Financial Industry Recovery Group

During this period of challenge and rapid change in the financial industry, financial institutions and other financial services companies need advisors with broad experience and an understanding of the full range of business and legal issues associated with current market and regulatory changes.

With decades of experience representing financial industry participants in regulatory, transactional and dispute resolution matters, Hunton & Williams delivers an integrated approach to addressing the challenges and pursuing the opportunities in the current market, including those presented by the Emergency Economic Stabilization Act of 2008 and the associated Troubled Asset Relief Program of the U.S. Department of the Treasury.

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Posted on June 30, 2009 by Hunton & Williams LLP Print This Article

Consumer Financial Protection Agency Bill Sent to Capitol Hill

The White House delivered to Capitol Hill today draft legislation for the creation of the Consumer Financial Protection Agency, according to a Treasury Department press release.  The draft legislation, officially called the Consumer Financial Protection Agency Act of 2009, is part of a broader effort on the part of the White House and Congress to pass financial industry regulatory reform legislation by the end of the year.  The new agency's consumer portfolio will include credit cards to mortgages, according to the Treasury Department.  In order to create the new agency, Congress must pass both the bill for the agency itself as well legislation modifying the Federal Trade Commission Act. 
 
Click here for the Treasury Department's press release, click here for the Consumer Financial Protection Agency Act of 2009 draft bill, and click here for draft language to modify the Federal Trade Commission Act.

Posted on June 26, 2009 by Hunton & Williams LLP Print This Article

Capital Purchase Program Warrant Repurchase and Disposition Process Announced

The Treasury Department outlined the warrant repurchase process under the Capital Purchase Program in a press release issued today.  The Capital Purchase Program allows qualified financial institutions to receive a capital injection from the Treasury Department in return for preferred stock and warrants.  When a publicly-traded institution repays the Treasury Department for investments made through the Capital Purchase Program the institution has the "right to repurchase the warrants at fair market value via an independent valuation process," according to the Treasury Department.  Today's press release outlines the four step process.

Click here for the Treasury Department's press release.

Posted on June 25, 2009 by Hunton & Williams LLP Print This Article

Treasury Requires TARP Recipients to Adopt Excessive or Luxury Expenditures Policy

On June 15, 2009, the U.S. Department of the Treasury (“Treasury”) announced an interim final rule regarding standards for executive compensation and corporate governance practices for those entities receiving financial assistance under the Troubled Asset Relief Program (“TARP”). Although the interim final rule contains many new standards for TARP recipients, the focus of this article is the requirement that TARP recipients adopt an “excessive or luxury expenditures policy.”

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Posted on June 24, 2009 by Hunton & Williams LLP Print This Article

Obama Administration Proposes Registration of Private Fund Advisers Following Recent Similar Proposals

On June 17, 2009, the Obama administration proposed a plan for Financial Regulatory Reform (the “White Paper”) that addresses five key objectives identified by the Obama administration to reform the financial regulatory system. Certain of the White Paper’s proposals, if enacted, will have a significant impact on private investment funds, such as hedge funds, private equity funds and venture capital funds, by requiring the registration of private investment fund advisers and by imposing informational and reporting requirements on the advisers and their funds.

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Posted on June 22, 2009 by Hunton & Williams LLP Print This Article

It's Not Too Late for TARP -- What To Do Now That The Capital Purchase Program Has Reopened?

In October 2008, we prepared an article entitled “A Look at TARP — What to do now?” Since the date of that article, more than 600 financial institutions, ranging in size from several billion dollars down to a few million dollars, have elected to participate in the Capital Purchase Program (“CPP”) established under the Department of the Treasury’s (the “Treasury”) Troubled Asset Relief Program (“TARP”). The Treasury has issued terms sheets for publicly traded financial institutions, privately held financial institutions and Subchapter S financial institutions. Since October 2008, several hundred financial institutions have elected to participate in the CPP.

