Podcasts about udap

This podcast segment covers the FHFA's decision to rescind its UDAP oversight rule for Fannie Mae and Freddie Mac, easing compliance burdens and reinforcing the FTC's authority over consumer protection enforcement.-------------------------------------------------------------Adam DeSanctis, VP of Communication at Mortgage Bankers AssociationAs a strategic public affairs and communications executive with nearly two decades of experience, Adam has deep expertise in strategy, management, and media relations. He is widely considered to be an expert in a variety of communications, including advocacy, brand, executive, crisis, grassroots, and social media. In his career, he has been the MBA spokesperson on a wide variety of real estate research and advocacy-related issues, promoted MBA research and advocacy efforts to financial, political, and trade industry media and on MBA's social media channels, and secured media opportunities for MBA leadership on key real estate trends and issues, generated media coverage for MBA's research and data on mortgage applications, credit availability, homebuilder applications, mortgage forbearance/delinquencies, commercial real estate originations, and forecasts, and other industry analysis, developed key strategic initiatives for MBA's organizational public affairs plan, media relations and member communications support for mPower, MBA's Opens Doors Foundation and MBA's Diversity, Equity, and Inclusion programs.

On today's podcast, Editor in Chief Sarah Wheeler talks with Managing Editor James Kleimann about a series of housing orders from FHFA Director Bill Pulte on climate risk, UDAP and special purpose credit programs. Related to this episode: Pulte terminates SPCPs, issues recision of UDAP bulletin in slew of orders | HousingWire HousingWire | YouTube More info about HousingWire   Enjoy the episode! The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate stories. Hosted and produced by the HousingWire Content Studio. Learn more about your ad choices. Visit megaphone.fm/adchoices

In this episode of the Payments Podium Podcast, the Payments Professor, Kevin Olsen, sits down with special guest Karen Sylvester to unravel the complexities of UDAP (Unfair, Deceptive, or Abusive Acts and Practices) and its impact on electronic payments and financial institutions. Discover how Karen's journey from part-time teller to industry expert has shaped her perspective on consumer protection, compliance, and regulations. Learn about the two versions of UDAP – one overseen by the FTC and the other by the CFPB – and how they govern business and financial institution practices.

Our podcast today focuses on negative option consumer contracts, i.e., agreements that allow a seller to assume a customer's silence is an acceptance of an offer. Such contracts are ubiquitous in today's marketplace. Today's guests are Kaitlin Caruso, a professor at the University of Maine Law School, and Prentiss Cox, a professor at the University of Minnesota Law School. They have written an article entitled, “Silence as Consumer Consent: Global Regulation of Negative Option Contracts.” The article is available on SSRN and will soon be published in the American University Law Review. The Professors first describe what they perceive to be some of the consumer harms resulting from the use of negative option contracts – consumers signing up for “free trial” offers that convert to term contracts requiring consumers to pay periodic fees after the free trial period has expired; credit card “add-on” products which are sold through telemarketing, like credit life and disability insurance; subscription contracts which make it difficult for consumers to cancel; subscription contracts for services, which are not used for lengthy periods of time while the consumer continues to pay periodic fees. The Professors then describe the existing federal and state statutes and FTC regulations and why they are inadequate to protect consumers. They point out that the current FTC negative option rule was promulgated decades before the development of the Internet and obviously does not begin to deal with online sales of goods and services. Instead, the FTC rule is intended to deal with mail order sales like the “Book-of-the-Month” club. While the FTC has proposed a new negative option rule which is a vast improvement over the existing FTC rule, it is unclear when or if a final rule will be promulgated. The Professors also describe the federal Restore Online Shoppers Confidence Act, and the FTC‘s Telemarketing Sales Rule which tangentially pertain to negative option contracts. Finally, the professors discuss a patchwork quilt of state laws (mostly part of state UDAP statutes) which deal with negative option contracts. After surveying the existing federal and state laws, as well as negative option laws enacted in many foreign countries, the Professors describe the core elements of what a negative option law (be it state or federal) should contain in order to protect consumers. The core elements are: 1.  A prohibition against converting a “free trial” offer into a term contract; 2. A prohibition against automatically converting a negative option contract into another term contract with the contract instead becoming a month-to- month contract.  Alternatively, the negative option contract could convert to a term contract, which could then be canceled during the first 90 days after the consumer sees a charge on a credit card statement. 3. If a subscription to services is not used by the consumer for at least one year, then the seller must notify the consumer of the dormancy, and if the service remains dormant for another three months thereafter, then the seller must cease charging the consumer for the service.  Alan Kaplinsky, Senior Counsel in Ballard Spahr's Consumer Financial Services Group, hosts today's episode.

