Thursday, May 19, 2022

November 2010 Legal Update

New CRA Regulation Effective 11/3/2010

Model Privacy Notices Safe-Harbor Under Reg P Will Change Effective 1/1/2011

New Final Rule Amends Reg Z, Prohibiting Certain Loan Originator Compensation and Steering Practices. Compliance Mandatory 4/1/2011

Federal Reserve Board Rule Reflects Delay in Gift Card Disclosure Requirements to 1/31/2011

Federal Reserve Board Announces Annual Indexing of Reserve Requirement Exemption Amount and Low Reserve Tranche for 2011

FDIC Issues New Guidance on Golden Parachute Applications

Compliance Dates Roundup

New CRA Regulation Effective 11/3/2010

Byron’s Quick Hit: Effective November 3, 2010, the federal regulators have added two new avenues for financial institutions to receive credit under the Community Reinvestment Act: (i) requiring consideration of low-cost education loans to low-income borrowers; and (ii) allowing regulators to consider certain joint activities conducted with minority- and women-owned financial institutions. These provisions are new and do not take away any existing opportunities to receive credit under the CRA.
                On October 4, 2010, the FDIC, Federal Reserve Board, OCC, and OTS published a new final rule revising existing regulations under the Community Reinvestment Act (CRA). The Final Rule is published at 75 F.R. 61035. The Final Rule implements two statutory changes: (1) the addition of Section 1031 of the Higher Education Opportunity Act (HEOA), which requires that the regulatory agencies consider low-cost education loans to low-income borrowers when assessing a financial institution’s record of meeting community credit needs (See 12 U.S.C. § 2903(d)); and (2) allowing the regulatory agencies to consider certain activities of nonminority- and nonwomen-owned financial institutions’ activities in connection with minority- and women-owned financial institutions and low-income credit unions. The Final Rule took effect on November 3, 2010.
Consideration of Low-Cost Education Loans to Low-Income Borrowers
                For purposes of the CRA, education loans are evaluated as consumer loans. A bank’s consumer lending will not be evaluated for CRA purposes unless (i) consumer lending makes up a substantial majority of the bank’s business; or (ii) if not, if the bank chooses to have its consumer loans evaluated when its CRA record is examined. The Final Rule adds a new subsection (e) to Reg BB, 12 C.F.R. § 228.21(e) [Note: I will refer to the changes to 12 C.F.R. § 228.21 here as applicable to banks regulated by the Federal Reserve Board. However, identical changes also appear at 12 C.F.R. § 25.21 (under the OCC’s regs), 12 C.F.R. § 345.21 (under the FDIC’s regs) and 12 CFR § 563e.21 (for thrifts governed by the OTS).] In order to qualify for credit under the CRA, a loan must meet each of the following four criteria:  
1.     It must be an “education loan” as defined under the Truth in Lending Act. The term “private education loan” is defined at 15 U.S.C. § 1650(a)(7), as follows: 
(A) …a loan provided by a private educational lender that–

(i) is not made, insured, or guaranteed under of Title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.); and (ii) is issued expressly for postsecondary educational expenses to a borrower, regardless of whether the loan is provided through the educational institution that the subject student attends or directly to the borrower from the private educational lender; and

