Posted on September 28, 2009 by Hunton & Williams LLP Print This Article

FDIC Proposed Rule Would Require Banks to Prepay Quarterly Risk Assessments Through 2012

A rule proposed today by the the Board of Directors of the Federal Deposit Insurance Corporation ("FDIC") would require banks to prepay their estimated quarterly risk-based assessments beginning with the fourth quarter of 2009 through 2012. The prepaid assessments would total approximately $45 billion, according to today's press release.  Additionally, the FDIC voted to adopt an increase in the assessment rate starting January 1, 2001 by a uniform three-basis points.  Today's proposed rule is designed to bolster the Deposit Insurance Fund. 

Click here for today's press release, click here for the FDIC's Notice of Proposed Rulemaking, and click here for the Deposit Insurance Fund Restoration Plan. 

Posted on September 14, 2009 by Hunton & Williams LLP Print This Article

Treasury Department Releases Financial Stabilization Status Report

The Treasury Department outlined today the federal government's next steps along the road to financial recovery in a report entitled, "The Next Phase of Government Financial Stabilization and Rehabilitation Policies."  The report indicates there are four "key elements" for the government:  (i) "exiting from some emergency programs," (ii) "diminishing reliance on federal support," (iii) "from infusing capital to repaying capital," and (iv) the "ongoing role for policy."

Click here for the Treasury Department's press release, and click here for the full report including the executive summary.

Posted on September 3, 2009 by Hunton & Williams LLP Print This Article

The Evolving Landscape for Financial Institutions

This is the fourth client alert that I have written this year dedicated solely to the evolving landscape that banks are confronting. Nowhere is the ground shifting more than in financial institutions’ interaction with regulatory authorities. Several of these issues are discussed below. 

Commercial Real Estate
The regulators’ position with regard to commercial real estate lending (“CRE”) has changed dramatically in the past three years. In 2006, the bank regulators issued guidance regarding CRE lending. Specifically, the guidance provided that, in the event a bank’s non-owner-occupied CRE loans approached 300 percent of capital or more, then the financial institution had to ratchet up its underwriting, monitoring and other facets of risk mitigation. Nowhere in the guidelines was there a cap on CRE lending. Even still, the reaction of the banking industry to the guidelines was near pandemonium. Bankers were concerned that the guidelines would be a de facto cap. The bank regulators responded to clarify that the guidelines were merely benchmarks and were not limitations.

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