The word "privacy" doesn't appear in the FTC Act, yet for 25 years, the FTC has used its limited resources and enforcement tools to act as the country's privacy enforcer. Past and current FTC leadership join host Anant Raut for this rousing look at the history of privacy enforcement by the FTC, and contemplate its future. In a world where the threats to privacy have grown manifold, has the Commission stretched the handful of words passed by Congress in 1938 as far as they can, and is it time for a new agency, empowered with fit-to-purpose authority, to take the baton for the next 25? With special guests: Samuel Levine, Director of the Bureau of Consumer Protection, Federal Trade Commission, Daniel Kaufman, Partner, BakerHostetler, and Maneesha Mithal, Partner, Wilson Sonsini Goodrich & Rosati LLP Hosted by: Anant Raut

Season 3 of Trust and Trade kicks off with an in-depth look at the heated turn in the relationship between the Federal Trade Commission and Congress, which broke into public view during a July oversight hearing by the House Judiciary Committee. Host Anant Raut and guest host John Villafranco welcome Katie McInnis (Chief Democratic Counsel to the subcommittee) and Nina Frant (former counsel to Commissioner Wilson) to discuss their insights from the hearing - what was said, how Chair Khan responded, and what this might mean for the FTC going forward. With special guests: Katie McInnis, Chief Democratic Counsel, House Judiciary Committee, Subcommittee on the Administrative State, Regulatory Reform, and Antitrust and Nina Frant, Vice President for Consumer Policy, U.S. Chamber of Commerce Hosted by: Anant Raut, John Villafranco, and Greg Fortsch

Section 5 of the FTC Act, which prohibits unfair or deceptive acts or practices, does not include a private right of action. Our special guest, Professor Myriam E. Gilles of Cardozo Law School, has written a law review article in which she makes the case for adding a private right of action to Section 5. We begin with a discussion of the origins of federal consumer protection law, including the connection to the rise of private antitrust enforcement, the legislative debate regarding the creation of a private right of action in connection with the FTC Act's enactment and later addition of a UDAP prohibition to Section 5, and the FTC's role in the enactment of state UDAP laws. We then discuss the arguments advanced by Prof. Giles in support of private enforcement of the FTC Act, including the need to counter efforts to limit state UDAP laws and the effects of political polarization on government enforcement, and issues relating to class actions that legislators would need to address in creating a private right of action. Alan Kaplinsky, Senior Counsel in Ballard Spahr's Consumer Financial Services Group, hosts the conversation.

In this episode of Commitment Matters, Mary speaks with Rich Horn, Attorney at Garris Horn LLP. You can contact Rich via email.During their conversation, Rich or Mary mentioned: Find CFPB v. Townstone Financial case details and documents online. Learn more about Rich's work and the services his law firm, Garris Horn LLP, offers.Rich says the concept of redlining has altered how banks market and determine their operation locations. Rich details two fair lending statutes, The Equal Opportunity Credit Act, or ECOA, and the Fair Housing Act, or FHA. Other cases illustrate similar discrimination and violations of ECOA and FHA, such as United States v. Chevy Chase Bank, F.S.B.It's important to note the differences between disparate treatment and disparate impact.Evidence in these cases is often pulled from HMDA (Home Mortgage Disclosure Act) data, which is publicly published data about the U.S. mortgage market.United States v. Cadence Bank is another example case that Rich uses to explain redlining.Chevron deference is a law principle previously discussed on Commitment Matters. Rich explains how it's applied in this case.UDAP refers to Unfair, Deceptive or Abusive Acts or Practices.Rich brings up a new rule from the CFPB called the Business Loan Data Collection Rule, which will create new HMDA data for small business loan applicants. You can now reach the Commitment Matters Podcast via phone! Got a topic or guest idea you want featured? Leave us a voice message at 214.377.1807 or email us at podcasts@ramquest.com. Don't forget to subscribe, rate, and review this podcast on Apple Podcast, Spotify, or wherever you listen to podcasts, or visit RamQuest.com/podcast to download the latest episode. Lastly, we love to see when and how you're listening. Share our posts, or create your own and tag them: #CommitmentMattersPodcast

Deal problems have a plan Electrics have serious cold weather battery issues No jump starting with EVs Not a family vehicle Jump start tip If your deal has a problem Factory problems follow a plan Due diligence, due process Follow the Chain of command Salesperson, Manager, Dealer principal or GM Manufacturer (Company.com) and the bank   Better business (BBB.org) Attorney general (your state.gov/attorney general) FTC (federal) UDAP statutes will help Attorney last Still no lease buy out relief Assertive and persistent, not aggressive

In this episode of Commitment Matters, Mary speaks with Steve Gottheim, General Counsel for ALTA. You can contact Steve via email.During their conversation, Steve or Mary mentioned: The American Bankers Association sues the CFPB over proposed changes to their supervisory manual. UDAP, or Unfair, Deceptive or Abusive Acts or Practices. In December 2022, the CFPB issued a consent order against Wells Fargo, which came with a hefty fine of $3.7 billion.Steve explains the House Freedom Caucus and its role among a divided government. Read about the concerns Republicans are raising about the CFPB's recent actions.Steve anticipates the Treasury Department will file a proposal that would require real estate transactions to go through a money laundering program.Find the 2022 Biden Administration's Regulatory Agenda and Plan here.Mary and Steve discuss the possibility of the acceptance of alternatives to title insurance. Take a look at ALTA's research on the risks associated with these alternatives.Sign up for ATLA's Title Action Network (TAN) to become an advocate for the title industry. You can now reach the Commitment Matters Podcast via phone! Got a topic or guest idea you want featured? Leave us a voice message at 214.377.1807 or email us at podcasts@ramquest.com. Don't forget to subscribe, rate, and review this podcast on Apple Podcast, Spotify, or wherever you listen to podcasts, or visit RamQuest.com/podcast to download the latest episode. Lastly, we love to see when and how you're listening. Share our posts, or create your own and tag them: #CommitmentMattersPodcast