(B) does not include an extension of credit under an open end consumer credit plan, a reverse mortgage transaction, a residential mortgage transaction, or any other loan that is secured by real property or a dwelling.
2.     The loan must be made for a student at an “institution of higher education”, as defined at 20 U.S.C. §§ 1001, 1002. This definition will include accredited institutions, including accredited vocational institutions that provide educational programs that prepare students for employment in a recognized profession.
3.     The loan must have interest rates and fees no greater than those comparable education loans offered directly by the U.S. Department of Education, as specified at 20 U.S.C. § 1087e). In explaining this requirement, the Final Rule states:
To determine whether education loans have rates and terms that are no greater than the rates and terms on loans made under the Federal direct loan program, education loans will be compared with comparable direct [U.S. Department of Education] loans. For example, fixed-rate loans will be compared to fixed-rate Federal loans, variable-rate loans will be compared to variable-rate Federal loans, loans to students will be compared to Federal loans to students, and loans to parents will be compared to Federal loans to parents…
The direct loan program formally called the William D. Ford Federal Direct Loan Program is the program against which the rates and fees of private education loans must be compared. The rates and fees that have been allowed under the FFEL program … are statutorily specified and are statutorily specified… The fixed rates under the Federal direct loan program that the agencies will use as benchmarks are the rates for unsubsidized direct Stafford loans for students and direct PLUS loans for parents. 
Although variable-rate loans are no longer available under the Department of Education programs, the Department of Education publishes rates annually for those variable-rate education loans that remain outstanding.
4.     The loan must be made to borrowers who have an individual income that is less than 50 percent of the area median income. 
Activities Undertaken in Cooperation with Minority- and Women-Owned Financial Institutions and Low-Income Credit Unions
                In addition to the addition of the low-cost/low-income education loans provided in the newly adopted 12 C.F.R. § 228.21(e), the Final Rule also adds a new subsection (f) to Section 228.21 as follows:
In assessing and taking into account the record of a nonminority-owned and nonwomen-owned bank under this part, the Board considers as a factor capital investment, loan participation, and other ventures undertaken by the bank in cooperation with minority- and women-owned financial institutions and low-income credit unions. Such activities must help meet the credit needs of local communities in which the minority- and women-owned financial institutions and low- income credit unions are chartered. To be considered, such activities need not also benefit the bank’s assessment area(s) or the broader statewide or regional area that includes the bank’s assessment area(s).        
                The Final Rule also contains a change to Appendix A to Reg BB to conform to this change. The discussion in the Final Rule on this addition makes it clear that the addition of this provision is intended to be a new avenue to earn CRA credit, and does not diminish a bank’s ability to use pre-existing programs that may allow for CRA credit.
 
Model Privacy Notices Safe-Harbor Under Reg P Will Change Effective 1/1/2011
Byron’s Quick Hit: Beginning January 1, 2011, new account and annual privacy notices required under Reg P will no longer enjoy safe harbor treatment that has been provided when using the sample clauses provided in Appendix B (formerly Appendix A) to Reg P. Moreover, the same clauses will be deleted from Reg P altogether effective December 31, 2011. The federal regulators have promulgated a new model privacy notice. Although use of the notice is not required, banks wanting safe harbor protection after December 31, 2010, will have to use the model form.
                Reg P relates to the privacy of consumer financial information, as enacted under the Gramm-Leach-Bliley Act. On December 1, 2009, the OCC, Federal Reserve Board, FDIC, OTS, NCUA, FTC, CFTC and SEC jointly promulgated a new final rule. The Final Rule published an optional model privacy form that financial institutions may use to disclose their information sharing practices as well as an opt-out form from information sharing. Importantly, the substance of Reg P and what information must be disclosed by banks has not changed.
Safe Harbor For Sample Clauses Will Disappear after 12/31/2010
                Banks are required to provide their consumer-customers with an initial privacy notice and annual privacy notices pursuant to 12 C.F.R. §§ 216.4, 216.5. Banks have enjoyed a safe harbor if they accurately used the sample clauses provided at Appendix A to Reg P. The Final Rule moves the existing sample clauses contained at Appendix A to Reg P to Appendix B. Banks are able to continue to enjoy the safe harbor provided for used of the sample clauses for any notices provided through December 31, 2010. Further, the Final Rule provides that the sample clauses, now contained at Appendix B to Reg P, will be removed from Reg P effective January 1, 2012.
                Although banks may continue to use the sample clauses after December 31, they will no longer be presumed to be in compliance with the disclosure requirements of Reg P by virtue of using them. As stated above, the substance of what information must be disclosed to consumers has not changed. 
New Model Privacy Notice
                The Final Rule provides a new, two-page model privacy notice. Although the Final Rule does not require the use of the new form, banks will not enjoy any safe harbor protection after January 1, 2011, unless the new form is used. 
                The purpose of adopting the new model is to allow consumers to identify and compare information sharing practices of different banks. For banks that choose to use the new model form, they will have very little discretion to change the form and retain the safe harbor protection.            
                Appendix A to Reg P and the model forms can be viewed at: http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=4befafec5f0acbfbc1b53f375fb9f089&rgn=div9&view=text&node=12:2.0.1.1.17.4.6.4.29&idno=12. In addition, on April 15, 2010, the regulators made a new online model privacy notice form builder available. Links to the form builder can be found at: http://www.federalreserve.gov/newsevents/press/bcreg/20100415a.htm
What Should My Bank Do?
1.     For banks using the sample clauses provided in Reg P, you may continue to use your existing privacy disclosures (whether initial or annual disclosures) through December 31, 2010 and enjoy safe harbor protection.
2.     You may continue to use the sample clauses and you are not otherwise required to use the new model form. However, if your bank wants to enjoy the presumption of compliance, you must use the new model form beginning January 1, 2011.
 
