Regulatory & Legal Affairs


Legal and Regulatory Advocacy
Following new laws and regulations

New laws and regulations are constantly being proposed for the banking industry, both in Washington, D.C. and Sacramento. As well-intended as some of these proposals are, many of them contain language that conflicts with current law or conflicts with current regulatory requirements. Decision-makers need to better understand how their proposals translate into the real-world workings of California’s financial institutions, which is where our legal and regulatory advocacy unit is intrinsically valuable.

Our legal and regulatory advocacy unit works to identify potential legal and regulatory conflicts, make those conflicts known and secure a reasonable solution for the industry. CBA’s legal and regulatory advocacy unit works closely with bank regulators and elected officials alike to ensure that the banking industry’s perspective is known, understood and considered in the decision-making process.

In addition to the work done on the legislative and regulatory fronts, CBA’s legal and regulatory advocacy unit also gives a voice to the banking industry in important legal matters affecting the banking industry. Among the many legal services CBA provides on behalf of the industry is the filing of amicus, or “friend of the court,” briefs on legal proceedings critical to the industry. Through the filing of these briefs, CBA is able to provide the industry’s perspective without signing on as a participant in a given case or lawsuit. Our members understand that we are providing end-to-end advocacy services through our legal and regulatory advocacy unit, affecting both policy decisions and key court decisions that affect our members’ ability to do business.

General information

FinCEN Extends Temporary Exception to Application of Customer Due Diligence/Beneficial Ownership Rule

Last Spring, The Federal Financial Institutions Examination Council (FFIEC) issued examination procedures for the Financial Crimes Enforcement Network (FinCEN) rule that requires banks, as part of their anti-money laundering program, to develop and implement appropriate risk-based policies, procedures and processes  for (1) conducting ongoing customer due diligence and (2) that are reasonably designed to identify and verify beneficial owner(s) of  legal entity customers. In response to banker concerns, FinCEN issued an administrative ruling to provide a 90-day limited excepti

General information

Law Firms Respond to CBA’s Request to Retract ADA Website Access Demand Letters

Last month the CBA, via representation from the law firm of Bryan Cave LLP, sent a letter to two law firms in Pennsylvania that had sent a number of legally questionable demand letters to CBA member banks, alleging violations of the Americans With Disabilities Act with respect to website access. In the letter we raised a number of serious concerns we had about their firms’ allegations and tactics, and called upon the firms to retract the threats of legal action made against our member banks, and to cease and desist from making any future threats or demands.

General information

California Supreme Court Allows Waiver of Class Action in Employment Arbitration Agreement

The California Supreme Court invalidated one of its own opinions, the 2007 Gentry v. Superior Court (Circuit City) decision, which held that class action waivers in employment agreements are unconscionable and thus unenforceable. The continued viability of Gentry has been in doubt since the U. S. Supreme Court’s 2011 decision in AT&T Mobility LLC  v. Concepcion, which held that arbitrating on a class-wide basis frustrates the fundamental purposes of the Federal Arbitration Act. In the current case, Iskanian v.

General information

Comment Letters Needed for Proposed New Accounting Standards

The Financial Accounting Standards Board and the International Accounting Standards Board are jointly proposing new standards for accounting of ALLL and Other Than Temporary Impairment of debt securities (OTTI) called the Current Expected Credit Loss model (“CECL”). The proposal is intended to address the overstatement of assets caused by delayed recognition of credit losses under existing standards, which recognize a credit loss that is probable or has already incurred.

General information

Court Signals it Will Not Halt Richmond’s March Toward Eminent Domain

Last week the federal district court judge in San Francisco during oral argument indicated he is likely to dismiss the case against the City of Richmond, which has already approved a plan to use its eminent domain powers to take underwater mortgages to reduce loan principal and then resell the mortgages to other investors. While Judge Charles Breyer acknowledged that the plan raises serious legal issues, the law suit by certain trustees of mortgage backed securities was not “ripe” for consideration because the city council of Richmond has yet to adopt a resolution of necessity.