2022 was a remarkable year for privacy. Utah and Connecticut enacted new privacy laws. California and Colorado launched detailed (and continuing) privacy rulemakings. Congress proposed a landmark bipartisan, bicameral federal privacy bill (the American Data Privacy and Protection Act, or ADPPA). And the FTC initiated a sweeping privacy rulemaking under its Section 18 (Mag-Moss) rulemaking authority. As if that weren't enough, the US and EU announced a new Transatlantic Data Transfer Framework. We saw aggressive enforcement of UDAP and privacy laws at the federal and state levels. California passed an Age Appropriate Design Code (similar to the UK's), while Congress proposed multiple kids' privacy bills. And, amidst all of this, “dark patterns” and “surveillance” shot to the top of the privacy lexicon. 2023 promises to be just as active, with further twists and turns on all of the above. Notably, the five new state privacy laws we've all been awaiting and planning for will take effect at various points in 2023. Further, other states may join the fray, enacting their own laws. If 2022 was the year that regulators and companies spent positioning themselves on the field, 2023 will be the year the balls start flying. We'll be blogging on all of this in 2023 but, for now, we want to highlight some issues we're watching with particular interest. https://www.adlawaccess.com/2022/12/articles/what-privacy-issues-are-on-deck-for-2023-here-are-some-of-the-most-interesting-ones-part-one/ KDW Privacy Team https://www.kelleydrye.com/Our-Practices/Regulatory-Government-Relations/Privacy-and-Information-Security-Counseling-and-Co Download the Ad Law Access App www.kelleydrye.com/News-Events/New…ind-Advertising See our LinkeTree for more information linktr.ee/KelleyDryeAdLaw Hosted by Simone Roach Produced by Jeff Scurry - https://www.linkedin.com/in/jeffscurry

While most attention is focused on the CFPB, state attorneys general are very active in investigating and enforcing state laws relating to consumer financial services (and often federal laws when incorporated into state law or when using their Dodd-Frank authority). We first discuss the CPD's priorities and how they are determined; use of its state law UDAP authority and available remedies; enforcement of federal law; and collaboration with the CFPB and other state AGs. We also discuss how a company's self-identification/self-remediation of violations factors into the CPD's enforcement approach. We then discuss key issues of CPD concern and enforcement activity in specific areas, including mortgage servicing, auto sales and financing, debt collection, fintech/new technologies, and buy-now-pay-later. Alan Kaplinsky, Senior Counsel in Ballard Spahr's Consumer Financial Services Group, hosts the conversation joined by John Grugan and Adrian King, partners in the firm's Litigation Group, who defend companies facing state Attorneys General enforcement initiatives.

Please join Troutman Pepper Partner Chris Willis and his guest and colleague Brooke Conkle as they discuss the Federal Trade Commission's (FTC) recent consent order with Passport Auto Group. The FTC alleged Passport violated the law in three areas: Passport had a practice of marking up fees from the advertised price; Passport had a discretionary markup practice that caused Black and Latino customers to pay higher fees; and it charged Black and Latino customers additional fees for markups for extra services. The consent order requires Passport to pay $3.38 million, with the FTC redistributing the money to affected customers. Chris and Brooke further discuss the FTC's proposed rule relating to disclosure of fees and how this affects auto dealerships.Associate Brooke Conkle focuses her practice on complex litigation and federal consumer protection statutes, including the Fair Credit Reporting Act (FCRA) and Regulation V, the Equal Credit Opportunity Act (ECOA) and Regulation B, the Telephone Consumer Protection Act (TCPA), and UDAP laws.

Is Discrimination “Unfair” Under the UDAP Laws? New Lawsuit Challenges CFPB's Anti-Discrimination Guidelines By Jessica Rich, Paul Singer & Alysa Z. Hutnik on September 30, 2022 POSTED IN CONSUMER FINANCIAL PROTECTION, CONSUMER PROTECTION 
Most people would generally agree that discriminating on the basis of race, color, religion, disability, or similar factors is a bad thing to do – indeed, that it's “unfair” within the common meaning of the word.  It's also illegal in various circumstances – e.g., the Equal Credit Opportunity Act prohibits certain forms of discrimination in lending, the Fair Housing Act bans discrimination in housing, and Title VII of the Civil Rights Act prohibits various types of employment discrimination. https://www.adlawaccess.com/2022/09/articles/is-discrimination-unfair-under-the-udap-laws-new-lawsuit-challenges-cfpbs-anti-discrimination-guidelines/ Jessica L. Rich
jrich@kelleydrye.com
(202) 342-8580
Bio - www.kelleydrye.com/Our-People/Jessica-L-Rich Paul L. Singer psinger@kelleydrye.com (202) 342-8672 Bio - https://www.kelleydrye.com/Our-People/Paul-L-Singer Alysa Z. Hutnik
(202) 342-8603
ahutnik@kelleydrye.com Bio - https://www.kelleydrye.com/Our-People/Alysa-Z-Hutnik See our LinkeTree for more information linktr.ee/KelleyDryeAdLaw Hosted by Simone Roach
 Produced by Jeff Scurry

Please join Troutman Pepper Partner Chris Willis and his guests and colleagues Alan Wingfield and Brooke Conkle as they discuss the Federal Trade Commission's (FTC) recent Notice of Proposed Rulemaking governing voluntary products in automobile finance transactions. During the podcast, they examine the requirements imposed on both advertising practices and the sales process and what it means for the automotive industry.Consumer Financial Services Partner Alan Wingfield helps consumer-facing clients navigate compliance, litigation, and regulatory risks posed by the complex web of state and federal consumer protection laws, including Section 5 of the FTC Act and state equivalents of the Unfair and Deceptive Act and Practices Act (UDAP). He is a trusted advisor and tireless advocate, helping clients develop practical compliance and dispute-resolution strategies.Associate Brooke Conkle focuses her practice on complex litigation and federal consumer protection statutes, including the Fair Credit Reporting Act (FCRA) and Regulation V, the Equal Credit Opportunity Act (ECOA) and Regulation B, the Telephone Consumer Protection Act (TCPA), and UDAP laws.

