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Brexit: Stay Calm, but Be Prepared for Changes

We have all woken up on June 24th to the surprising news that the UK has voted to leave the European Union following a contentious referendum.  The vote was very close, with 52% voting to leave and 48% voting to remain.  Markets are reacting with volatility, as might be expected, and British Pound Sterling values have sunk overnight to a historic 30 year low against the dollar.  To add to the turmoil, David Cameron, the British Prime Minister, has announced that he will be stepping down with his successor to be in place by the October Conservative Party conference.

That said, nothing is going to happen immediately.  There is a very specific legal process for Brexit and the timeline is hardly swift.  As the first step, the UK has to give notice to leave under Article 50 of the Lisbon Treaty.  Based on the Prime Minister’s announcement this morning and questions surrounding who might lead the negotiations on the terms of the UK’s exit from the EU, that notice may not be given for many weeks, if not months. That notice is also just the commencement of the process. Once notice has been given, there is then a two year period in which to negotiate the terms of an exit Treaty.

Our colleagues have posted more details on the Brexit process on Bryan Cave’s EU & Competition blog.

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Rinearson Identifies How US is Behind in FinTech Innovation

London and New York Partner Judith Rinearson authored a “Bankthink” opinion piece posted on the front page of American Banker  on Dec. 28 regarding differences in how the payments industry is perceived and supported in the U.S. and Europe.

“My biggest surprise after moving to London in September is how far the U.S. has to catch up to the United Kingdom and other European Union countries in the fintech and payments innovation race. Compared with their U.S. counterparts, U.K. and EU regulators are really trying to encourage payment innovation through licensing regimes. One thoughtful and pragmatic step taken by the U.K.’s payments regulator, the Financial Conduct Authority, was to ask industry for its input on appropriate policy. But the U.K. and EU’s bigger advantage is how their ‘e-money’ and payment service licensing processes work compared with U.S. state money transmitter laws.”

Click here to read her full article.

Rinearson is leader of Bryan Cave’s global Prepaid & Emerging Payments Team and has recently been named co-chair of the firm’s new Fintech Team.

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Media Mentions – August 1, 2014

With attorneys and staff worldwide, Bryan Cave attorneys are often quoted in the news.  Recent mentions of Financial Institutions group attorneys include:

Jerry Blanchard in the Atlanta Journal-Constitution

Atlanta Partner Jerry Blanchard was quoted July 18 by The Atlanta Journal-Constitution on reasons behind the shrinking number of banks in Georgia. The state, which led the nation in bank failures stemming from the real estate bust, has seen an increase in the number of banks being bought up at a rate of about one a month as healthy banks grow through the acquisition of other healthy banks. Blanchard said the question on many bankers’ minds is, “Can you survive the recovery? It’s hard to make money.” Click here to read the full article.

Rob Klingler in American Banker

Atlanta Partner Robert Klingler was quoted July 1 by American Banker concerning the trend among trust-preferred creditors of telling deadbeat banks that they must negotiate repayment or be forced into liquidation. Trapeza Capital Management filed legal documents recently to force FMB Bancshares in Lakeland, Ga., into involuntary bankruptcy. Trapeza, which manages a collateralized-debt obligation containing FMB’s trust-preferred securities, said in its filing that it is owed $13.6 million in unpaid debt and interest. FMB is the second lender to face involuntary bankruptcy over unpaid trust-preferred dividends. “Involuntary bankruptcies send a clear signal that doing nothing does not appear to be a good strategy,” Klingler said. “When you’re in default and tell your creditors you can’t do anything, you’re asking for an involuntary bankruptcy.”