New Final Rule Amends Reg Z, Prohibiting Certain Loan Originator Compensation and Steering Practices. Compliance Mandatory 4/1/2011
Byron’s Quick Hit: A new final rule amends Reg Z to provide new consumer protection related to the compensation and practices of loan originators. Beginning April 1, 2011, the rule will apply to closed-end consumer loans that are secured by a dwelling. The rule will prohibit (1) payment to mortgage loan originators based upon the terms or conditions of the loan transaction; (2) payment to a mortgage loan originator by any person other than the consumer if the loan originator receives compensation directly from the consumer; and (3) “steering” by the loan originator toward loan products for which the loan originator gets paid more, where it is to the detriment of the consumer. Banks should begin evaluating their compensation structures for loan officers and external mortgage brokers, as well as their policies and procedures affecting the activities of their loan originators, to ensure compliance by the deadline.
                On September 24, 2010, the Federal Reserve Board published yet another final rule amending Reg Z, at 75 F.R. 58509. The stated purpose of the Final Rule is “to protect consumers in the mortgage market from unfair or abusive lending practices that can arise from certain loan originator compensation practices…” The Final Rule has three features: (1) it prohibits payments to loan originators (including mortgage brokers and loan officers), based on the terms or conditions of the loan transaction other than the amount of credit extended; (2) it prohibits any person other than the consumer from paying compensation to a loan originator in a transaction where the consumer pays the loan originator directly; and (3) it prohibits loan originators from steering consumers to consummate a loan for which the loan originator will receive greater compensation if it is not in the interest of the consumer (and provides a safe harbor for compliance with this provision). The Final Rule will affect only (i) closed-end transactions (it does not affect HELOCs), (ii) secured by a dwelling, (iii) where the loan application is received on or after April 1, 2011.
Important Definitions
                For banks’ purposes, the most important definition applicable to the Final Rule is “loan originator.” This term is defined at the revised Section 226.36(a), as follows:
[A] person who for compensation or monetary gain, or in expectation of compensation or other monetary gain, arranges, negotiates, or otherwise obtains an extension of credit for another person. The term “loan originator” includes an employee of the creditor if the employee meets this definition. The term “loan originator” includes the creditor only if the creditor does not provide the funds for the transaction at consummation out of the creditor’s own resources, including drawing on a bona fide warehouse line of credit, or out of deposits held by the creditor.
                For banks, the term “loan originator” will include loan officers who are paid to assist the bank in obtaining an extension of credit on behalf of the bank. It will not include administrative staff, unless such staff’s compensation is based on whether any particular loan is originated. The term would also clearly apply to a loan broker who is not employed by the bank but refers loan applicants to the bank. Further, the definition will apply to the bank itself if the loan is not funded out of the bank’s own resources (e.g., table funding).
                Another definition under the Final Rule is “mortgage broker,” which for purposes of 12 C.F.R. § 226.36 is “any loan originator that is not an employee of the creditor” as to any particular transaction.
Prohibition on Payments by Persons Other than the Consumer (12 C.F.R. § 226.36(d)(2))
                This prohibition is contained at the newly adopted 12 C.F.R. § 226.36(d)(2), which provides:
If any loan originator receives compensation directly from a consumer in a consumer credit transaction secured by a dwelling:
(i) No loan originator shall receive compensation, directly or indirectly, from any person other than the consumer in connection with the transaction; and
(ii) No person who knows or has reason to know of the consumer-paid compensation to the loan originator (other than the consumer) shall pay any compensation to a loan originator, directly or indirectly, in connection with the transaction.
                The Official Staff Interpretation provides some clarification for when this provision will and will not apply. It states:
Payments to a loan originator made out of loan proceeds are considered compensation received directly from the consumer, while payments derived from an increased interest rate are not considered compensation received directly from the consumer. However, points paid on the loan by the consumer to the creditor are not considered payments received directly from the consumer whether they are paid in cash or out of the loan proceeds. That is, if the consumer pays origination points to the creditor and the creditor compensates the loan originator, the loan originator may not also receive compensation directly from the consumer. …
The restrictions imposed under § 226.36(d)(2) relate only to payments, such as commissions, that are specific to, and paid solely in connection with, the transaction in which the consumer has paid compensation directly to a loan originator. Thus, payments by a mortgage broker company to an employee in the form of a salary or hourly wage, which is not tied to a specific transaction, do not violate § 226.36(d)(2) even if the consumer directly pays a loan originator a fee in connection with a specific credit transaction. However, if any loan originator receives compensation directly from the consumer in connection with a specific credit transaction, neither the mortgage broker company nor any employee of the mortgage broker company can receive compensation from the creditor in connection with that particular credit transaction.
Prohibition on Payments Based On Transaction Terms or Conditions (12 C.F.R. § 226.36(d)(1))
                The reader may notice that this article has presented the two prohibitions contained at Section 226.36(d) out of order. This is because the prohibition contained at Section 226.36(d)(1) provides that if the prohibition of Section 226.36(d)(2) on payments by persons other than consumers applies, then the prohibition on payments based on terms and conditions contained at Section 226.36(d)(1) will not apply to the transaction. See 12 C.F.R. § 226.36(d)(1)(iii). Thus these two provisions are mutually exclusive. However, if both COULD apply, then Section 226.36(d)(2) will apply and Section 226.36(d)(1) will not.
                The prohibition on payments based upon transaction terms or conditions is set out at Section 226.36(d)(1) as follows:
