On December 3, 2009, the Federal Deposit Insurance Corporation, the Federal Reserve, the Office of the Comptroller of the Currency and the Office of Thrift Supervision conducted a telephone seminar that provided additional guidance on the Policy Statement on Prudent Commercial Real Estate Loan Workouts, released on October 30, 2009 (Workout Guidance) and responded to questions submitted by financial institutions.  The regulatory agencies reiterated their intent to encourage prudent CRE loan workouts and reaffirmed that lenders will not be subject to criticism for prudently structuring CRE loan workouts, even if the new loans are impaired.  [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 →]

On October 15, 2009, the U.S. House Committee on Financial Services (“HCFS”) approved its version of the Over-the-Counter Derivatives Markets Act of 2009 (the “HCFS Approved Legislation”).  The HCFS Approved Legislation would require the regulation of the over-the-counter (“OTC”) derivatives marketplace, including transactions, products and participants.  [Read more →]

The Federal Reserve Board has announced in Consumer Affairs Letter 09-8 that it will implement a consumer compliance supervision program involving nonbank subsidiaries of bank holding companies (BHCs) and foreign banking organizations (FBOs). This compliance supervision program will include activities covered by the consumer protection laws and regulations the Federal Reserve has the authority to enforce. [Read more →]

On August 11, 2009, the U.S. Treasury Department delivered comprehensive legislation to Congress calling for the regulation of the over-the-counter (“OTC”) derivatives market.  Below is a summary of key provisions of the “Over-the-Counter Derivatives Markets Act of 2009” (the “Proposed Act”). [Read more →]

The American Reinvestment and Recovery Act of 2009 (ARRA) authorizes the Department of Treasury to award $2.3 billion in tax credits for qualified investments in advanced energy projects, to support new manufacturing facilities.  The tax credit, known as the Advanced Energy Manufacturing Tax Credit (MTC) or the Section 48C credit, provides a 30% credit for the qualified costs of investments in new, expanded, or re-equipped renewable energy manufacturing projects located in the United States.  [Read more →]

The credit crisis that gripped U.S. and global markets and the subsequent recession have created fresh investment opportunities for private equity funds.  Traditionally, private equity funds were discouraged from investing in banking institutions by two primary factors: (1) high entity valuations dominated the banking industry, and (2) significant investments in banking institutions could trigger considerable regulatory burdens.  However, recently announced regulatory policy changes and significant declines in stock prices across the financial industry have combined to create a more attractive environment for private equity to invest in banking institutions.  [Read more →]

Continuing his intense criticism of the Treasury Department’s management of the Toxic Assets Recovery Program (TARP) and other federal commitments under the 2008 Emergency Economic Stabilization Act (the Bailout), Neil Barofsky, Special Inspector General for TARP (SIGTARP), issued his second quarterly report on July 21, 2009, purporting to demonstrate, contrary to Treasury’s position, that TARP recipients can meaningfully describe how TARP funding has affected their lending and other operations. [Read more →]