Walt Moeling in SNL Financial

Atlanta attorney Walt Moeling was quoted July 10 by SNL Financial regarding the increase in bank M&A in Georgia this year. These recent transactions are simply logical, said Moeling, who noted that acquirers today have excess capital and outstanding commitments to put those funds to work, and they often are looking to rationalize fragmented franchises. Moeling agreed buyers are becoming more assertive and attributed some of the increased confidence to the fact that potential sellers are sitting on firmer ground. “They’re picking up a much smaller amount of problem assets and so there is a willingness to be a little more aggressive in doing acquisitions and again that’s only logical,” he said.

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Media Mentions – June 6, 2014

With attorneys and staff worldwide, Bryan Cave attorneys are often quoted in the news.  Recent mentions of Financial Institutions group attorneys include:

Walt Moeling in American Banker

Walt Moeling was quoted May 8 by American Banker concerning an uptick in interest from outside investors in the Florida banking industry.  A number of banks in the Midwest and elsewhere poured money and resources into Florida a decade ago, only to absorb large losses when the housing market collapsed.  “That was an interesting phenomenon,” Moeling said.  “The theory is that Florida has good deposits and is a good growth market . . . But those who fail to learn from history are doomed to repeat it.  The truth of the matter is it is very hard to be successful in a totally different market where you don’t have a lot of experience.”

Judith Rinearson and John ReVeal in Pay Magazine

Judith Rinearson and John ReVeal authored an article for the spring edition of PayBefore’s Pay Magazine  concerning the importance of crafting agreements between banks and their third-party vendors that will withstand the scrutiny of regulators.  “Recent regulatory publications, examinations and enforcement actions suggest that the standards and expectations by which regulators evaluate banks’ third-party relationships now are significantly more exacting,” they wrote.  “They’re digging deeper on how banks select their third-party vendors, and the scope of their review is extending to more and more vendors. This increased focus makes it critically important for banks and their partners to get their relationships right from the start by setting their own appropriate expectations and establishing standards for oversight, access and follow through.  And, the contract is the key.  Click here to read their full article.

Margo Strahlberg in Paybefore News

Margo Hirsch Strahlberg was quoted April 29 by Paybefore News regarding a qui tam action involving the state of Delaware relating to claims that nearly two dozen well-known retailers avoided escheating unused gift card balances to the state through the use of special purpose entities organized in other states. Delaware law enables the state to collect unclaimed property, including gift card funds that have gone unused after five years, from companies incorporated in the state. Strahlberg said Delaware’s pursuit of legal action in this case doesn’t mean other states will follow the strategy of seeking court intervention. “The states will still continue to pursue legislation in their attempt to grab at unclaimed funds,” she told the publication. “Delaware always has been known as an aggressive state with respect to unclaimed property, so its willingness to rely on the courts comes as no surprise.”

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Media Mentions – April 25, 2014

With attorneys and staff worldwide, Bryan Cave attorneys are often quoted in the news. Recent mentions of Financial Institutions group attorneys include:

Rinearson in AFP Exchange

New York Partner Judith Rinearson authored an article on the future of bitcoin and virtual currency for the April edition of AFP Exchange magazine, by the Association for Financial Professionals. Her article was part of the publication’s annual payments issue. “Can virtual currencies be regulated in a manner that protects consumers, merchants, our payment systems and national security, while at the same time not ‘killing the golden goose’ through overly burdensome or unfeasible regulatory requirements?” Rinearson wrote. “I believe the answer is yes….However, such regulation should be imposed with a light hand and reasonable steps must be taken quickly.”

Shumaker in Bank Safety & Soundness Advisor

Atlanta Associate Michael Shumaker was quoted extensively April 14 by the Bank Safety & Soundness Advisor concerning top misconceptions in vendor management. After all the talk from regulators over the growing risks and expectations of managing third-party relationships, some banks still seem to think the guidance does not apply to them. “Probably the most important thing for banks to recognize is that things have changed, and that the regulatory expectations of banks with respect to the integration of risk associated with vendor contracts, those expectations have changed,” Shumaker said. “You can outsource the activity, but you cannot outsource the risk. Banks need to recognize that having a vendor conduct the activity does not change their obligation to manage the risk of the activity.”