What to do when your deal runs into dishonest or ethical issues Electric sales are not booming Shipping charges are crazy high and the value is crazy low If your deal has a problem Factory problems must follow a plan Due diligence, due process Follow the Chain of command Salesperson, Manager, Dealer principal or GM Manufacturer (Company.com) and the bank   Better business (BBB.org) Attorney general (your state.gov/attorney general) FTC (federal) UDAP statutes will help Attorney last Assertive and persistent, not aggressive

Hosted by Simone Roach 49 State Attorneys General joined in a National Association of Attorneys General letter authored by Florida, Iowa, Mississippi, Pennsylvania, and Tennessee responding to the FTC's Request for Public Comment concerning impersonation scams. While a bipartisan coalition from the State AGs on consumer issues isn't particularly surprising, the call for additional federal oversight into areas the State AGs already have authority to enforce is certainly interesting. The letter notes that, “Attorneys general are uniquely qualified and well-positioned to provide insights regarding impersonation scams.” Not only do State AGs provide insights regarding these scams, but also they often enforce their laws prohibiting unfair and deceptive practices (UDAP) to stop them. The letter details several recent State AG actions in this area, including settlements with companies allegedly sending deceptive mail solicitations that appeared to come from government agencies, and companies making calls impersonating government agencies and other businesses. Having obtained these resolutions, it is interesting that the State AGs then write that “there is a pressing need for FTC rulemaking to address the scourge of impersonation scams” and that “a national rule that encompasses and outlaws such commonly experienced scams discussed herein would assist attorneys general and their partners in reducing consumer harm….” Blog Post - https://www.adlawaccess.com/2022/02/articles/state-attorneys-general-fight-imposters-among-us/ Contacts Paul L. Singer psinger@kelleydrye.com (202) 342-8672 Bio - https://www.kelleydrye.com/Our-People/Paul-L-Singer Beth Chun bchun@kelleydrye.com (202) 342-8671 Bio - https://www.kelleydrye.com/Our-People/Beth-Bolen-Chun Produced by Jeff Scurry

In this episode of Commitment Matters, Mary chats with Loretta Salzano, President at Franzen and Salzano, P.C. Visit Loretta's website or connect with her via email at lsalzano@franzen-salzano.com. As a reminder, as with all our podcast episodes, this interview should not be considered as legal advice. During their conversation, Loretta or Mary mentioned:Here's an overview from RESPA News regarding the resurgence of joint ventures. For a deeper dive into ABAs check out this article detailing their evolution.Loretta mentions the importance of a culture of compliance.Here's a look at the three requirements for safe harbor under the law and a glimpse at how the CFPB is widening its RESPA enforcement.Lorretta mentioned HUD's Ten Factor Test for Controlled Business Arrangements in the HUD Statement of Policy 1996-2. RESPA News gives us the Do's and Don't's of MSAs and the CFPB's definition of them. Loretta mentions co-marketing regulations, as well. Here's what the National Association of Realtors suggests.This article highlights the ebb and flow of “cozy marketing arrangements” in the mortgage industry.The CFPB ordered Lighthouse Title to pay $200,000 for illegal quid pro quo referral agreements in an effort to take action against mortgage kickback agreements. The CFPB created this downloadable version of its RESPA FAQs, released in October of 2020.MLinc Solutions can advise and evaluate the fair market value of sponsorships and promotions. Here's a bit more about Pass Through Leases.Loretta talks about Grant Mitchell, who was knowns a Mr. RESPA. She also mentions Mick Mulvaney and Kathy Kraninger – both of whom have led the CFPB in the past.As noted, the acting CFPB director, David Uejio outlined priorities and announced plans for more aggressive enforcement and supervision.MSAs and other arrangements are under FDIC scrutiny. Here's more on the “mini” CFPBs developing in some states.The CFPB is hiring!Mary asked about seasonal gifts. Here's what the CFPB says about RESPA Section 8 and gifts.Learn more about Section 9 of RESPA. You can also watch this RESPA News webinar which explains the differences between sections 8 and 9, where section 9 applies, and expands on the term, “required use.”Here's a look back at a Stewart Title Guaranty Company's blog, offering insights on social media and referrals.Mary and Loretta mention UDAP. Here's the FTC's handbook on the matter.If you'd like to contact the Commitment Matters podcast, email podcasts@ramquest.com. Don't forget to subscribe, rate, and review this podcast on Apple Podcast, Spotify, or wherever you listen to podcasts, or visit RamQuest.com/podcast to download the latest episode. Lastly, we love to see when and how you're listening. Share our posts, or create your own and tag them: #CommitmentMattersPodcast

What to do if there is a problem with your deal or the vehicle Watch out for the problems lists on the net They either suggest the wrong thing or can't explain it If your deal has a problem Factory problems must follow a plan Due diligence, due process Follow the Chain of command Salesperson, Manager, Dealer principal or GM Manufacturer (Company.com) and the bank   Better business (BBB.org) Attorney general (your state.gov/attorney general) FTC (federal) UDAP statutes will help Attorney last Assertive and persistent, not aggressive