Payments based on transaction terms or conditions. (i) In connection with a consumer credit transaction secured by a dwelling, no loan originator shall receive and no person shall pay to a loan originator, directly or indirectly, compensation in an amount that is based on any of the transaction’s terms or conditions.
(ii) For purposes of this paragraph (d)(1), the amount of credit extended is not deemed to be a transaction term or condition, provided compensation received by or paid to a loan originator, directly or indirectly, is based on a fixed percentage of the amount of credit extended; however, such compensation may be subject to a minimum or maximum dollar amount.
                What Is Compensation?
                The Official Staff Interpretation offers further guidance on what may be considered “compensation” for purposes of this prohibition. It states:
[T]he term ‘‘compensation’’ includes salaries, commissions, and any financial or similar incentive provided to a loan originator that is based on any of the terms or conditions of the loan originator’s transactions. For example, the term ‘‘compensation’’ includes:
A. An annual or other periodic bonus; or
B. Awards of merchandise, services, trips, or similar prizes.
                Examples of compensation that is based on transaction terms or conditions include:
1.     Compensation based upon the transaction’s interest rate, annual percentage rate, loan-to-value ratio, or the existence of a prepayment penalty.
2.     Compensation based on a factor that is a proxy for a transaction’s terms or conditions (e.g., a consumer’s credit score). 
Examples of compensation that is NOT based on a transactions terms or conditions include:
1.     Compensation based upon the loan originator’s overall loan volume.
2.     The long-term performance of the loan originator’s loans.
3.     Hourly pay to compensate the loan originator for actual hours worked.
4.     Compensation based upon whether the consumer is an existing customer of the creditor or new customer.
5.     Compensation based on the percentage of applications submitted by the loan originator that result in consummated transactions.
6.     Compensation based upon the quality of the loan originator’s loan files, i.e., accuracy and completeness of documentation.
7.     Compensation that is based upon the amount of the loan.
NOTE: For purposes of Section 226.36(d), affiliates are treated as a single “person.” Thus, lenders cannot avoid the prohibitions of this Section by having one of its affiliates pay the loan originator, instead of the lender directly.
Prohibition on Steering (12 C.F.R. § 226.36(e))
                In addition to the prohibitions related to compensation of loan originators, the Final Rule also contains a prohibition against loan originators attempting to “steer” a consumer to a product so the loan originator will receive greater compensation. The heart of this provision is contained at Section 226.36(e)(1), which provides:
General. In connection with a consumer credit transaction secured by a dwelling, a loan originator shall not direct or ‘‘steer’’ a consumer to consummate a transaction based on the fact that the originator will receive greater compensation from the creditor in that transaction than in other transactions the originator offered or could have offered to the consumer, unless the consummated transaction is in the consumer’s interest.
                What is Steering and When Is a Transaction in the Consumer’s Interest?             
Again, the Official Staff Interpretation adds some further clarification:
“[S]teering” … means advising, counseling, or otherwise influencing a consumer to accept a transaction. For such actions to constitute steering, the consumer must actually consummate the transaction in question.
In determining whether a consummated transaction is in the consumer’s interest, that transaction must be compared to other possible loan offers available through the originator, if any, and for which the consumer was likely to qualify, at the time the transaction was offered to the consumer. Possible loan offers are available through the loan originator if they could be obtained from a creditor with which the loan originator regularly does business…. [A] loan originator [is not required] to direct a consumer to the transaction that will result in the creditor paying the least amount of compensation to the originator. However, if the loan originator reviews possible loan offers … and … directs the consumer to the transaction that will result in the least amount of creditor-paid compensation for the loan originator, the requirements of § 226.36(e)(1) are deemed to be satisfied.
                Safe Harbor Provision (12 C.F.R. § 226.36(e)(2) – (3))
                A loan originator may fall within a compliance safe harbor provision from violating Section 226.36(e)(1). In order to qualify for the safe harbor, the loan originator must present the consumer with multiple loan options for each type of transaction in which the consumer has expressed an interest. For purposes of the safe harbor, the “types of loan transaction” means: (1) a loan that has an APR that cannot increase; (2) a loan that has an APR that may increase; or (3) a reverse mortgage loan. As to each type of loan transaction, the loan originator must satisfy each of the following requirements:
1.             The loan originator must obtain loan options from a “significant number” of the creditors with which the originator regularly does business. The Official Staff Commentary offers clarification that “significant number” here means three (3) or more creditors. However, for loan originators who regularly do business with fewer than three creditors, this requirement is met so long as he obtains loan options from all of the creditors with which he regularly does business. Further, the loan originator can submit multiple loan options from one creditor.
2.             The loan option(s) presented to the consumer must specify (A) the loan with the lowest interest rate; (B) the loan with the lowest interest rate without negative amortization, a prepayment penalty, interest-only payments, a balloon payment in the first 7 years of the life of the loan, a demand feature, shared equity, or shared appreciation; and (C) the loan with the lowest total dollar amount for origination points or fees and discount points.
3.             For each loan presented, the loan originator must have a good faith belief that the loan is one for which the consumer likely qualifies.
What Should My Bank Do?
                Banks should review their current compensation structure and policies and procedures for their loan officers, and if applicable, outside mortgage brokers to ensure that they will be in compliance with these revisions to Reg Z by the mandatory compliance date of April 1, 2011. Also, it is noteworthy that the Dodd-Frank Act has its own set of restrictions for loan originator compensation practices. While there is some overlap between the Final Rule covered here and the Dodd-Frank requirements, banks should expect additional regulatory changes in this area related to Dodd-Frank in the future.
 