General information

CBA Requests Publication of Opinion that Counters Recent Trend Toward Lender Liability

The financial crisis has spawned a raft of litigation arising from loan defaults and modifications, and courts have responded by judicially imposing on creditors heighted duties of care to borrowers. A court of appeal decision came down that bucked the trend but, unfortunately, the opinion was not published. Last week CBA requested that the opinion, Aspiras v. Wells Fargo Bank, N.A., be published so that it may be used as precedent. The case arose from the bank’s foreclosure on a defaulted home mortgage loan as modification negotiations faltered.

General information

CBA Files Friend of the Court Brief in Richmond Eminent Domain Suit

In a rare departure from our practice of not getting involved in judicial matters at the trial court, CBA filed an amicus brief in the U.S. District  Court last week asking the judge to grant a request for an injunction against the City of Richmond, California. The city had taken the first steps to seize mortgages by the exercise of its eminent domain authority when it sent letters to loan servicers asking them “voluntarily” to sell selected loans in portfolios at large discounts from face value.

General information

Supreme Court Declines to Review Reporting Privilege Case

The California Supreme Court declined to review one of the few judicial cases that refused to enforce banks’ privilege for reporting suspicious activities to law enforcement. The court of appeal in Greene v. Bank of America refused to recognize the reporting privilege provided in 31 U.S.C. 5318(g) (Annunzio-Wylie Anti-Money Laundering Act) that protects banks from liability for filing suspicious activities reports and other reports of crime.

General information

Treasury Department Provides Helpful Notice About the Federal Garnishment Rule

In previous edition of the Monday Courier, we alerted banks about a potential conflict between the federal garnishment rule and criminal seizure orders. Banks’ need to comply with the rule could frustrate law enforcement’s efforts to seize assets held in banks because enforcement agencies expect banks to turn over assets immediately and without offset.

General information

California Supreme Court Threatens Enforceability of Contracts
January 22, 2013

In January this year, the California Supreme Court overturned a case that had been decided by the same court in 1935.The two cases, rendered 83 years apart, involved remarkably similar facts. A borrower, falling behind in payments, works out an arrangement with the creditor to modify the terms of repayment, which are memorialized in a subsequent written agreement.The borrower defaults again and the creditor enforces the revised agreement as written.The borrower claims that the creditor made promises different from what was memorialized in the agreement.The dispute, at issue in both


2010 CBA Regulatory and Litigation Summary
Leland Chan, CBA General Counsel

2010 will be remembered as the year that Congress enacted the single most significant piece of banking legislation since the Great Depression. By one count, the Dodd-Frank Wall Street Reform and Consumer Protection Act directs the issuance of 243 new regulations, many by the newly established Bureau of Consumer Financial Protection. The new independent agency will have primary jurisdiction over banks with over $10 billion in assets with respect to a myriad of consumer protection laws and regulations.


FDIC Responds to State Banking Association’s Concerns Regarding Regulatory Examinations

In a letter dated May 21, 2010, FDIC Chairman Sheila Bair responded to a letter sent by the Florida Banks Association, which outlined their concerns with the bank supervision process. In the letter, Chairman Bair states that “there has been no change in our process for evaluating capital adequacy, and regulatory minimums remain in force. However, as we have done in the past, individual institutions with asset quality or earnings weaknesses frequently need to hold higher capital levels because of safety-and-soundness considerations.

Post Leland Chan

2009 CBA Regulatory and Litigation Summary
Leland Chan, CBA General Counsel

As expected, 2009 saw a flood of initiatives at all levels of government to address the financial crisis. Thanks to the CBA state government relations team, only one major banking bill was enacted in the state this year—AB 7, the foreclosure moratorium bill. And in response to frenetic activity in Congress, by the Administration, and the federal banking agencies, opposition mounted on major reform efforts, including the creation of a federal consumer agency, establishing a resolution authority for economically significant institutions, and consolidation of bank charters. As of the beginning of 2010, none of these proposals has yet been enacted.