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Current Events - 09/24/2001

CBA's Merger with WLSI Approved

The members of both the CBA and the Western League of Savings Institutions have overwhelmingly approved the merger of the associations. The merger will close on October 1, 2001, at which time the members of the Western League will join the CBA family, making the combined organization stronger, more diverse, and more effective in Sacramento and Washington. Thanks to all CBA members for your support.

CBA’s Washington D.C. Trip

For obvious reasons, CBA’s trip to Washington September 10-12 did not turn out as expected. The announcement of the attacks on the World Trade Center did not reach our group of 22 bankers until after their breakfast meeting with Rep. David Drier, as they were all preparing to begin the first of 28 meetings scheduled with members of Congress. The Pentagon –a few miles away from the group’s hotel – was attacked only moments later.

But, with so many government officials encouraged to return to “business as usual,” we found ourselves able to make the best of our situation and make some key connections in the days following the attacks.

FDIC chairman Don Powell kept his luncheon appointment with our bankers, providing his insight on issues like FDIC insurance reform and the real threat posed by credit unions. Powell indicated that the FDIC is likely to back insurance reform that uses a risk-based assessment system to determine premiums for FDIC institutions. He also agreed that credit unions pose a real threat to the banking industry and that banks should be actively watching credit union-related issues.

Clearly, nothing can diminish the sadness, frustration and anger over the terrorist attacks in New York and Washington. Many of our members lost loved ones, friends, colleagues and business partners in the attacks.

We greatly appreciate the effort of those who both planned and participated in this event and remain hopeful that our next visit to Washington will be an easier one. CBA also wants to thank all of you who have gone the extra mile to ensure that your customers were well served during this time of crisis.

If there is any way in which CBA can assist you, your staff, or your customers during this difficult time, please just let us know and we’ll do our best to be of service.

Disaster Relief Contributions

In the wake of the disasters in Washington and New York, some of CBA’s members have made generous donations to victim relief funds. If your organization has made a contribution to any of these funds, please call Anissa Yates at 916/441-7377 ext. 214, as a list of contributing organizations is being compiled for the next issue of California Banker.

Wells Fargo & Company contributed $1 million to the American Red Cross disaster relief fund to support efforts to assist victims and families of the September 11 tragedies. In addition, Wells Fargo has established a Wells Fargo-Red Cross account in all of its 3,000+ stores as a way for customers to contribute to the Red Cross’ disaster relief fund.

If you would like to contribute to the various relief funds, you may want to refer to the information provided below:

• Victims and Families Relief Fund (founded by the American, Virginia and New York Bankers Associations): P.O. Box 791202, Baltimore, MD 21279-1202
• American Red Cross: Call 800-HELP NOW and note that your donation is for the Disaster Relief Fund – NY.
  
• NY firefighters 9-11 Disaster Relief Fund: Make checks payable to International Association of Firefighters, P.O. Box 65858, Washington, D.C., 20035-5858 or call 202/737 8484.
  
• NY State WTC Relief Fund: P.O. Box 5028, Albany, NY 12205 or call 800/801-8092.
  
• Salvation Army: Call 800-SAL ARMY.

Tracking Terrorists’ Finances. The FBI has asked the FDIC to circulate to all banks a listing of names of alleged suspects in the World Trade Center and Pentagon attacks. The FBI is requesting that all financial institutions check their records for any relationships or transactions with the suspects appearing on the list, which is available at http://www.fdic.gov/news/news/financial/2001/fil0179.html. Any institution that identifies such a relationship should complete and file a Suspicious Activity Report and immediately contact FBI Special Agents Charles Sciarini or Lisa Miller by facsimile at (202) 278-2598.

Interest Rate Limitations Under the Soldiers’ and Sailors’ Civil Relief Act

Recent events, specifically the announcement that Reserve and National Guard units will be called to active duty, have focused attention on the easily forgotten Soldiers’ and Sailors’ Civil Relief Act of 1940 (50 U.S.C. App. 501 et seq.) The section of this act that is most often of interest to bankers is the provision (sect. 526) reducing the interest rates on pre-active duty loans to a maximum of 6%.

Q. Who is eligible for this relief?
A. Any active duty service member who has a loan made before he/she went on active duty.

Q. What loans are covered?
A. The statute is written very broadly and covers any “obligation or liability.”

Q. What is the highest rate of interest allowed on loans covered by this
statutory provision?
A. 6% (Interest is defined as including any fees except “bona fide” insurance. If a lender charges the full 6%, it may not charge late fees, etc.)

Q. When does the interest rate limitation begin?
A. On the borrower’s entry onto active duty. This rate limitation occurs by operation of law. If the lender does not learn of the commencement of active duty before it occurs, the interest rate reduction must be backdated to the first day of active duty.

Q. How do we know when someone goes on active duty?
A. Normally the lender does not learn of this until contacted by the borrower. Proof of active duty will usually be a copy of the service member’s orders or a document from his/her unit verifying the date he/she entered active duty.

Q. When does the interest rate reduction end?
A. On the last day of active duty.

If you have any questions about this, please contact either Mathew Street (202) 663-5031 or Irv Warden (202) 663-5031 at the American Bankers Association.