Federal Reserve Board Rule Reflects Delay in Gift Card Disclosure Requirements to 1/31/2011
Byron’s Quick Hit: The Credit Card Accountability Responsibility and Disclosure Act of 2009 placed many requirements on the activities of entities that issue gift certificates, store gift cards and general use pre-paid cards. All such provisions were originally effective August 22, 2010. However, a new final rule delays some, but not all, of the requirements to January 31, 2011.  In order to take advantage of this delayed effective date, card issuers must comply with some additional requirements, as described below.
                On October 19, 2010, the Federal Reserve Board issued a new Final Rule amending Reg E, in order to implement recent legislation that modifies the effective dates of certain disclosure requirements for certain gift card disclosure requirements under the Credit Card Accountability Responsibility and Disclosure Act of 2009 (the “Act”). The Act required that its provisions must be effective by August 22, 2010. However, on July 27, 2010, Congress passed legislation to delay the effective date of certain, but not all, of the gift card disclosure provisions under the Act, to April 1, 2010. 
                Section 205.20(h)(1) delays the effective date of some, but not all, of the disclosure requirements. Specifically, Section 205.20(h)(1) provides that for any gift certificate, store gift card, or general-use prepaid card produced prior to April 1, 2010, the effective date of the requirements of paragraph 205.20(c)(3) (disclosures prior to purchase), (d)(2) (disclosures required to be printed on the gift card, gift certificate, prepaid card itself), (e)(1) (prohibiting the issuance or sale of certificates or cards unless policies and procedures have been established to ensure that a consumer will have at least 5 years before the certificate or card will expire), (e)(3) (requiring disclosure of a toll-free number, Web site for information of replacement of certificate or card, and (f) (requiring certain fee disclosures) is changed to January 31, 2011. However, in order to take advantage of the delayed date, vendors must meet certain conditions.
Conditions That Must Be Met
                In order to take advantage of the delayed effective date, a card or gift certificate issuer must meet the following conditions:
1.             The issuer must comply with all of the other provisions of Section 205.20. This includes the substantive restrictions on fees that can be imposed by the issuer.
2.             The issuer cannot impose an expiration date with respect to the funds underlying the gift certificate or card.
3.             The issuer must replace any certificate or card at the consumer’s request and at no cost to the consumer, if the certificate or card has funds remaining.
4.             The issuer must satisfy new disclosure requirements imposed by Section 205.20(h)(2), which provides:
Issuers relying on the delayed effective date in § 205.20(h)(1) must disclose through in-store signage, messages during customer service calls, Web sites, and general advertising, that:
(i) The underlying funds of such certificate or card do not expire;
(ii) Consumers holding such certificate or card have a right to a free replacement certificate or card, which must be accompanied by the packaging and materials typically associated with such certificate or card; and
(iii) Any dormancy, inactivity, or service fee for such certificate or card that might otherwise be charged will not be charged if such fees do not comply with Section 915 of the Electronic Fund Transfer Act.
 
