Category — Reregulation of Banking and Financial Services

The financial reform bill passed by the Senate on July 15 tightens the definition of “accredited investors” eligible to participate in private placements of securities.  The bill has been sent to the White House for final enactment upon the signature of President Obama.  The relevant provision of the bill changes the financial test used to define an “accredited investor” under Regulation D, a widely used exemption for private placements. [Read more →]

On June 21, 2010, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Office of Thrift Supervision and the Federal Deposit Insurance Corporation (together, the Regulatory Agencies) issued final guidance on sound incentive compensation policies for banking organizations. As outlined in the final guidance, banking organizations must maintain incentive compensation practices that are consistent with safety and soundness principles, even though this may require more conservative incentive compensation practices than are necessary to align employees’ interests with those of shareholders. [Read more →]

The law firm of Troutman Sanders LLP announced today the creation of a Financial Crimes and Securities Fraud Team to help counsel clients on a new nationwide government task force focused on combating white-collar crime.   [Read more →]

Federal agencies have targeted banks and holding companies for deficient financial reporting over the last several years, but the stakes got higher when the U.S. Attorney for the Eastern District of Virginia established a new task force targeting financial crimes and securities fraud. As reported in The Wall Street Journal on Friday, May 14, the goal of this nation-wide, multi-agency task force is to focus on white collar crime – and to target high profile cases – using an investigative task force of federal, state, and local entities to crack down on financial crime and securities fraud. [Read more →]

On February 2, 2010, President Obama announced a proposal (the Proposal) to establish a new Small Business Lending Fund (the SBLF) to encourage and facilitate increased lending by community banks to small businesses.  As proposed, the SBLF would offer up to $30 billion for equity investments in community banks, which are defined as banks with assets under $10 billion. The SBLF would be separate and distinct from the Treasury’s TARP program but would be funded with $30 billion of repaid TARP capital.  [Read more →]

On January 12, 2010, the Federal Deposit Insurance Corporation (FDIC) issued an advance notice of proposed rulemaking (the Proposal) inviting comment on whether the FDIC should charge higher deposit insurance premiums for institutions with compensation plans that encourage excessive risk taking.  At issue are compensation structures that fail to align incentives of individual employees with other stakeholders – namely shareholders and the FDIC.  The Proposal states the FDIC’s position that excessive risk taking by employees remains a contributing factor in financial institution failures and losses to the FDIC insurance fund. [Read more →]

The National Association of Attorneys General (“NAAG”) has recently created a unique State-Federal Task Force on Mortgage Enforcement (“Task Force”). The Task Force is co-chaired by Attorney General Rob McKenna (R-WA) and Attorney General Tom Miller (D-IA) and includes twenty-two Attorneys General. Of these Attorneys General, seventeen are Democrats and five are Republicans. [Read more →]

On October 30, 2009, the Federal Deposit Insurance Corporation, in coordination with other federal bank regulatory agencies, released guidelines on prudent commercial real estate loan workouts.  The guidelines update and replace existing supervisory guidance on the impact of workouts on loan classifications and required loan loss revenues.  The guidelines are intended to “promote supervisory consistency, enhance the transparency of commercial real estate loan workouts and ensure that supervisory policies and actions do not inadvertently curtail the availability of credit to sound borrowers.”  Finally, the guidelines set forth a range of workout scenarios to demonstrate the examiner’s analytical review process under these guidelines. [Read more →]

On October 22, 2009, the Board of Governors of the Federal Reserve System (Federal Reserve) released proposed incentive compensation guidelines that would apply to all banking organizations under the Federal Reserve’s supervision. These guidelines aim to ensure that banking organizations’ compensation policies and practices do not encourage excessive risk-taking and undermine the soundness of the banking organization. [Read more →]

On October 21, 2009, President Obama announced a series of measures aimed at improving access to credit by small businesses. These programs would provide lower-cost capital to community banks and would increase the maximum Small Business Administration (SBA) loan sizes. Importantly, only the general terms of these programs were released by the Obama administration; the U.S. Treasury Department (Treasury) will release specific terms for the capital program in the near future, following consultation with community banks and the small business community. [Read more →]