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Media Mentions – January 31, 2014

With attorneys and staff worldwide, Bryan Cave attorneys are often quoted in the news.  Recent mentions of Financial Institutions group attorneys include:

Rob Klingler in Bank Safety and Soundness Advisor

Atlanta Partner Robert Klingler was quoted Jan. 27 by Bank Safety and Soundness Advisor concerning an eagerly awaited amendment to the Volcker Rule, which will exempt most bank-issued Trust Preferred Securities (or TruPS). The interim final rule, however, does not exempt insurer or REIT-backed TruPS. Klingler said the exemption does not include insurer and REIT TruPS because the Collins Amendment didn’t either, and regulators modeled the Volcker exemption after the Collins Amendment. “They were looking to the Dodd-Frank Act itself for the statutory authority,” he said. “They used the Collins Amendment to form the basis for why they’re able to exempt [these TruPS]. They don’t have a statutory basis for excluding insurer-backed TruPS. They probably wanted to make sure the final rule wasn’t going to be challenged. The way to do that was to lock in the $15 billion bank asset threshold.”

Judith Rinearson in Multiple Outlets

New York Partner Judith Rinearson was quoted a number of times recently in connection with hearings in New York on the future of virtual currency, including the popular Bitcoin. She was quoted Jan. 28 by The Verge, Inc. magazine and IDG News Services (in an article that ran in IT World and CFO World) and Jan. 27 by Upstart Business Journal. Rinearson acted as an expert witness at the hearings, which could lead to the creation of “BitLicenses” to allow the introduction of Bitcoin ATMs and other Bitcoin-related startups in New York. “New York has always been one of the lead states when it comes to money transmitter licenses,” said Rinearson, who is also regulatory counsel for the Network Branded Prepaid Card Association and serves as chair for the association’s Government Relations Working Group. “But I think a lot of other states are going to be watching and a lot of states will be waiting to see what happens.”  Click here to read the full Upstart Business Journal article.

Dan Wheeler in Financial Services Publications

San Francisco Partner Daniel Wheeler authored an article for the January edition of Western Independent Bankers’ Lending & Credit Digest on common regulatory errors in making a commercial loan. Lenders often ignore or misunderstand several regulations and other laws that affect the origination of a commercial loan. Wheeler’s article discussed some surprising aspects of bank regulations and laws that can catch a commercial lender by surprise and result in a compliance violation.  Click here to read the Lending & Credit Digest article.  Dan authored an article for the January edition of Western Independent Bankers’ Directors Digest regarding current opportunities and regulatory issues related to common non-interest income opportunities, including overdraft protection.  Click here to read the Directors Digest article.  Dan also authored a lengthy article for the December edition of Banking & Financial Services Policy Report on basic interest rate swaps, which he said remain a viable and necessary tool for small community banks.  “Despite Congress’ and the regulators’ enactment of thousands of pages of burdensome and frequently counterproductive swap regulation, community banks still have compelling reasons to offer swap capability to their customers,” he wrote.  “Community bank management need not become experts in swap accounting or regulation; they merely need to understand the risks and strategy involved in the swaps they offer.”

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ReVeal, Rinearson, Simon to Speak at Money2020 Expo

DC Partner John ReVeal, New York Partner Judith Rinearson and Santa Monica Partner Brette Simon will provide insight at the Money2020 Expo. The conference promises to bring together a global community of innovators in payments and financial services with 400-plus speakers spanning more than 100 sessions and workshops. More than 4,000 attendees are expected.

October 6, 2013 – October 10, 2013
Aria Resort and Casino
3730 Las Vegas Blvd.
Las Vegas, NV 89158

On Oct. 6, ReVeal will moderate a panel on the risks and rewards of credit-based emerging payment products. In addition to discussing what people need to know when launching or distributing credit-based products, this panel will address the current consumer group and regulatory pressure to restrict or prohibit credit as part of emerging payments and financial services solutions.

