I am pleased to be able to send to you the second issue of our Banking Law Committee eNewsletter.  The newsletter will also be posted on the Committee website.

We are a Committee of approximately 1500 members, but in these times of expense management generally not more than 150 members are able to attend our Committee meetings.   This newsletter is our most recent effort to provide a link to those members we may not see frequently at our meetings.  In the best tradition of the Committee, the newsletter is a substantive discussion of the issues of the day from five leading practitioners.  My thanks on behalf of the entire Committee to Christopher Bellini, editor-in-chief and to Charlotte Bahin, Peter Heyward, Raymond Natter and Thomas Vartanian, contributing editors.

While advance registration is closed, there is still an opportunity to register on-site next week for our Fall Meeting, to be held at the Jefferson Hotel in Richmond, Virginia on Friday, November 11 and Saturday, November 12.  This is an opportunity to hear from our federal banking regulators, representatives of the SEC and Capitol Hill staff.  You may also use this occasion to speak with Chris Bellini about assisting with the newsletter.  Details of the meeting are on the Website of the ABA or you can email me at scottj@citigroup.com.

I welcome your ideas for the Committee or the newsletter, including any thoughts you may have concerning how Committee members might interact electronically through our website.  Thanks again to those who took the time to prepare the articles. 

Jim Scott

Committee Chair

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Introduction

In the post Sarbanes-Oxley Act (“SOX”) era, in-house counsel, senior management, and especially independent members of the board of directors, are being asked to walk the increasingly narrow line between protecting their company and openness with the government.  The ever increasing frequency of internal investigations is an outgrowth of the current business climate, brought about by the public demise of Enron, WorldCom, and others.  While depository financial institutions have only played peripheral roles in the various accounting scandals that have occurred, as public companies, the rules of engagement apply equally to them.  In that regard, it should be noted that many of the SOX era governance reforms come directly out of banking statutes enacted in the early 1990s, such as the Federal Deposit Insurance Corporation Improvement Act of 1991.

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On October 12, 2005, the Federal District Court for the Southern District of New York validated the OCC’s position that it has the exclusive right to enforce applicable State law against national banks and their operating subsidiaries and the State Attorney General has no authority in this sphere.  In a companion case, the court found that the OCC’s exclusive visitorial authority applies whether the State Attorney General is acting on behalf of the State directly, or on behalf of affected citizens of the State.  As a result of these cases, the New York Attorney General is enjoined from investigating or taking enforcement actions against national banks.

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Government Accountability Office report GAO-05-621, entitled "Industrial Loan Corporations – Recent Asset Growth and Commercial Interest Highlight Differences in Regulatory Authority," makes an interesting contribution to the debate surrounding industrial loan companies ("ILCs").  Dated September 15, 2005, the Report responds to a request by Congressman Jim Leach, dated March 4, 2004, seeking information on the following six issues:

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In the 30 years since the enactment of the Home Mortgage Disclosure Act (HMDA), its requirements have stirred more than a fair share of controversy.  As the mortgage market has evolved, Congress and the Board of Governors of the Federal Reserve System (Federal Reserve) have amended the statute or its implementing regulation to require that additional information about the loans and/or the borrowers be reported.

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