State UDAP laws are powerful tools for private plaintiffs and state Attorneys General to redress marketplace misconduct and abuse of consumers. But with the growing proliferation of lawsuits based on novel theories of what constitutes "unfair" trade practices, is it time to rein them in? In this episode co-hosts Alicia Downey and Christina Ma talk to Matt Sawchak, UDAP scholar, antitrust litigator, and former solicitor general for the state of North Carolina, about the ongoing debate over the scope of and remedies afforded by UDAP legislation. Listen to this episode to learn about the sources of tension between state UDAP statutes and U.S. antitrust law. Related Links: North Carolina Opera The Official Tourist Website for Prague Hosted by: Alicia Downey, Downey Law LLC and Christina Ma, Partner, Wachtell, Lipton, Rosen & Katz

Consumers are protected under various state and federal laws when it comes to rent-to-own companies. Some of the biggest rent-to-own companies are Aaron's and Rent-A-Center. There are laws to protect consumers in every state, and these laws are oftentimes called UDAP laws. What that stands for is Unfair, Deceptive, Abusive Acts and Practices. Under various UDAP statutes consumers are entitled to money damages, and there's what's called a fee shift provision. That means our fees and costs are paid for by the other side. So if you're being harassed by a rent-to-own company, and they are some of the most aggressive companies I've seen go after consumers, whether it's harassing phone calls, contacting family, friends, or neighbors, you can contact my office. We will immediately get the harassment to stop, and not only are you entitled to money damages but based on the fee shift provision these rent-to-own companies have to pay my fees and costs, so you're not going to owe me a penny for my time. 

The main issues people have with security systems are installation issues and service issues. Technicians will come to their house, sometimes they'll damage their property, or the system is not even installed correctly, and yet they're paying the monthly fee to have that service. Other times we'll see security systems installed correctly, but the service doesn't work.We've been helping out a lot of clients recently who've had issues with ADT, or Vivint, and some of the other security system companies. And consumers throughout the country are protected under UDAP statutes. And UDAP stands for unfair deceptive acts and practices and, under these laws, consumers can get money damages back. And there's a fee shift provision so that means the other side pays our fees and costs.So when clients come to us with security system issues, we help them. We help them resolve the issue. They get money damages. And the other side pays our fees and costs, so our clients never pay us a penny for our time.

When things aren't right Station wagons limited Might be great resale DWI might be stopped Like I said, the 10 best used cars If your deal has a problem Factory problems must follow a plan Due diligence, due process Salesperson, Manager, Dealer principal or GM Manufacturer (Company.com) and the bank   Better business (BBB.org) Attorney general (your state.gov/attorney general) FTC (federal) UDAP statutes will help Attorney last Assertive and persistent, not aggressive

After looking at how the 2008 financial crisis and its aftermath might inform regulators’ response to the pandemic, we discuss how collections, loss mitigation/hardship programs, and originations of existing products and new programs designed to assist pandemic-impacted consumers (including changes to credit risk/fraud models to address the pandemic’s effects) can create UDAP and fair lending risk.

When the troubles begin Undercoating makes it quiet Honda resurfaces at CR Due diligence, due process Salesperson, Manager, Dealer principal or GM Manufacturer (Company.com) and the bank   Better business (BBB.org) Attorney general (your state.gov/attorney general) FTC (federal) UDAP statutes will help Attorney last Assertive and persistent, not aggressive

If your deal has a problem Automobile Advice can often be wrong Leasing is still a great way Three questions for reading Due diligence, due process Salesperson, Manager, Dealer principal or GM Manufacturer (Company.com) and the bank   Better business (BBB.org) Attorney general (your state.gov/attorney general) FTC (federal) UDAP statutes will help Attorney last Assertive and persistent, not aggressive

If your deal has a problem Minus equity review Repair bill stat CPO lease What kind of went wrongs Due diligence, due process Salesperson, Manager, Dealer principal Manufacturer (Company.com) and the bank   Better business (BBB.org) Attorney general (your state.gov/attorney general) FTC and UDAP statutes Attorney Assertive and persistent, not aggressive

