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Basel III Treatment of DTAs and MSAs

October 9, 2017

Authors

Robert Klingler

Basel III Treatment of DTAs and MSAs

October 9, 2017

by: Robert Klingler

We have heard, read and seen (and internally had) some confusion regarding the joint proposed rulemaking regarding the potential simplification of the capital rules as they relate to Mortgage Servicing Assets (MSAs) and certain Deferred Tax Assets (DTAs).

In addition to simply being complicated regulations, the regulators also have two proposed rulemakings outstanding related to these items. In August 2017, the banking regulators jointly sought public comment on proposed rules (the “Transition NPR“) that proposed to extend the treatment of MSAs and certain DTAs based on the 2017 transition period. Then, in September 2017, the banking regulators jointly sought comment on proposed rules (the “Simplification NPR“) that proposed to alter the limitations on treatment of MSAs and certain DTAs (and also addressed High Volatility Commercial Real Estate or HVCRE

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The CFPB Proposes Ambitious Payday Lending Regulations

June 6, 2016

Authors

Bryan Cave

The CFPB Proposes Ambitious Payday Lending Regulations

June 6, 2016

by: Bryan Cave

On June 2, 2016, the CFPB released its long-awaited proposed regulations for payday loans, vehicle title and certain high-cost installment loans.  Comments on the proposed rules must be received on or before September 14, 2016.

While most payday lenders would need to make significant changes to their products and practices under the proposed rules, the final rules could well be delayed though legal challenges in court.  The scope of the proposal is extraordinary, even requiring a new credit reporting system, that would need to be built, to facilitate the ability-to-repay requirements of the proposal.  The CFPB is relying on its authority under the Dodd-Frank UDAAP provisions to issue the rules, which is admittedly very broad, but even that might not be enough to support this ambitious proposal.

Nevertheless, because we cannot predict how courts would ultimately rule on the CFPB’s authority, it’s important to understand the proposed rules, prepare

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The New Deposit Insurance Proposal

June 18, 2015

Authors

Jonathan Hightower

The New Deposit Insurance Proposal

June 18, 2015

by: Jonathan Hightower

A Quick Overview and a Note on Construction Lending

On June 16, 2015, the FDIC issued a notice of proposed rulemaking to revise its calculations for deposit insurance assessments for banks with under $10 billion in assets (excluding de novo banks and foreign branches).  The rules would go into effect the quarter after they are finalized but by their terms would not be applicable until after the designated reserve ratio of the Deposit Insurance Fund reaches 1.15%.

At almost 150 pages, there are many facets to the proposed rule that must be carefully analyzed.  At the outset, we give credit to the FDIC for attempting to fine tune deposit insurance assessments beyond the blunt instrument that they have always been.  We have long held the position that the FDIC should adopt more careful underwriting procedures, similar to private insurers, in order to better

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Speculation Abounds on CFPB’s Next Step on Arbitration Clauses

April 7, 2015

Authors

Seyi Iwarere

Speculation Abounds on CFPB’s Next Step on Arbitration Clauses

April 7, 2015

by: Seyi Iwarere

You might have seen it this March in the New York Times: an article about American troops having their vehicles repossessed by auto lenders while on active duty, and the troops being unable to fight repossession in court because of mandatory arbitration clauses  in their lending contracts.

The poignant story on vets and car repossession is just one piece in the ongoing discussion about what actions the CFPB will take regarding provisions in consumer contracts limiting the consumer to arbitration in the event of a future dispute, referred to as “pre-dispute arbitration clauses.” Under Section 1028 of Dodd-Frank, the CFPB was required to conduct a study on use of arbitration clauses in connection with offering consumer financial products and services. If, through study, the CFPB finds that prohibiting or limiting the clauses in agreements between market participants it regulates and consumers “is in the public interest and for the

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FinCEN’s Beneficial Owner Proposal Conflicts with FCRA

April 2, 2015

Authors

Bryan Cave

FinCEN’s Beneficial Owner Proposal Conflicts with FCRA

April 2, 2015

by: Bryan Cave

On August 4, 2014, FinCEN released proposed rules that would require banks and certain other financial institutions to identify the “beneficial owners” of their business entity customers and to verify the identity of each such beneficial owner (the “Proposal”).  If the Proposal results in final rules that are substantially identical to the proposed rules, financial institutions might be unable to comply without violating the federal Fair Credit Reporting Act (“FCRA”).

Under the Proposal, “beneficial owners” would generally include at least one manager of the entity and each individual owning 25% or more of the entity.  This could mean up to five individuals if no manager also owns 25% or more of the entity.