Federal Reserve Board Announces Annual Indexing of Reserve Requirement Exemption Amount and Low Reserve Tranche for 2011
                On October, 26, 2010, the Federal Reserve Board announced the annual indexing of the reserve requirement exemption amount and of the low reserve tranche for 2011. The announcement, published at 75 F.R. 65563, amends Reg D, which deals with reserve requirements of depository institutions. The amendment is effective November 26, 2010.
                The change to Reg D sets the amount of total reservable liabilities of each depository institution that is subject to a zero percent reserve requirement in 2011 at $10.7 million (the reserve requirement exemption amount). This is unchanged from the 2010 level. 
For banks that are subject to a three percent reserve requirement in 2011, the new reserve requirement exemption amount is $58.8 million (the low reserve tranche), which is up from $55.2 million.
 
FDIC Issues New Guidance on Golden Parachute Applications
                The FDIC issued new guidance on October 14, 2010, regarding their consideration of golden parachute applications.   The guidance can be found at FIL-66-2010. I would hope that the application of this for our readers is very limited, but in these difficult financial times, it’s sometimes hard to know.
                A golden parachute is generally considered to be an agreement between an employer and an employee (typically an executive) whereby the employee will receive certain benefits upon his termination. In practice, struggling companies may attempt to use such a device as either (i) a disincentive of an acquiring company to terminate an employee in anticipation of a merger; (ii) a sweet-heart deal for executives upon their termination. Although good arguments can certainly be made that there are legitimate business reasons for such arrangements (e.g., the need to retain top talent to weather difficult conditions), there is a potential for abusing this device.
                The Federal Deposit Insurance Act (“the Act”) gives the FDIC authority to limit or prohibit the payment of golden parachutes by troubled insured depository institutions and covered companies. See 12 U.S.C. § 1828(k). Under existing FDIC regulations, a financial institution will generally be considered “troubled” if it has a composite rating of 4 or 5. The FDIC’s new guidance provides that a troubled financial institution may not make or agree to make a golden parachute payment, unless (i) it falls within one of three permissible golden parachute payments; and (ii) prior FDIC approval is applied for and obtained.
                The application to approve a golden parachute agreement must show that (1) the employee has not committed any fraudulent act or omission, breach of trust or fiduciary duty, or insider abuse, that has had a material adverse effect on the institution; (2) that the employee is not substantially responsible for the insolvency or troubled condition of the institution; and (3) that the employee has not violated any applicable federal or state banking law that has had or is likely to have a material effect on the institution. Applications on behalf of senior management, directors or others with significant responsibilities will be receive more scrutiny.
                In order to reduce the number of applications, the new guidance provides a de minimis golden parachute payment for lower-level employees of up to $5,000 per employee for which an application will usually not be necessary.
                As part of its consideration of an application to approve a golden parachute, the FDIC can require specific provisions, including, for example, a staged-dispersal of payments or a claw-back provision (where funds can be retrieved from the recipient under certain circumstances). The guidance indicates that the FDIC is unlikely to approve such payments for institutions that are in a precarious financial condition, unless the financial institution can demonstrate that the short-term benefits outweigh the cost of the payments.
 