Later in the afternoon, Rinearson will moderate the panel “Money Transmitter Licensing: Kafka Revisited,” which will offer insight on how to manage the ambiguities of state money transmitter licensing laws.

Simon then will join a panel on how to prepare in advance of raising capital from institutional investors. Topics will include getting your legal and business house in order to maximize value upon a capital raise and avoid the “10% valuation haircut;” due diligence and the risks of having the wrong investors; and structuring investment to avoid “change of control” regulatory issues.

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Media Mentions – July 2013

With attorneys and staff worldwide, Bryan Cave attorneys are often quoted in the news.  Recent Media Mentions of Financial Institutions Group attorneys include:

Jerry Blanchard in Daily Report

Atlanta Partner Jerry Blanchard was featured July 5 in the Fulton County Daily Report for his hobby of ice climbing. Blanchard generally takes one ice climbing trip a year and has climbed Montmorency Falls near Quebec, ice walls in Banff National Park in Canada, and the Grand Teton and Mt. Moran in Wyoming, among other places. “The interesting thing for me about ice climbing is how it clears your mind,” he told the publication. “When you are on the ice, all other thoughts are pushed from your mind. You focus on where the next ice axe placement is going to be or whether the ice crampons have pushed far enough into the ice.”

Judith Rinearson in New York Times

New York Partner Judith Rinearson was featured July 11 in The New York Times regarding a group of senators who are asking regulators to examine the use of prepaid cards in place of paychecks. Across the country, a growing number of companies are doing away with paper paychecks or direct deposit and instead offering prepaid cards. But critics say using the cards can generate fees. “We strive to ensure we set a high bar with our best practices for our members,” said Rinearson, a lawyer with the Network Branded Prepaid Card Association, a trade group that represents the prepaid industry.  Click here to read the full article.

Dan Wheeler in American Banker

San Francisco Partner Dan Wheeler was quoted June 11 by American Banker concerning the mandatory hike in dividend payments on Troubled Asset Relief Program (TARP) preferred stock for banks that are set to hit their fifth anniversaries. Those dividend payments are scheduled to jump to 9 percent from 5 percent. Many observers fear the higher dividend could motivate banks to stop making quarterly payments or cause more bank sales. Banks that owe TARP funds “unfortunately, with some exceptions, tend to be the weaker banks,” Wheeler said. Banks that are “on the edge already…may decide to forgo” these higher payments. Wheeler also was quoted May 7 by American Banker on a push by private student lenders for permission to be more forgiving of recent college graduates who are having trouble repaying their loans. Under current rules, banks could risk examiners classifying such loans as troubled debt. That accounting designation can lead a bank to set aside bigger loss reserves, which reduces earnings. “So it shifts the key metrics on a bank balance sheet the wrong way, if you’re in management,” Wheeler said.

 

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Media Mentions – April 15, 2013

With attorneys and staff worldwide, Bryan cave attorneys are often quoted in the news.  Recent Media Mentions of Financial Institutions Group attorneys include:

Kristine Andreassen in PayBefore

DC Associate Kristine Andreassen was quoted April 2 by PayBefore concerning a new anti-money laundering rule under consideration that would require consumers to report when they transport prepaid cards, along with cash and other monetary instruments, with a value of more than $10,000 into or out of the country. Andreassen said the rule would be relatively easy to get around, as most incidents of prepaid cards being used for cross-border money laundering likely have involved cards that have little or no value when they cross the border but are loaded once they reach their destination. “[Regulators] are focusing on card balance, but anyone trying to launder money will quickly learn to send cards with a zero balance,” she said. “So the rule is only going to ensnare the innocent.”