The Proposal would require a financial institution first to identify the customer’s beneficial owners.  This should be reasonably manageable because institutions would be able to provide a certification form to its customer and require that the customer

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How Well Do I Know You – Let Me Count the Ways

August 21, 2014

Authors

Jerry Blanchard

How Well Do I Know You – Let Me Count the Ways

August 21, 2014

by: Jerry Blanchard

FinCen Updates Customer Due Diligence Requirements

Modern entertainment, whether it be books or movies,  oftentimes grapple with the issues of “who are you?” As a story line develops the audience is kept guessing as characters turn out to have different motivations or identities than what they were first perceived to have. Political thrillers oftentimes involve agents of shadowy groups behind which the true masterminds operate. How much effort will it take to reach the truth? FinCEN has recently come out with some proposed guidance that addresses this issue in the context of the legal entities that financial institutions do business with.

In a proposed rulemaking published in late July, FinCEN proposed a new regulatory requirement to identify beneficial owners of legal entity customers. Going forward, the essential elements of customer due diligence will include: (i) identifying and verifying the identity of customers; (ii) identifying

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Comments on Proposed Rules for Georgia Fairness Hearings

July 7, 2014

Authors

Michael Shumaker and Eliot Robinson

Comments on Proposed Rules for Georgia Fairness Hearings

July 7, 2014

by: Michael Shumaker and Eliot Robinson

On May 9, 2014, the Georgia Securities Division issued a proposed rule to create a formal process for fairness hearings to be conducted by the Georgia Commissioner of Securities.  The proposed rule would establish procedures for administrative hearings to determine the fairness of certain mergers and other business combinations in which securities are issued.  If the Commissioner determines that the terms of the proposed transaction are fair to the shareholders receiving securities, the issuer would be able to claim an exemption from the registration requirements of the federal Securities Act of 1933 for the securities to be issued.  Specifically, Section 3(a)(10) provides an exemption from the registration requirements of the federal Securities Act for securities issued in a transaction determined to be fair pursuant to a fairness hearing by a governmental authority.  The exemption from registration with the SEC is particularly valuable for companies that are not currently subject

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Proposed Rule for Georgia Merchant Acquirer Limited Purpose Bank

August 27, 2013

Authors

Jerry Blanchard

Proposed Rule for Georgia Merchant Acquirer Limited Purpose Bank

August 27, 2013

by: Jerry Blanchard

The Georgia DBF recently published its proposed rules (the “Rule”) for implementing the Georgia Merchant Acquirer Limited Purpose Bank Act. The Act was adopted 2012 to create a special purpose state-chartered bank that would allow companies to enter card networks directly rather than renting a Bank Identification Number (“BIN”) from a financial institution sponsor. Existing networks currently require that members be “eligible” for FDIC deposit insurance coverage in order to obtain a BIN and currently the only institutions that are eligible for such coverage are state and federal owned financial institutions that accept demand deposits. The Act addresses that issue by only authorizing a MALPB to accept deposits from a corporation that owns majority of the shares of the MALPB. It may not operate in any manner that attracts deposits from the general public and no deposit can be withdrawn by check or similar means for payment to third

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CFPB to Amend Remittance Transfer Rules

December 5, 2012

Authors

Jeannie Osborne

CFPB to Amend Remittance Transfer Rules

December 5, 2012

by: Jeannie Osborne

On November 27, 2012, the CFPB announced that it intends to propose adjustments to its rules on international remittances, as well as briefly extend the effective date of the rule. A notice of proposed rulemaking is expected in December, and the bureau stated it intends to “fast track” the rule changes so that the new implementation date will be sometime in the spring of 2013. The rules are currently slated to become effective on February 7, 2013.

In its blog post regarding these plans, the CFPB acknowledged that some entities covered by the rules have identified issues that pose “practical challenges” in implementation. The bureau’s proposed changes will address:

  • Errors resulting from incorrect account numbers provided by consumers sending remittance transfers. The bureau intends to propose that where the remittance transfer provider can demonstrate that the consumer provided incorrect information, the provider must attempt to recover the
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CFPB Focusing on General Purpose Reloadable Prepaid Cards

July 2, 2012

Authors

Bryan Cave

CFPB Focusing on General Purpose Reloadable Prepaid Cards

July 2, 2012

by: Bryan Cave

As a precursor to further regulation of general purpose reloadable (GPR) cards, the Consumer Financial Protection Bureau (CFPB) is seeking responses to 10 questions before July 23, 2012.

The CFPB recently released an advance notice of proposed rulemaking (ANPR) seeking comments, data and information regarding GPR cards, including questions regarding costs, benefits and risks to consumers. The ANPR is the first step in the long-anticipated process of regulation by the CFPB over “open loop” or “general use” prepaid cards.

While the ANPR specifically discusses “cards,” other mechanisms that access a prepaid financial account are also encompassed, including key fobs and cell phone apps. The ANPR is focused on GPR cards which the CFPB defines loosely as a general use prepaid card “issued for a set amount in exchange for payment made by a consumer” that is reloadable by the consumer, “meaning the consumer can add funds to the card.” 

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