Kelly interviews Peter Weinstock, Partner, Hunton & Williams, Dallas Office. They talk about bank M&A deals and minority shareholder actions to gain control of bank management. Peter Weinstock’s practice focuses on corporate and regulatory representation of financial institutions. He is Practice Group Leader of the Financial Institutions Section and has counseled institutions on more than 150 M&A transactions, as well as provided representation on securities offerings and capital planning.   Kelly Coughlin is CEO of BankBosun, a management consulting firm helping bank C-Level Officers navigate risk and discover reward. He is the host of the syndicated audio podcast, BankBosun.com. Kelly brings over 25 years of experience with companies like PWC, Lloyds Bank, and Merrill Lynch. On the podcast Kelly interviews key executives in the banking ecosystem to provide bank C-Suite officers, risk management, technology, and investment ideas and solutions to help them navigate risks and discover rewards. And now your host, Kelly Coughlin. Kelly: Hi, this is Kelly Coughln from the BankBosun. Hope everybody’s doing fine. I’m going to do an interview today with a deal guy. He’s with a law firm in Dallas, Texas. We’re going to talk about the types of deals that are getting done. Are they P&A deals? Are they stock deals? There are distressed deals out there, there are strategic ones, and what is he saying in terms of M&A activity in the banking sector. With that, we’ll get Peter Weinstock on the phone, from Hunton & Williams. Let’s talk about deals, Peter. I have kind of a basic question on general trends. In bad banking economies, it seems that we have a lot of P&A deals, where I think the seller is normally the FDIC, correct? Peter: Right. Kelly: We must have had a lot of those in 2008, 2009, possibly up to 2010. Peter: Yeah, I agree. For really almost a four, four and a half year period, there were more deals sold by the FDIC than there were private sector M&A transactions. Kelly: Then today, better economy, better banking environment, we don’t see many of those, correct? Peter: Very few. Kelly: Would you say that the number of P&A deals is a leading indicator, lagging indicator of economic conditions of banks in general? Peter: Yeah, it’s certainly a lagging indicator, just like capital as a protection is a lagging indicator because what tends to happen is asset quality issues or concentration levels or interest rate risk, some of those other factors, the metrics indicating those issues are becoming problematic kick in long before capital starts declining and capital starts declining generally long before or moderately before problem banks are looking to sell or the FDIC takes over. The number of P&A transactions, which again, we’re down to very few, are more reflective of the fact that the economy seemed to turn sometime in 2012 and we’ve had now three full years of, even though it’s not a great recovery, we’ve had some recovery. Kelly: How many P&A deals have we seen in three years? Peter: I think we’re only up to two so far this year, where we were, in 2009 through 2011, we were having dozens and in one of those years over one hundred bank deals. Kelly: The two this year, are they in, say, oil patch regions that are struggling economically or somewhere else? Peter: That’s an outstanding question because the answer is, it’s not. That’s not to say that the oil patch or the commodity price areas are not under stress. Certainly, the ag economy is under some stress, but again, it gets back to your first question about lagging indicators. The banks that are failing now are banks that have been circling around the drain for a long time now. They’ve been shrinking to maintain capital ratios, but they can’t get recapitalized because of the legacy assets that they have from the downturn, so we still have a significant number of banks that are undercapitalized and unless something happens, they could fail because they have elevated problem asset levels and those problem asset levels are what would bring them down. At December 31 there were 78 banks that were still somewhere undercapitalized or only adequately capitalized, which is down from, at one point, the problem bank list was over 600, but the 78 institutions that are adequately capitalized or worst, as of year end, are ones that are suffering from the last downturn, rather than the next one. Kelly: All right, you mentioned 78 that are undercapitalized. What’s the metric that you use? Peter: These are banks that are not well capitalized, so they’re adequately capitalized or lower, which is they have to have a leverage ratio of 5% in order to be well capitalized. Then you have the Basel III metrics. Right now, you’re talking about a total risk-based capital ratio of under 10% and total leverage ratio of under 5% to be adequately capitalized or, in that case, undercapitalized. It’s not an incredibly high bar that they’re not able to chin, so these 78, you would think that they would be able to recapitalize themselves, but the big challenge that they have is their elevated asset quality levels. Kelly: You have these 78 banks. Are brokers out there, investment bankers out there trying to get them to sell? You guys probably don’t do that. Lawyers don’t hustle for business like that, I don’t think, right? You’re not making cold calls? Peter: We’re purist, man. We would never do such a thing. I’m sure that all 78 of them have been shaking the trees and have talked to anyone and everyone who they think could be an avenue for capital and for addressing their problems, but at some point, if you’ve got capital of 5 million but you have problem assets of 15 or 20 million, at some point the numbers don’t make sense for an investor and that’s why these institutions are still on the list, some of them. Kelly: Let’s talk about the good side of the market, not the problem areas. Let’s say last year, you being a proxy for the market, how many deals were related to distressed banks and how many were for strategic acquisition reasons or market expansion? Peter: I would tell you the vast majority of them were strategic and few were problem bank acquisitions. What I mean by strategic isn’t necessarily that the seller was in great shape and they sold for a very high price. What we’re seeing is a number of sellers are kind of giving up the ghost because in this interest rate environment, with anemic loan demand, very competitive loan pricing, there are sellers that look at their compliance costs and their IT costs and their personnel costs and they’re saying, “We’re not big enough to do a deal. We’re not big enough to survive on our own and make our shareholders a fair return, so we need to look at doing something else.” The something else is not necessarily selling for cash and going on down the road. One of the biggest trend lines we’ve seen in the last two, three years, is the willingness of sellers to take illiquid stock, stock from a privately owned financial institution. Kelly: In the acquiring company. Peter: To take illiquid stock from an acquiring company, that’s another community bank like they may be, sellers are much more willing to do that than they ever have been before in my 30+ year career. I think the biggest driver of that is that on the operational standpoint, the challenges of being a bank are such that skill matters and then on the shareholder valuation standpoint, I think they recognize that this may not be the greatest pricing time