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Current Events - 04/22/2002

Industry Brief

• The FDIC indicated that subprime consumer lending is the biggest risk to the banking industry in the near term and is the industry's "single most likely source of significant insurance losses."
• The OCC is urging banks to more fully take advantage of existing technologies to increase banking services to low-income Americans. Comptroller of the Currency John D. Hawke, Jr. cited the proliferation of electronic transfer accounts (ETAs), whereby recipients of federal assistance to access those stipends through electronic funds transfers, as one of the most successful outreach efforts to the underbanked.
• Those financial institutions whose financial statements are audited by Arthur Andersen LLP should be advised that those statements will be accepted by the Securities and Exchange Commission (SEC), but only with supporting documentation. For more information on necessary documentation should visit www.sec.gov.
• Leann Britton, senior deputy comptroller for midsize and community bank supervision, is retiring from the OCC as of May 27.

Zenzola joins Government Relations team

CBA is pleased to announce the addition of Pat Zenzola to its Sacramento-based government relations team. Zenzola joins CBA as a vice president of government relations, bringing more than 13 years of experience advocating on behalf of the financial services industry. Pat will be an integral part of the development and implementation of CBA's legislative strategy.

Prior to joining CBA, Zenzola held several positions with Household International, one of the largest consumer lenders in the U.S. While at Household, Zenzola served as a government relations liaison, manager of Government Relations (California and Hawaii), and director of Government Relations (California, Hawaii and Nevada). Zenzola has also served as Executive Board chairman for the California Financial Services Association and as president of the Nevada Consumer Finance Association.

Pat graduated cum laude and Phi Beta Kappa from University of Illinois with a bachelor's degree in political science and also earned his master's degree in industrial relations from Loyola University (Chicago). He and his family reside in Folsom, Calif.
CBA Compensation & Benefits Benchmark Survey

The CBA Compensation & Benefits Benchmark Survey Committee is racing the calendar to mail the final survey document to you by August 15, 2002. We heard your feedback loud and clear for the last three years and have made the timely delivery of the report our number one goal for the 2002 survey.

Survey documents were mailed to your HR directors at the end of March. All data must be submitted to Perry-Smith by May 1. If we are to deliver the results to you by August 15, we will not be able to make any exceptions to this deadline. This is a much stricter approach than in the past. Please be sure that your institution received the survey documents and will respond by the deadline. Your cooperation in this regard is critical to meeting our goal.

The Survey Committee is excited about the changes taking place this year and expects to have 100 percent satisfied customers in August.

OCC Alert

Subject: Identity Theft
Description: Fictitious IRS Forms and Bank Letters
Date: April 5, 2002

TO: Chief Executive Officers of All National Banks; All State Banking Authorities; Chairman, Board of Governors of the Federal Reserve System; Chairman, Federal Deposit Insurance Corporation; Conference of State Bank Supervisors; Deputy Comptrollers (districts); Assistant Deputy Comptrollers; District Counsel and Examining Personnel

RE: WARNING--Circulation of Fictitious IRS Forms and Bank Letters

Attached are samples of a fictitious document that is not a genuine IRS form and a fraudulent letter addressed to a bank customer purporting to be from the customer's bank.

Some of your customers may be the unwitting subjects of a new fraud scheme that uses fictitious IRS forms and fraudulent bank correspondence. These incidents are not limited to the customers of small community banks. Documents like those attached are being circulated nationwide in an attempt to steal your customer's identity and money by having your customer disclose personal and banking information. Accordingly, when the perpetrator of the fraud contacts your bank in person, telephonically or through electronic means, they have all the necessary customer information to appear credible.

You should advise any of your customers that have filled in and returned the fictitious form via the fax number, mail service, or any other means to promptly notify all financial institutions with which they do business. We also suggest that you advise your customers to immediately do the following:

1. Contact the fraud department of each of the three major credit bureaus and report that his/her identity has been stolen. Also, consider placing a "fraud alert" on your file and request that no new credit be granted without prior approval.

2. For any accounts that have been fraudulently accessed or opened, contact the security department of each affected creditor or financial institution. Consider closing these accounts. Also, on any new accounts you open, consider using a password, but do not use your mother's maiden name.

3. File a report with your local police department or the police where the identity theft took place. Retain a copy of the police report in case your bank, credit card company, or others need proof of the crime at a later date.

4. Contact the Internal Revenue Service to report the incident using the following toll-free hotline number:
1-800-829-0433.

If a customer has received this fictitious form but did not complete and return it, any information which they have concerning this matter should be brought to the attention of the Internal Revenue Service at the same toll-free number listed above.

Additional sources of information for your customers on what to do if they are a victim of identity theft, and the precautions to take to prevent becoming a victim, can be found at theFederal Trade Commission's Web site:

http://www.consumer.gov/idtheft/victim.htm

And the OCC's Web site:

http://www.occ.treas.gov/idtheft.pdf

If you have additional questions, please contact the supervisory office responsible for your bank or:

Office of the Comptroller of the Currency
Enforcement & Compliance Division
250 E Street, SW, Washington, DC 20219
Fax: (202) 874-5301
Internet: http://www.occ.treas.gov
E-mail: alertresponses@occ.treas.gov

Brian C. McCormally
Director
Enforcement & Compliance Division

Addition to Endorsed Products and Services

CBA is pleased to announce the addition of the Jordan Lawrence Group (JL Group) to its list of endorsed products and services. JL Group helps banks across the nation better manage their records management practices through arcMethods, its Web-based records maintenance system. This system has helped hundreds of banks nationwide to develop fully-cited records retention schedules, customizable to banks' needs and which fully comply with all regulations. This product specifically helps banks ensure that records are kept for an appropriate amount of time, but no longer - a common and costly mistake. As a result of CBA's contract / agreement with JL Group, CBA member banks will receive access to arcMethods at a reduced rate. For more information on CBA's arrangement with the JL Group, please contact John Neely, vice president of Products and Services, or please contact Mark Emery, Regional Manager of the JL Group at 636/527-3000 ext. 250 or at memery@jlgroup.com.