BANK COMPLIANCE ASSOCIATION REGULATORY UPDATE

1. BANK COMPLIANCE ASSOCIATIONREGULATORY UPDATE December 15, 2011 By David J. Wiese Hinckley, Allen & Snyder LLP 20 Church Street Hartford, CT 06103 (860) 331-2714 dwiese@haslaw.com

2. Let’s Start With The New Regulator That Will Shape The Future of the Financial Services IndustryThe Consumer Financial Protection Bureau (the “Bureau”) • July 21, 2011 Transfer Date • Bureau Comes To Life • Inherits Rulemaking & Enforcement Power With Respect to Many Existing Consumer Compliance Regulations • New Supervisor for Banks Over $10 Billion • Trickle-Down Impact on Smaller Banks • New “Cop on Beat” For Other Institutions • Nondepository Lenders & Brokers? • Direct Education Lenders, Payday Lenders and Other “Large Market Participants” • New Enforcement Powers With Respect to UDAAP • Until Director is Confirmed by Senate, Many Powers Are Limited

3. Developments With The Bureau • Elizabeth Warren Steps Aside • Raj Date Appointed to Lead Bureau in Interim • President Obama Nominates Richard Cordray on July 24 • Former Ohio Attorney General • Senate Republicans Pledge to Fight Confirmation Unless Bureau Structure is Reformed • Senate Banking Committee Approved Nomination on October 6, But Full Confirmation Has Since Been Delayed • Will We See Something Before Next Election? • Impact on Bureau’s Agenda

4. Developments With The Bureau (cont.) • Elizabeth Vale – Assistant Director For Community Banks and Credit Unions • Rumors? • “Know Before You Owe” Project • First Phase – Development of Combined Initial TILA and GFE Form Still Ongoing • Second Phase Announced November 8 – Combined Final TILA and HUD-1 • Official Publication of Proposal Required by July 21, 2012

5. Developments With The Bureau (cont.) • Bureau Requests Information on Products Offered to Servicemembers (September 6) • Knowledge Base to Inform Bureau As It • Develops Education and Outreach Initiatives • Monitors Consumer Complaints • Develops “Other Consumer Protection Measures” • Coincidentally, DOJ Submitted Legislative Proposals to Congress (on September 20) Regarding Servicemembers • Would Strengthen SCRA (including increased penalties) • Would Also Strengthen Fair Lending Enforcement Under FHA and ECOA

6. Developments With The Bureau (cont.) • First Edition of the Bureau’s Supervision and Examination Manual Released (October 13) • Incorporates Many of the Exam Procedures Developed by FFIEC For Transferred Consumer Compliance Laws (TILA, RESPA, etc.) • New Exam Procedures For Entities Conducting Mortgage Servicing Activities • Recites Statutory Prohibition Against “Abusive” Practices • But Bureau Cannot Engage in Rulemaking On This Topic Until Director Appointed • Will the Bureau Develop Interpretations Through Enforcement (and Circumvent the Administrative Protections Afforded by the Rulemaking Process)?

7. Developments With The Bureau (cont.) • Bureau Seeks Comments On Proposed Information Collection Process (November 2) • Information to Be Collected to Provide Qualitative Feedback on Disclosures and Model Forms • Bureau Requests Information on Private Education Loans (November 16) • Report Due to Congress Next Summer • Federal Agencies (Including Bureau) Issue Joint Statement on Their Respective Roles in Enforcing Federal Consumer Financial Laws (November 17) • Includes Clarifications on When and How to Calculate Total Assets For Purposes of $10 Billion Threshold

8. Developments With The Bureau (cont.) • Bureau Requests Information on How to Streamline Regulations (November 29) • Dodd-Frank Calls for Bureau to Reduce Outdated, Unnecessary and Unduly Burdensome Regulations • Bureau’s Notice Seeks Comments On • What Are the Highest Priorities? • Specific Opportunities For Streamlining? • Bureau Will Soon Begin to “Republish” Inherited Regulations • Limited to Conforming and Technical Changes

