As I come to the end of my three years as Chair of the Banking Law Committee with the Annual Meeting in New York on August 9 and 10, some of the people to whom I owe the greatest debt of gratitude are Ray Natter, Peter Heyward, Charlotte Bahin, Tom Vartanian and Travis Nelson. These are the editors who for the past three years have written the articles that made the Banking Law Committee Journal (formerly, the Quarterly Newsletter) an integral part of and a tradition within the Committee. For some of you who cannot attend the meetings regularly, this is your most constant tangible link to the Committee. Of course, special thanks goes to Chris Bellini, a master at encouraging, pleading, cajoling (and, I believe, bribing) the editors to produce the fine articles you receive.

All Committee members should make a habit of reviewing the current and now extensive set of prior articles on our website. 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 this initiative and tradition, 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.

Remember, the Annual Meeting is upon us, and you have just until July 25 to preregister for the reception at the New York Federal Reserve Bank and the Committee dinner.

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

back to top ↑

There is little debate that, given a choice, the current regulatory structure of the financial services industry would be organized differently. Whether it is the regulation of the banking, securities, insurance or other financial services companies, the existing framework is the result of events of the past and not a comprehensive organizational plan. With some regularity, every few years, a proposal to reorganize the regulation of financial services companies is drafted. Sometimes the suggestions are borne from a crisis; while other times they are promoted as a means to avert a future crisis or to streamline the existing structure.

The latest version of a plan to modernize the financial services regulatory structure was issued by the Department of Treasury in March 2008 as a Blueprint for Modernized Financial Regulatory Structure. Even though the timing of the release of the document coincided with the collapse of Bear Stearns and the escalating mortgage crisis, Treasury staff had been working on the document for a year or more, during which time there had been numerous meetings and an advanced notice of proposed rulemaking. While a number of the suggestions appeared to respond to these events, in fact, the plan is much broader in scope.


More...

The Brookings Institution on May 16, 2008 published a discussion paper, "The Great Credit Squeeze: How it Happened, How to Prevent Another" ("Credit Squeeze"), concurrently with a public forum on the same subject. Written by Robert E. Litan, Martin Neil Baily, and Douglas W. Elmendorf, all affiliated with Brookings, the paper weighs in at more than 160 pages. It is to be published in book form in November 2008.

To the extent that its title implies startling new insights or daring solutions to the problems confronting the financial sector, Credit Squeeze may disappoint some readers: I suspect that there is little here that will surprise expert observers of these matters (a category that does not include this reviewer). But the paper's authors probably did not intend such an implication in any event. They readily acknowledge that their paper is a "work in progress," a sensible caveat in view of the frequency and force of the shocks that continue to rock the financial system. The paper contains a wealth of information about the origins of the current turmoil in our financial markets, offering thoughtful conclusions, debunking a few misconceptions, and making some interesting proposals for reforms. Moreover, it is richly annotated with interesting graphics and references to academic studies and other materials. Many readers should find it useful - as I did - to have such a large amount of data and wide range of possible policy responses addressed in a single document.


More...

The United States faces one of the most severe financial challenges since the Great Depression. As a result of a spectacular bubble in housing prices, fed by easy credit and lax underwriting standards, Americans today are facing the prospect of millions of home foreclosures. Concerned that these foreclosures could have a serious negative impact on our financial institutions and our economy in general, the Administration and both Houses of Congress have come forward with plans to enhance the ability of the Federal Housing Administration (FHA) to assist home owners by permitting many of them to refinance out of higher cost, often variable rate loans, and into FHA insured mortgages.

While the concept behind all of these plans is very similar, the details vary enough that the legislation has been stalled in Congress for many months. This situation changed dramatically when the Secretary of the Treasury and the Chairman of the Federal Reserve Board urged Congress to grant the Treasury authority to lend to and if necessary, invest in the equity securities of Fannie Mae and Freddie Mac. As a result of this unusual request, it now appears that Congress will probably enact comprehensive mortgage and housing related legislation before the August recess.


More...

Introduction

As the subprime meltdown continues to evolve, we are seeing attorneys for aggrieved consumers file individual and class action lawsuits alleging a variety of novel and not-so-novel theories as to why their clients are not liable for delinquent or defaulted mortgages. Increasingly, in order to get what they perceive as a more favorable forum, consumers are pleading what would otherwise be causes of action under the Truth in Lending Act (TILA), Real Estate Settlement Procedures Act (RESPA), or Fair Debt Collections Practices Act (FDCPA), as state causes of action ranging from breach of contract, to violation of state substantive disclosure or lending laws, to state unfair or deceptive acts or practices (UDAP) laws. The goal of proceeding under state claims is often to either seek state law remedies, or to retain jurisdiction in more favorable state courts. Notwithstanding these creative measures ("artful pleading"), there remain valid approaches that bank counsel can take to get the case removed to a more favorable federal court.


More...

Introduction

The purpose of this article is to provide an overview of the requirements of the Identity Theft Red Flags and Address Discrepancies under the Fair and Accurate Credit Transactions Act of 2003 Final Rules (the "Final Rules"). The Final Rules are already effective; however, the mandatory compliance date is November 1, 2008. The Final Rules are accompanied by Interagency Guidelines on Identity Theft Detection, Prevention and Mitigation (the "Guidelines"), which further illustrate the Program (as defined below) requirements. The Final Rules mandate that financial institutions and creditors consider the Guidelines and include in their Programs those that are appropriate.

This article is organized in a functional manner, rather than in sequential order of the Final Rules. Citations refer to the Federal Deposit Insurance Corporation ("FDIC") version of the Final Rules whenever possible. The Final Rules apply to "financial institutions and creditors" but for ease of reading this article uses the term "financial institutions" when referring to both financial institutions and creditors.


More...

Recent Congressional testimony summarized the results of the federal government's sustained assault on the attorney-client privilege over the past decade:

"We are forced to practice in a world where we cannot expect that any privilege will be respected by government investigators. The government now expects a waiver as an inherent right."

These sentiments reflect growing concern over the Department of Justice's ("DOJ's") policies governing the role of attorney-client privilege and work product protection in federal prosecutions of business corporations. The DOJ policies, contained in a December 2006 Memorandum issued by then-Deputy Attorney General Paul McNulty ("the McNulty memo"), have been the subject of much recent debate and have generated calls for reform from, among others, Congress, former prosecutors, and corporate executives and lawyers. What began as a trickle of criticism is now more aptly characterized as a flood, placing DOJ on the defensive.


More...

back to top ↑