Walt Moeling in American Banker

Atlanta Partner Walt Moeling was quoted April 15 in two American Banker articles. Moeling was quoted regarding the Office of the Comptroller of the Currency’s bid for more power to issue sanctions directly against independent contractors, who often are hired by a bank under an enforcement action. “To me, the whole thing about the consultants is just more scapegoating,” Moeling said. “I tell my clients all the time that I’m a consultant but I’m not a banker. I can’t run it. You’ve got to run it.” He also was quoted April 15 on the drop in the number of enforcement actions levied against banks. Banks “are not encountering the early stage ferocious regulators,” Moeling told the publication. In addition, Moeling was quoted April 1 by American Banker concerning the proposed Bank of Bird-in-Hand. Eighteen investors, many of them Amish, are asking regulators for the OK to open what would be the first de novo bank in the U.S. in more than two years. Moeling said as the economy improves, the banking climate will, too. “I say that because it always has, even though everybody said it never would,” he told the publication.  Click here to read the April 1 article.

Judith Rinearson on NBC’s Today.com

New York Partner Judith Rinearson was quoted April 17 by NBC’s Today.com on the rising popularity of prepaid debit cards. Proponents say they are a better way to manage your money and a smart alternative to checking accounts: With a prepaid card there’s no credit check, no minimum balance and you can’t spend more than you load on the card. However, some fear they may not provide the same level of protection against loss or fraud. “You get the same fraud protection as with any other debit card,” Rinearson explained, saying Visa, MasterCard, American Express and Discover all have zero-liability policies if the card is lost, stolen or misused.  Click here to read the full article.

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Media Mentions – March 29, 2013

With attorneys and staff worldwide, Bryan Cave attorneys are often quoted in the news.  Recent Media Mentions of Financial Institutions Group attorneys include:

BankBryanCave in GBA e-Bulletin

BankBryanCave post concerning a potential new wave of ATM class actions in Georgia was featured in the March 8 edition of the GBA e-Bulletin, from the Georgia Bankers Association. The suit against Branch Banking and Trust Company in federal court in Atlanta alleges that two of the bank’s ATMs did not meet the accessibility features mandated by the Americans with Disabilities Act.  Click here to read the GBA summary of the topic, which links to our original March 6 post written by Atlanta Partners Jennifer Dempsey and Bill Custer.

Linda Odom and Courtney Stolz in Bank Director

DC attorneys Linda Odom and  Courtney Stolz authored an article March 29 in Bank Director regarding steps the Federal Trade Commission has taken to push for more unified mobile payments regulation. “For banks interested in mobile banking, its actions and publications are very instructive,” they wrote. “Over the last two years, the FTC’s actions include: bringing law enforcement actions, obtaining high-profile settlements with Google and Facebook and issuing policy reports for mobile businesses and policymakers. Although financial institutions are not directly regulated by the FTC in this area, the FTC does regulate all other mobile providers including merchants, payment card networks and payment processors.”  Click here to read the full article. The two also authored an article for Bank Director on proposed guidance from the Federal Financial Institutions Examination Council to help banks manage their social media risks. “Social media has become ubiquitous and many banks are wondering if they can survive without a trendy presence on Facebook, LinkedIn, Twitter, YouTube, and in the ‘blogosphere,’ ” they wrote. “It is a bit of the Wild West out there though, with few rules in place to protect your message.” Click here to read the full article.

Judith Rinearson on Reg Watch

New York Partner Judith Rinearson was quoted March 28 on The Hill’s regulation blog, Reg Watch, regarding new regulations aimed at stopping the use of prepaid credit cards to launder money across the border. The Financial Crimes Enforcement Network within the Treasury Department has been working on rules since 2011 that would require travelers to tell customs officials if they are carrying more than $10,000 on the cards. (Travelers currently must declare only cash and travelers checks above that amount.) “Nobody takes your ATM card to find out what’s in your bank account when you go through customs,” Rinearson said. “If you’ve got a huge line of credit on your credit card – no one asks to see it. Why should prepaid cards be any different?”  Click here to read the full article.

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