I am pleased to send you another quality edition of the Banking Law Committee Journal that will be posted on our Committee website. Several of the authors of the current and prior articles will be at the Spring Meeting in Dallas April 10-12, including at the Committee dinner at the Dallas Art Museum. They will be available there to discuss these articles in more detail and, as always, to autograph copies of the articles for your personal collection. We look forward to as many of you attending as possible.

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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After receiving significant pressure from Congress, consumer groups and others, the Board of Governors of the Federal Reserve System issued a proposal that would address a number of the lending practices and concerns arising out of the current subprime lending situation. The proposal would amend Regulation Z, the regulation that implements the Truth in Lending Act, to implement provisions of the Home Ownership and Equity Protection Act ("HOEPA"). Previously, the Federal Reserve issued a regulation requiring the disclosures for high cost loans as defined by HOEPA.


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A great deal of attention has focused recently on investments by "sovereign wealth funds" ("SWFs") in the United States, particularly in banks and investment firms. SWF transactions regularly make headlines, at least in the business pages, and Congress has held three hearings on the subject in the last four months alone.

What is all the fuss about? These investors have poured tens of billions of dollars into some of the biggest and most prestigious U.S. financial institutions, which sorely needed the cash infusions. This would seem clearly to be a very good thing. Nevertheless, it is apparent that SWF involvement in the U.S. economy evokes concern as well as relief among American policy-makers, business people and academics. In this article, I will try to provide an overview of SWFs and the issues that their recent investments have raised, focusing on investments in U.S. banking organizations.


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Last month the U.S. Court of Appeals for the D.C. Circuit issued a significant decision affecting professional service firms in Grant Thornton, LLP v. Office of the Comptroller of the Currency (OCC). Under review in this case was the Comptroller’s cease and desist and civil money penalty orders levied against Grant Thornton, LLP ("Grant Thornton") in connection with its external audit of First National Bank of Keystone, Keystone, WV. The OCC alleged several departures from accounting standards on the part of Grant Thornton, for example that it had relied upon oral confirmations of assets when prudential practices demanded obtaining written confirmations. Due to this and other alleged misfeasance, the OCC charged that Grant Thornton "recklessly engaged in an unsafe and unsound practice in conducting [Keystone’s] affairs. " The Court reversed the Comptroller’s decision, deciding instead that the OCC had not met its statutory burden for jurisdiction through which to exercise enforcement authority over Grant Thornton under Section 8 of the Federal Deposit Insurance Act ("FDIA").


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One of the broadest tools in a plaintiffs attorneys' arsenal, and that of public prosecutors as well, is state unfair and deceptive acts and practices laws, or "UDAP." Every state has enacted some form of UDAP law, sometimes called "little FTC Acts" after similar language found in Section 5 of the Federal Trade Commission Act: "Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful." This article shall discuss some of the approaches that states have taken to UDAP legislation, and the application of preemption principals to UDAP cases.


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