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Current Events - 03/20/2000

When is Privacy No Longer Private? — When you make it public, of course!  And that is just what we are doing this week. As you know, the federal regulators have been given until May 12 to issue a final rule in the area of privacy regulation following the enactment of Gramm-Leach-Bliley. The rule is scheduled to become effective on November 12. We have attached a preliminary draft comment letter on the proposal from CBA and we urge each of you to make your comments known to the regulators in Washington. This is the most important regulatory proposal we have seen since the infamous Know Your Customer fiasco which ended (at least for the time being) about a year ago. It is crucial that the regulators hear from you as well as us. Our letter must, of necessity, be general in nature. Your comments can be specifically tailored to your own bank’s structure and operations. Our letter is being crafted by Leland Chan internally, working with the Regulatory Compliance Committee. If you have questions about your own letter, feel free to call Leland at 415/284-6999 ext. 214.

Now some direct answers to some direct questions: What will the real implementation date be?  Unless their is a delay allowed by the regulators the effective date is November 12. This whole issue is politically charged, and unless we forcefully make our case for a transition period at least a portion of the regulation will go into effect on that date. What other issues should we be sure to comment on?  Anything that directly affects your bank’s operations is deserving of a comment. Obviously, the regulation cannot undo what Gramm-Leach-Bliley has done, but the regulators need to hear the kind of flexibility you need to operate effectively. Also, we need to have the rule provide that only one privacy notice is required for joint accounts. This is consistent with other notification requirements.  Another area requiring vocal comment from the banking industry is the notion that some monitoring may be required by banks to prohibit the unauthorized re-use of information that the banks have legitimately shared with third parties. This area could be ripe for litigation as well if a duty is imposed on financial institutions. As you can see there are many issues that beg for an industry response. Our attached letter, though still in draft form, is rather lengthy and detailed. It highlights many of these topics from an industry perspective. Use the framework we have provided to write a letter from your bank related directly to the way you do business. And if Leland can help you with the process, give him a call.

ATM Access Fees — The final reply brief from the cities has been filed in their appeal of the preliminary injunction we won at the District Court level here in San Francisco. As we go to press, the Ninth Circuit has neither assigned a panel to hear the case nor set a date for oral argument. The main briefing, however, is now completed. And the parties continue to believe that the Court’s ruling on this preliminary injunction appeal could decide most of the issues in the case (aside from the scope and nature of a permanent injunction if we win, perhaps). Clearly, this lawsuit is coming to a head. In related developments, several cities have held their own proposed ATM access fee ordinances in abeyance pending the outcome of our litigation (or at least until the Ninth Circuit’s initial ruling provides some definitive guidance on the matter). If you are aware of a city or county that is contemplating such an ordinance, please call Chris Chenoweth at 415/284-6999 ext. 218 to let us know. We don’t want anything slipping between the cracks on this issue. I will report more news when the Ninth Circuit decides when and who will hear the case.

The Economy — The stock market continues to bump along in a seemingly endless upward trend (despite some NASDAQ bumps this week), the jobless rate is very low, inflation is nowhere in sight, productivity continues to rise, but many bankers I talk to are becoming increasingly cautious. One banker confided that he is not making as many loans as he used to, and certainly not on the same terms. “I’ll let my competitors make those mistakes,” he said. And when you look behind the wonder return on the S&P 500 last year you find out that it was all driven by just 30 stocks. 470 stocks were either close to level for the year or had a decline. No, I don’t know when the strong economy will end, but I still believe the business cycle exists. And I still can’t get used to high tech companies which sell for 300 and even 500 times earnings. Alan Greenspan has been steadfast in his belief that interest rates must rise until business and consumer spending slows and the stock market cool off. Others ask, “where’s the fire?” and wonder why the Fed is trying to throttle the economy where inflation is hard to spot anywhere but in gasoline prices.  Hang on, this ride is not over yet.

Steve Young Knows a Good Thing — As you have no doubt heard, Steve Young tied the knot this week in Hawaii. And where did he have the guests for his wedding stay?  Being a rather well to do man of taste and distinction, he put them up in the best place he could find, the Orchid at Mauna-Lani on the Island of Hawaii. And guess, if you can, where CBA has chosen to have its annual meeting this year!  Come join your colleagues in paradise. For more information and to sign up, go to our website at www.calbankers.com and click on the scrolling text at the top of the screen. What could be easier. If you want help from a live and friendly CBA person, call us at 415/284-6999 and ask for Dorothy Hong (extension 215) or Janet Caggiano (extension 227) and they will be glad to lend a hand. See you in Hawaii!  And being people of taste and distinction (if less athletically talented than Mr. Young), the CBA has also chosen the Orchid for our guests. This was not a trick question. Aloha!