudulent e-mail.

The FDIC has released a special alert confirming that these announcements are not from the FDIC.

The official FDIC website does contain useful information if you have questions about FDIC insurance; alternatively, we encourage you to contact your bank if you have

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REMINDER – Red Flags Rule Takes Effect Nov. 1

October 27, 2009

Authors

Bryan Cave

REMINDER – Red Flags Rule Takes Effect Nov. 1

October 27, 2009

by: Bryan Cave

Barring some last minute legislative/regulatory activity, the FTC will expect companies to be red flags rule compliant as of November 1, 2009.  Companies should recognize that there is not a “one size” approach to addressing identity theft risks in making a Red Flags Rule Plan.  Instead, the FTC expects each company’s plan to be tailored to its own needs and circumstances.   Click here for help on steps your company can take.

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FDIC Pre-payment Assessment Update

October 27, 2009

Authors

Bryan Cave

FDIC Pre-payment Assessment Update

October 27, 2009

by: Bryan Cave

On September 29, 2009, the FDIC announced a proposed rule that would require institutions to prepay on December 30, 2009, an estimated quarterly risk-based assessments for the 4th quarter of 2009 and for all 2010, 2011, and 2012.   For a synopsis, see our prior summary of the proposed rule. Comments to the proposed rule are due by October 28, 2009.

Tax Treatment of Prepayments

The general rule is that prepayments that benefit more than one taxable period cannot be deducted in full, but must be deducted over the periods for which the benefits are obtained.  Thus, a payment of 3 years worth of insurance premiums cannot be deducted in a single tax year regardless of whether the institution is an S corporation or a C corporation.  The rule also is the same for cash method taxpayers, with one limited exception.  A cash method taxpayer can prepay up to

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Deadline Approaching – Opt-Out Deadline for Extended Transaction Account Guarantee is November 2, 2009

October 22, 2009

Authors

Robert Klingler

Deadline Approaching – Opt-Out Deadline for Extended Transaction Account Guarantee is November 2, 2009

October 22, 2009

by: Robert Klingler

As a reminder, the FDIC has extended the Transaction Account Guarantee portion of the Temporary Liquidity Guarantee Program until June 30, 2010.  Institutions that have not previously opted-out of the program will automatically continue in the program (at increased costs) unless they pro-actively opt-out of the extension.

Starting January 1, 2009, the FDIC assessment for its full guarantee of funds held in non-interest bearing demand deposit accounts will rise to an annualized rate of 15 to 25 basis points, depending on the Risk Category rating of the institution.

The deadline to affirmatively opt out of the Transaction Account Guarantee program is November 2, 2009. We have previously posted information about how to opt out.

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President Obama Announces Additional TARP Capital for Community Banks

October 21, 2009

Authors

Robert Klingler

President Obama Announces Additional TARP Capital for Community Banks

October 21, 2009

by: Robert Klingler

On October 21, 2009, President Obama announced the broad outlines of a new program to provide additional capital to community banks in an effort to spur lending to smaller business.

Actual facts about the new program are currently very sparse.  A review of the currently available information does provide some details that may be attractive to community banks that current have TARP CPP funds, as well as those that currently do not have funds.  However, it does not appear that there will be any change in the Treasury’s determination of which community banks are eligible for TARP funds; participating institutions appear to still need to be viable without the funds.

There are three basic sources of official information:

  • the text of President Obama’s speech in Landover, Maryland;
  • the press release announcing the speech; and
  • a fact sheet on the President’s Small Business Lending Initiatives.
  • Known Facts

    FinCEN Outreach to Community Banks

    October 20, 2009

    Authors

    Bryan Cave

    FinCEN Outreach to Community Banks

    October 20, 2009

    by: Bryan Cave

    FinCEN has announced a new outreach effort targeted at depository institutions under $5 billion in total assets to determine how these institutions comply with the Bank Secrecy Act and the specific compliance hurdles they confront.   If your institution has assets under $5 billion, please see our client alert about FinCEN’s outreach proposal.

    As part of its ongoing outreach efforts, FinCEN is now seeking to engage smaller to moderate size depository institutions who are working to implement the four pillars of the Bank Secrecy Act regulatory regime: (1) policies, procedures and internal controls; (2) designation of a compliance officer; (3) ongoing training; and (4) independent testing.

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