to sell out, so they look at doing some kind of strategic combination to be part of a bigger, more profitable organization, even though the stock is illiquid. Kelly: Let’s say, in those situations where you’ve got a reasonably healthy bank, they see that if they don’t do something they might be in part of the 78 again, but they might go down that way, so they’re proactive. As a part of that, they have to lock up some of their good producers, right? Their good credit officers and those things. One of the thing we do in our business is help with non-qualified plan benefits to try to use that as a way to lock in good senior management. Do you see much of that going on as part of the deal criteria? Peter: It surprises me that more banks that are potential sales candidates don’t do more. In community bank America, it almost doesn’t matter how big you are, you’re a potential target. I’ll give you an example. One of my clients is a $5 billion bank in California and they merged with an $8 billion bank in December, they announced it. The reason is because our client, that’s $5 billion, felt that they needed to get bigger in order to compete. The $8 billion bank felt like they needed to be bigger to compete, so now they’re going to be $13 billion. If you’re not an $8 or a $5 billion bank, if you’re smaller than that, you might say to yourself, I don’t need to be bigger to survive, but my efficiency ratio sure as heck would improve if we got bigger. I would tell you that almost every bank is a candidate to be sold, they’re a candidate to buy and they’re a candidate to be sold. KPMG did a survey in 2014 and it indicated that over 50% of the banks thought they would engage in an acquisition, but 3% of banks thought they would sell. The numbers wound up in 2015 being something like 4.4% of all the banks sold. Every bank out there, it seems, is thinking about doing an acquisition, but every bank and community bank America is a potential candidate. A long way around to your question is because the banks are all potential merger candidates, then they really should look at putting in place protections for their employees and really locking them up, but when they’re doing that, they also need to think about not hurting shareholder value. The way you could hurt shareholder value is you provide some kind of agreement, let’s say a change in control agreement, that provides on a change in control the employee gets paid if they leave the bank. Now we hurt shareholder value because the buyer knows that they could lose that person because there’s an incentive for that person to leave. Really, it takes somebody like you to think through not just how to protect the person, not just how to lock them up, but also to do it in a way where it creates or at least preserves shareholder value because the buyer is not looking at that contract and saying that that contract harms me because I’m going to lose a valuable producer. Your question is a good one and I would even go further and I’d say what exists gets paid. If people want agreements to be in place, they need to put them in place because if they exist they’ll get paid, where if you wait until a potential acquisition, then what’s going to happen is the acquirer is going to say, “You can do that, but if you do that it comes out of the shareholder’s purchase price,” and I don’t think you want to be negotiating those types of agreements with another person with their elbows on the table. Kelly: I’ve got a lot of experience in other financial sectors like financial advisors and broker dealers and the common theme with them is you’ve got much more highly paid execs, but the notion that the assets go down in the elevator every day. It’s more or less the same thing with many banks and not locking them up one way or another in an acquisition, it always kind of surprises me. Let’s talk about surprises in an acquisition landmines. It seems to me that when we’re talking about banks that are not a huge footprint, a community bank that’s got 1 to 15 branches, isn’t it a fair statement to say that more of the acquirers or interested acquirers are going to be a current competitor of that bank and doesn’t that always present a bit of a due diligence challenge or problem, where you’re going to release sensitive, confidential information to your competitor? Peter: That is absolutely correct that that’s a possibility. The reason for that is because most financial institution mergers are driven by cost savings. Where do you get the most cost savings? In a market deal or an adjoining market deal. It is very likely the party that can pay the most is going to be an existing competitor. That absolutely presents challenges in terms of protecting your employees and your confidential information. Obviously you’re going to negotiate the heck out of the non-disclosure agreement, if that’s likely buyer, if you’re the seller. The other thing is you’re probably going to want to hold back on when you deliver information until there is an agreement on all of the relevant terms and then the due diligence becomes more in the way of confirming diligence than it does in terms of setting the price. You’ll release some key information, including whether there’s a termination fee as a result of the transaction on your data processing agreement, changing control agreements with employees, give all of that pricing type information, but you might hold back the loan review and the customer review until the deal is essentially set. Kelly: The customer name is withheld until the deal is a little more mature. Peter: We’ve also done it where you redact the customer names, but in an in-market deal it doesn’t take a lot of information for the buyer to know who that player is. Kelly: Yeah, right. Back to my other question that we started on. Surprises? Peter: I’d say the biggest surprise to buyers is that the seller’s compliance issues could infect them. I’ll give you an example. When MB Financial was acquiring Cole Taylor, Cole Taylor had a major compliance issue and the transaction was held up for about a year, while the regulators got comfortable with the resolution of that compliance issue. Similarly there have been a number of red-lining cases and BSA cases where the compliance issues of the target have held up the deal. I think that’s a surprise for a number of buyers because if you’re engaged in a potential transaction, you’re locked into that transaction. You’ve agreed to try to get that deal closed. If you wind up with an extended regulatory approval time period, that could prevent you, preclude you from going after a deal that becomes available six months, a year later that might be a better deal for you. Similarly for sellers, even in cash deal, if there’s a surprise that the buyer’s compliance issues can be such a hold up and what we’ve seen is we’ve seen AML, BSA, KYC issues that have held up approval of deals for two or three years in UDAP and some other consumer compliance issues that similarly have held up deals. As a seller, you have to perform some reverse due diligence, some extensive reverse due diligence on the buyer, even in the transaction that’s a cash deal. For a lot of sellers, that’s a surprise to them. Kelly: Do regulators hold up the deal or does the buyer intentionally hold that up? Peter: Generally it’s the regulators because from the buyer standpoint, they become aware of the issue and they adopt a plan of remediation for the issue. It’s one thing for a private