Too many banks in the last financial crises fundamentally misunderstood or did not pay attention to structural subordination risk. We feel that this pattern is partially repeating at some banks today. Further, most banks overestimate the amount of credit support that can be recognized across corporate entities and individual sponsors, and this leads to misguided lending practices. We want to explain where banks can buttress their credit underwriting when dealing w
Tag: Legal Risk
Last month’s Consumer Financial Protection Bureau (CFPB) study combined with the Wells Fargo account opening fraud and Friday’s public letter from six senators will cause many banks to rethink arbitration clauses in their account documents. While banks argued for decades that arbitration clauses are a common commercial practice in the U.S. and benefit customers to settle conflict quickly and inexpensively than going to court, the CFPB is about to argue that it helps hide wrongdoing while denying fundamental legal rights.
Congress just gave banks a lump of coal for Christmas and it is not being received well. Last week the Senate failed to extend the Terrorism Risk Insurance Act (TRIA) which means that this December 31st will be the last day of coverage. This government-sponsored reinsurance program put in place after 9/11 allowed property owners and lenders to cover catastrophic losses (those above $100k) from an event of terrorism such as a bombing, biohazard attack or similar.
You can ignore banking law, but it is a life force that is always around us, everywhere, all the time – just like Ryan Seacrest. Similar to that hard working celeb, banking law, particularly as it pertains to commercial lending, really came into its own during the downturn. It seemed like every loan had an issue.