9. Developments With The Bureau (cont.) • Bureau Publishes Interim Report on Credit Card Complaints (November 30) • First Report Based on New Centralized Complaint System (Using Complaints From July to October) • Customer Confusion Continues to Be Evident • But Many Complaints Resolved By Issuers • At the Same Time, Bureau Publishes Proposed Policy Statement on Sharing Complaints Through Public Databases • Personal Data to Be Excluded • But Would Include Name of Issuer • Data Could Be Searched, Filtered, Aggregated and Downloaded • Available to Your Customers, Consumer Groups, the Media, etc. • Creditors Would Have 30 Days to Respond Before Complaint Information Is Added to Database

10. Developments With The Bureau (cont.) • Bureau Begins Collection of Complaint Information Regarding Home Mortgages (December 1, 2011) • Also Announces That It Will Be Prepared to Handle Complaints For All Products By End of 2012 • Bureau Issues Two-Page “Prototype” Credit Card Agreement (December 7) • To Be Tested by Pentagon Federal Credit Union • Bureau Establishes Ombudsman Office (December 8)

11. Other Concerns Related To Transfer of Power to Bureau • In Two Years Leading Up to Transfer Date, Fed, HUD and Other Agencies Rush to Design and Implement Many New Rules, Including • RESPA Reform • TILA • Credit Card Rules • New Open-End Disclosures and Substantive Protections • Mortgage Transfer Notices • Escrow Requirements for Jumbo Mortgages • New MDIA Tables in Fed-Box Disclosures • Higher Limits for TILA Exemptions • New Appraiser Independence and Compensation Rules • New MLO Compensation Restrictions • Plus Several Other Massive Reform Proposals • FCRA (Adverse Action and Risk-Based Pricing Notices) • Overdraft Protection “Guidance” and “Opt-In” Requirements • Just to Name a “Few”

12. Other Developments Related To Transfer of Power to Bureau (cont.) • Transition to Bureau Leaves Industry Hanging on Hundreds of Unanswered Questions and Concerns • Informal Interpretations By Agency Staff Are Numerous • But Lack Reliability As a Matter of Law • And Uniformity is Often a Problem • Migration of Agency Staff to Bureau • Will the Bureau Have the Same Interpretations? • When Will the Bureau Respond? • Problem Illustrated With MLO Compensation Rules • Rules Arise Out of Power to Prohibit Unfair and Deceptive Acts (So Uncertainty Involves Significant Compliance Risk) • Bonuses and Benefit Program Concerns Highlighted by ABA • Also Note That CSBS and AARMR Published Guidelines For State Examiners to Use When Examining Nondepository Originators and Creditors for MLO Rule Compliance (October 1)

13. Anticipating July 21st Effective Date Under Dodd-Frank • HUD Publishes “Technical and Clarifying” Amendments to RESPA’s Regulation X (July 11) • FTC Publishes FCRA Staff Report and Summary of Previous Interpretations (July 20) • Staff Commentary Repealed • OCC Publishes Final Rule to Implement Assorted Dodd-Frank Provisions • Addresses OCC’s New Role as Regulator of Federal Thrifts (Replacing OTS) • Revises OCC Rules on Preemption and Visitorial Powers

14. Other Developments • SEC Publishes Guidance on Disclosure of Cybersecurity Risks by Public Companies (October 13) • U.S. Supreme Court Agrees to Hear RESPA Section 8(b) Case (October 11) • Federal Agencies Publish Revisions to Flood Insurance Q&A’s (October 14) • Allows Different Methods For Identifying Replacement Cost Value • Discusses Delays During 45-Day Period • Also Proposes Several New Interpretations

15. Other Developments (cont.) • Occupy Wall Street Prompts Bank Transfer Day • North Carolina Congress Introduces “Freedom and Mobility Banking Act” • Vendors Respond With Technology Solutions • Retailers Sue the Fed Alleging That Fed Overstepped Rulemaking Authority With Interchange Fee Rule (November 22) • FTC Issues a Final Rule on Mortgage Advertisements (July 19)

16. Concluding Remarks • Question & Answers