Current Events - 10/16/2000

Competition at its best —Washington Mutual’s decision to stop surcharging ATM customers further illustrates CBA’s  position:  the market place is the best regulator of institutional activity. Without government intervention we enjoy an active, free marketplace, and it works.

Update on the city of Santa Monica ATM ordinance —The city was subject to a court order to pass an ordinance to suspend the original ordinance banning surcharges. The city responded by passing the ordinance, the second and final reading was on September 26, and it should become final by October 26. The city was ordered to suspend the ordinance by October 12.

California employers scored one of their biggest victories in years — Last Friday the California Supreme Court issued its decision in Guz v. Bechtel, a case in which CBA participated as amicus curiae (“friend of the court”). This case tested the limits of an employer’s at-will employment policy where a long time employee was laid off in connection with the elimination of his department. The court upheld the employer’s written at will employment policy against an implied contract claim based on the employee’s term of service, consistent promotions, salary increases and such company policies as progressive discipline. Ironically, had the decision gone in favor of the plaintiff employee, employers would have faced disincentives to retain, promote, and so forth in order to preserve their at-will status. Also, plaintiff alleged that elimination of his department was a pretext for terminating him for cause, an argument that, had it prevailed,  would have subjected employers to judicial second guessing on whether any macro-business decision like a restructuring or a merger was reasonable or simply a pretext for termination. The court also ruled against the employee on an age discrimination claim because it was unsupported by the facts, a signal that California courts are becoming less friendly to age discrimination suits.

Big Push for Subchapter S Reform — On September 26 the American Bankers Association, America’s Community Bankers and the Independent Community Bankers Association sent a joint letter to Senator William Roth, Chairman of the Senate Committee on Finance, urging the enactment of Subchapter S reforms, which would provide increased tax advantages for community banks. Last Thursday, nine Representatives sent a joint letter to House Ways and Means Committee Chairman Bill Archer (R-TX) and Ranking Member Charles Rangel (D-NY) also urging the enactment of Subchapter S relief for community banks.

The message in both letters is straight forward:  Because Subchapter S rules remain too restrictive, complex, and burdensome, many banks are unable to elect Subchapter S status or attract sufficient capital to grow to their full potential. CBA will be joining the fray this week. If your bank has an interest in making a Sub S election you need to be involved also. Give the CBA Sacramento office a call at 919/441-7377 Ext. 209 for more information.

Upcoming elections are really your opportunity — This November a large number of new legislators will be elected to the California Legislature. Many of these candidates are running in “safe seats” —  their election is guaranteed. This is an excellent opportunity for bankers to get to know the individuals who will be representing them in the Legislature. If you don’t know who the candidates are in your area give the Sacramento Office a call (916/441-7377 Ext. 207) and we will provide the information you need. Conversely, if you know any of these candidates and have information that you would like to pass on, give us a call.

We got the message — CBA members, particularly community banks, have been asking for more help with their due diligence on products and services. Welcome John P. Neely, Vice-President for Product Endorsements and Development. He brings 22 years of diversified financial experience to CBA’s for-profit subsidiary, Banker Benefits. This includes six years at All Tel Information Services as a senior account executive in the Financial Services division, two years at Checkfree as regional sales manager in the Marketing division; another six years as branch manager for CalFed and Wells Fargo, and eight years at American Express as a sales manager in the Card division. In his new role John will be identifying  products and services that will provide added value and benefits to our member banks and their customers.
 
 

10/16/00