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Current Events - 01/24/2000

CBA goes 2 for 2 with the California Supreme Court —  The banking industry enjoyed a stellar week in California’s highest court.  Through its briefing, CBA assisted in the favorable outcome in Peatros vs. BofA and can claim credit outright for the opinion in Wells Fargo v. Superior Court (Boltwood Trust).

In Peatros, the Court had to decide whether the National Bank Act’s “at-will” dismissal provision for bank officers preempts state law discrimination claims.  Although the decision appears splintered because there are three separate opinions among the seven justices, four judges held that state law discrimination claims are absolutely preempted by federal law.  Three other judges found that even if the state law claims are not preempted, they are limited to the claims, rights, and liability limitations of federal law.  Of note, the National Bank Act’s dismissal provisions are the same as those in the Federal Home Loan Bank Act and the Federal Reserve Act.  Institutions regulated by those laws can also take advantage of the incredible victory in Peatros.  Talk with your counsel about how to do this. And look in the next issue of the California Banker for an article by Patricia Gillette of the Heller Ehrman law firm. She was counsel for Bank of America in this case.

Our second home run occurred in the Boltwood Trust case, dealing with the attorney client privilege between a trustee (in this case Wells Fargo) and its counsel.  In the course of suing Wells, the trust beneficiaries sought to discover confidential documents and communications between Wells and its counsel.  They argued that these documents were part of the trust itself and therefore copies should be made available to the trust beneficiaries.  The issue the parties brought to the court was the extent of this privilege where communications were generated in defending the trustee.  In our amicus brief Stephen Mayne and Lisa Carvalho of the Steefel, Levitt & Weiss law firm worked with me to agree that all attorney client communications (whether generated in the personal defense of a trustee or in the normal course of trust administration) could be protected from discovery by the beneficiaries.  The court agreed with us and their opinion went beyond the specific facts of the case to adopt this larger policy argument. Beneficiaries have no right to invade the attorney client privilege between the trustee and its counsel.  Further, this is true even if trust assets are used to pay for the legal advice.  The payment of legal fees does not determine who holds the privilege.  Possibly the most gratifying aspect of this case may have come in Justice Mosk’s dissenting opinion.  He chided the majority for being sucked in by our amicus brief and he blames the CBA for the decision!  This time we have written proof that your association’s efforts pay dividends!  To find out how this case may apply to your own trust situation, talk with your counsel and look for an article by Stephen and Lisa in our next California Banker magazine.

Legislative Summary — Hard copies of CBA’s annual Sacramento Legislative Summary were sent out last week for your use.  This will complement the on-line version of the Summary which I alerted you to in a previous Current Events.  The on-line version offers the additional advantage of direct Internet links to voting records and committee analyses.  You’ll find it on CBA’s web site at www.calbankers.com.  Also, if you need extra copies of the fancier printed version, you can save yourself time and CBA’s bottom line by downloading the PDF version directly from the website (click here).  Call Ivory Wright in our San Francisco office (415) 284-6999 ext. 201 or Yvette Ernst in our Sacramento office (916) 441-7377 ext. 200, if you encounter any difficulties.

Bank Presidents Seminar — CBA’s annual Bank Presidents Seminar has just provided attendees with an important leg up on the coming year. McKinsey and Company updated their survey of four years ago by examining successful banking strategies for community banks and the best alternatives available for the future.  Don Ogilvie of ABA discussed the banking industry’s sole role in the world of e-commerce. CBA’s Electronic Commerce Committee reported on their California survey of bank practices in the Internet realm and the ever popular banker panels on Saturday morning focused on both acquisition strategies and considerations in selling a community bank.  Throw in plenty of networking time and some entertainment from Bob Newhart and the experience was complete.  If you were not able to attend, remember to join us in paradise in May as CBA ventures to Hawaii for its annual meeting.

We plan many useful breakout sessions and presentations tailored for the community bank.  Dick Kovacevich from Wells Fargo will be our keynote speaker, marking the first opportunity for him to address the industry following the Wells/Norwest combination.  And rest assured that there will be time to interact with your peers and enjoy Hawaii as well.  To register, call Dorothy Hong at (415) 284-6999 ext. 215.

Ballot Initiative on Water Bond-Financial Support Urged — CBA’s Board of Directors has unanimously approved support of Proposition 13 (Safe Drinking, Clean Water, Watershed Protection, and Flood Protection Act), which will be on the March 7th primary ballot.  CBA joins a broad coalition of business, labor, local government, environmental, agriculture and good-government groups — including the California Chamber of Commerce, the California Business Roundtable, League of Women Voters, Agricultural Council of California and the Planning and Conservation League — in urging passage and financial support to get the message out on this essential California infrastructure issue.  The proceeds of the $1.97 billion bond issue will be used to attack groundwater contamination, sewer repair, pollution sources and decaying distribution systems and benefit virtually all Californians.  The money will also be used to deliver more water to meet growth —  enough new water for 8 million Californians per year —  through conservation, recycling, underground storage and more efficient use of reservoirs.  If Proposition 13 passes, California will be eligible for more than $600 million in additional federal funds for clean water and water supply programs. Several of California’s banks have already pledged their financial support to insure passage of Proposition 13. (Bank of America has pledged $100,000!)  Passage of Proposition 13 is in your self interest and good for your communities. Please send your check payable to Yes on Proposition 13, I.D.# 991968, 1915 15th Street, Sacramento, CA 95814.  Any amount will be welcome.
 

Association News —  Finally CBA has made recent changes to our for-profit subsidiary, CBIS. Former CBA President Don Mullane is now its new Chairman and Linn Wiley has also been added to the strong Board of Directors. Their first piece of business was to elevate Paul Allen, internally, to President of the company. I extend my congratulations to Don, Linn and Paul. CBIS will also be changing its name to Western Bankers Services to more accurately reflect what we do. Watch us, shop with us, and buy from us.  We are here for you.
 

Chris Chenoweth
CBA COO & General Counsel
On behalf of the entire staff
1/24/00