sector party to get a handle on an issue and have a plan of remediation and feel good that they can implement it. It’s a whole other thing for an agent, say, to get their arms around it in a time frame that seems reasonable. The Federal Reserve has two analysts in Washington who handle compliance issues with regard to applications. Kelly: The buyer would just haircut the valuation. At the end of the day it’s a contingent liability, right? They would just haircut the valuation on it. Peter: If it’s a known risk and it’s one that they have presumably priced in. If it’s not a known risk and they become aware of it, then they may go back to the seller and say, “We’ve got all of these costs related to it, we need to reduce the price,” or if it’s significant enough, they could decide to walk the transaction. Kelly: In terms of surprises, known compliance issues and I suppose the ‘know what you don’t know,’ whatever that term is. You know those issues, it’s the unknown compliance regulatory issues. Any ideas on pre-detecting, early detection of those things? Peter: That’s really you just have to engage in some pretty thorough diligence of the other party to really understand where the risk areas are. Kelly: I suppose you look at their internal controls and their timely filings or substantiation and all of those things on the control structure. Peter: You do. Something that I like looking at as a starting point for diligence is nowadays banks have to do risk assessments. Seemingly a banker can’t walk out doing a five-page risk assessment. Those risk assessments are the other party’s self-confessing, if you will, where they see their own challenges or concerns. The beauty of that for the other party is that gives them a roadmap of things to look at in diligence. Kelly: I was director of risk management for asset management subsidiaries of Lloyd’s Bank out of London, and this was many, many years ago. Regulatory issues and compliance back then just didn’t quite get the importance. They actually did in the UK, but things have ramped up in the US quite a bit, that it’s probably more on par with what it was with the British banks back then. Peter: If you parachuted back, if you were Mr. Peabody and you got in the Wayback Machine and went back to 2000 and you had a full-time, dedicated BSA officer, and how many banks had full-time, dedicated compliance offer and how many banks had a full-time, dedicated risk officer, and how many banks had a full-time, dedicated IT person, and you compare those numbers to the way they are now, it’s just shocking. The bigger the acquisition, the more you want to look at areas that you might not want to spend the money on if you’re a smaller institution. In a bigger deal, you absolutely want to evaluate IT exposures and make sure that there have not been or in place potential breaches. Kelly: Why don’t you give us parting thoughts you’d like to give. Speak to both buyers and sellers. Peter: One thing we’re seeing for banks that may not want to be a seller is there is a lot more activism. We had six private banks in the fourth quarter that had proxy sites, tender offers. One even had a TRO, a temporary restraining order, filed against them. That’s continued in the first quarter of 2016. One thing is to put in place protections and recognize that your risks can be from your existing shareholder base or people who buy in. The world’s awash in money and people out there know if they could buy stock of a bank at eight-tenths of book or book and then wrestle control of the board and get control, then the bank on the sale might be worth book and a quarter or book and a half, book seven, where they could potentially even more than double their money, buy the stock and flipping it in a control situation. We’re seeing activism creeping down into the community bank, into the private bank sector, and that’s something clearly you want to watch. Kelly: You’re not talking political and social activism. You’re talking about business acquisition, venture capital, investment activism. Peter: Absolutely. We’re talking shareholder activism. Then just another thing that we’ve seen on the buyer’s side is buyers tend to be most focused targets who are of sale who sent them books. We talked about some of the compliance challenges of the application process. Just because somebody sends you a book and the book says, “We’re for sale,” doesn’t mean that they’re the greatest candidate for you to buy. What you want to be careful about is being locked up on a deal in the regulatory process that is somebody who doesn’t really move the needle for you. It’s got something that obviously is worthwhile, but maybe it’s really not consistent with your strategic focus. We’ve seen potential buyers almost shift their strategic focus just because an investment banker sends them a book on a potential target. Kelly: Two good points. I always like to finish with two things: Your favorite quote and the stupidest thing you’ve either said or done in your business life. Peter: There are a lot of the latter. Upon the former, I like the Warren Buffet quote, which it really resonates when you’re talking about shareholder activism. He said, “I prefer to manage my business for the shareholders who want to stay in and not the ones who want to get out.” I may be paraphrasing it, but that’s the thought. I like that quote a lot because that’s actually directors of the bank. Those are the people they have a duty to. The second one is the stupidest thing I’ve ever done in my career? Kelly: Yes. Peter: One thing that I learned a long time ago not to do is something that’s emotionally gratifying because in business it almost always is a bad decision. Early on in my career I would get testy with regulators and that’s never a good strategy. Gray hair and maybe even the loss of hair and some experience, I’ve learned the wisdom of working together with regulators a lot more than trying to beat them up. Kelly: Can you recall one that you said something to? Peter: I remember when I was a third-year lawyer, I went to a meeting with the Federal Reserve and I’m not exactly sure what I said at the point, but this person with the Federal Reserve got up and it wasn’t quite Nikita Khrushchev banging his shoe on the table, but he was animated. Kelly: All right, Peter. Thank you very much. I appreciate your time. I wish you the best. We want to thank you for listening to the syndicated audio program, BankBosun.com The audio content is produced by Kelly Coughlin, Chief Executive Officer of BankBosun, LLC; and syndicated by Seth Greene, Market Domination LLC, with the help of Kevin Boyle. Video content is produced by The Guildmaster Studio, Keenan Bobson Boyle. The voice introduction is me, Karim Kronfli. The program is hosted by Kelly Coughlin. If you like this program, please tell us. If you don’t, please tell us how we can improve it. Now, some disclaimers. Kelly is licensed with the Minnesota State Board of Accountancy as a Certified Public Accountant. Kelly provides bank owned life insurance portfolio and nonqualified benefit services to banks across the United States. The views expressed here are solely those of Kelly Coughlin and his guests in their private capacity and do not in any other way represent the views of any other agent, principal, employer, employee, vendor or supplier of Kelly Coughlin.

Conditions Have Improved, Banks Still Face Certain Indirect Risks

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