Compliance Dates Roundup
10/1/2010 – Deadline to Escrow for HPML Loans on Manufactured Housing (See September 2009 Legal Update)
10/1/2010 – Deadline to Adopt Policies and Procedures Required for Compliance with the S.A.F.E. Act (See August 2010 Legal Update)
11/1/2010 – Fees Banks May Charge for Compliance with Oklahoma Subpoenas Increase (See August 2010 Legal Update)
12/31/2010 – FDIC TAG Program Expires (for banks that did not opt out in April 2010) (See October 2010 Legal Update)
1/1/2011 – Deadline to Comply with New Final Rule for Notice of Transfer of Mortgage (See September 2010 Legal Update)
1/1/2011 – Deadline to Comply with Final Rule on Risk-Based Pricing (See October 2010 Legal Update)
1/1/2011 – Model Privacy Notices Safe-Harbor Under Reg P Changes to New Model Form (See November 2010 Legal Update)
1/3/2011 – Deadline to Display Update FDIC Insurance Signage (See October 2010 Legal Update)
1/30/2011 – Deadline to Comply with New Reg Z Disclosures (§ 226.18 (s) and (t)) (See September 2010 Legal Update)

 4/1/2011 – Deadline to Comply with New Final Rule Prohibiting Certain Loan Originator Compensation and Steering Practices. (See November 2010 Legal Update)