I am pleased to send you another quality edition of the Banking Law Committee Journal that will be posted on our Committee website. Many if not all of the authors of the current and prior articles will also appear in person at the meeting of the Committee in Washington D.C. on November 2 and 3, 2007, at the Ritz-Carlton. They will be available there to discuss these articles in more detail and to autograph copies of the articles for your personal collection. Walk-ins can register to attend the meeting at the Ritz.

I commend these and the now extensive set of prior articles on our website to you, both in terms of the relevance of the topics covered and the quality of the articles. These articles provide examples of the blending of legal expertise and practical experience that make the Committee very useful for lawyers who represent financial institutions, trade associations, and government regulatory agencies. Hopefully, this Journal will be the initial step you take in your use of the Committee as well as be helpful in acquiring practical insights in how to understand and address the legal, policy and compliance issues with which you are dealing.

Please also feel free to contribute to the dialogue, including by providing your opinion or analysis on current topical issues. Write a short article for the next edition and send it to any of the editors listed here. You will be speaking to the 1600 members of the Committee. Also, feel free to contact Chris Bellini at cbellini@gibsondunn.com or at our meetings if you want to discuss a proposed article or have other material suitable to be posted on our website for our members.

Jim Scott
Chair, Committee on Banking Law
scottj@citigroup.com

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In the past few months there has been much discussion on what could have been done differently or whether additional regulation of banks and thrifts could have prevented the current subprime lending meltdown. There are suggestions that the federal banking regulators could have taken actions that would have mitigated, if not prevented, the problems that have surfaced.

In response to the calls from Congress and others, the Office of Thrift Supervision ("OTS") has issued an advance notice of rulemaking to implement its authority under the Federal Trade Commission Act ("FTC Act") in the area of Unfair or Deceptive Acts or Practices. While any rule issued by the OTS would apply only to savings associations and possibly their affiliates, the issues raised in the advanced notice are instructive and provide a useful guide to some of the factors that need to be addressed in this area.


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As Federal Reserve Board Governor Randall Kroszner highlighted in a speech earlier this year, electronic payments (credit and debit cards combined) have surpassed the use of checks as the preferred means of making non-cash payments. Remote deposit capture is gaining popularity (and acceptance) with banks and their customers, while mobile bill payment and banking options continue to revolutionize the way in which customers conduct transactions. With these and other changes, non-banks have become increasingly prevalent throughout all aspects of the payments system, from front-end functions such as user authentication, to back-end processing, and even in developing new and innovative contributions to the payments system arena.


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In Watters v. Wachovia, the U.S. Supreme Court brought some measure of certainty to preemption issues relative to national bank operating subsidiaries, but has invited new and revived debate as to the application of federal preemption principles to the activities of state-chartered banks. This article will consider how Watters and other recent court decisions might resolve some issues, and raise new ones.


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Bank Secrecy Act and Anti-Money Laundering (BSA/AML) related enforcement actions have grown to become a significant focus of the federal bank regulators' enforcement activity over the course of the last few years. With the enactment of the USA PATRIOT Act, the role of banks in combating terrorist financing has only sharpened this focus. In 2004, the bank regulators undertook 437 enforcement actions, 66 of which were BSA/AML related. The following year, bank enforcement actions totaled 410 of which 53 were BSA/AML related actions. The trend of BSA/AML related enforcement actions constituting approximately 15 percent of total bank enforcement actions continued last year when bank regulators undertook 56 BSA/AML enforcement actions out of a total of 369 enforcement actions. As a result of the focus on BSA/AML compliance, BSA/AML related enforcement actions have also led to record civil money penalties (CMPs) ranging from $10 million to $100 million. However, civil enforcement actions are not the only penalties banks may face for BSA/AML violations.


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