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Posted on June 22, 2009 by Hunton & Williams LLP Print This Article

Impact of Obama's Financial Regulatory Reform on Banks and Holding Companies

On Wednesday, June 17, 2009, President Obama set forth his administration’s blueprint for overhauling the financial system outlined in an 88-page white paper that touched everything from traditional banking regulation, such as capital ratios and liquidity, to nontraditional financial service firms, whose size alone impacts the overall economy. Traditional banking organizations will likely feel the greatest impact from the call for stronger capital and prudential standards for all financial firms and from the creation of the new office of the National Bank Supervisor, which will assume the duties of the Office of the Comptroller of the Currency and the ongoing duties of the Office of Thrift Supervision (“OTS”). The federal savings bank charter overseen by the OTS will be phased out under the proposal. The plan also proposes a new Consumer Financial Protection Agency with broad federal powers over consumer financial products and services, regardless of whether such products and services are offered through a bank. This article highlights aspects of the Financial Regulatory Reform white paper (the “white paper”) that are most applicable to traditional banks and their holding companies.

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Posted on June 19, 2009 by Hunton & Williams LLP Print This Article

President Obama's Regulatory Reform Proposal: No Surprises for the Securitization Industry

The Obama Administration’s proposed regulatory reform has been called by the Wall Street Journal “the most sweeping overhaul of the way the U.S. government oversees financial markets since the 1930s.” Controversy surrounds a number of elements of the broad proposal, a copy of which may be found here, notably the proposal’s plan to increase the Federal Reserve Board’s role in regulating any large financial institution whose combination of size, leverage and intercon¬nectedness to other financial institutions could pose a threat to financial stability if it failed. This supervision would extend to foreign parents and subsidiaries regardless of whether those entities are currently subject to regulation by authorities in the United States. Another controversial provision of the proposal is the creation of the Consumer Financial Protection Agency, whose mission includes encouraging the offering of “plain vanilla” products and banning or restricting “yield spread premiums,” prepayment penalties and other practices thought to be unfair to unsophisticated consumers. For the most part, however, the elements of the proposal that touch on the securitization market incorporate concepts already being discussed among market participants, which suggests that the securitization market is moving in the right direction with those policies it proactively has taken under review.

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Posted on June 17, 2009 by Hunton & Williams LLP Print This Article

Financial Regulatory Overhaul Proposals Unveiled

The White House unveiled its anticipated proposal to overhaul the regulation of U.S. financial markets, according to today's White House press release.  The proposal was outlined in a Treasury Department white paper released today called, "Financial Regulatory Reform: A New Foundation."  The administration also released supporting facts sheets addressing the myriad of proposed changes.   

Click here for the Treasury Department's white paper.  Click on "fact sheet" for each of the following Treasury Department documents:

  • Requiring Strong Supervision And Appropriate Regulation Of All Financial Firms (Fact Sheet)
  • Strengthening Regulation Of Core Markets And Market Infrastructure (Fact Sheet)
  • Strengthening Consumer Protection (Fact Sheet) 
  • Providing The Government With Tools To Effectively Manage Failing Institutions (Fact Sheet) 
  • Improving International Regulatory Standards And Cooperation (Fact Sheet)
Posted on June 15, 2009 by Hunton & Williams LLP Print This Article

Hunton & Williams LLP Achieves TALF First

Hunton & Williams LLP represented American Home Mortgage Servicing, Inc. (“AHMSI”) and an affiliated issuer, AH Mortgage Advance Trust 2009-ADV1, in a $550 million sale of term notes (the “Notes”), in the first issuance of TALF-eligible notes secured by a revolving pool of servicer advance receivables. These Notes are term (i.e., non-revolving) asset-backed notes and are eligible collateral for loans to investors under the Term Asset-Backed Securities Loan Facility (“TALF”) program administered by the Federal Reserve Bank of New York (“FRBNY”). The servicer advance receivables consist of AHMSI’s contractual rights to reimburse-ment for advances AHMSI makes in its capacity as servicer under servicing agreements for securitized residential mortgage loans.

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Posted on June 10, 2009 by Hunton & Williams LLP Print This Article

Treasury Dept. Names Special Master for TARP Executive Compensation

The Treasury Department published an interim final rule today providing further guidance on the executive compensation and corporate governance provisions applicable to financial institutions receiving TARP funds.  As part of today's rule the Treasury Department announced the appointment of  Kenneth Feinberg as the Special Master for TARP Executive Compensation.  According to today's press release, Mr. Feinberg "will review payments and compensation plans for the executives and the 100 most highly compensated employees of TARP recipients that have received exceptional assistance to ensure that compensation is structured in a way that gives those employees incentives to maximize long-term shareholder value and protect taxpayer interests."   

For the rest of the rules published today, either click here for the Treasury Department's press release, or click here for the published interim final rule in its entirety.

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