DFI Monthly Bulletin – October 2008
Volume 12, Number 4
Deadlines Approaching for Capital Purchase, Temporary Liquidity Guarantee Programs
On October 14, 2008, the U.S. government announced a series of initiatives to strengthen market
stability, improve the strength of financial institutions, and enhance market liquidity. The U.S.
Department of the Treasury announced a voluntary Capital Purchase Program to encourage U.S.
financial institutions to build capital to increase the flow of financing to U.S. businesses and consumers
and to support the U.S. economy. Under the program, Treasury will purchase up to $250 billion of
senior preferred shares on standardized terms. The deadline for submitting applications to participate in
the Capital Purchase Program is November 14, 2008.
The Federal Deposit Insurance Corporation (FDIC) Temporary Liquidity Guarantee Program will
guarantee certain newly issued senior unsecured debt of banks and certain holding companies and will
provide full coverage of non-interest bearing deposit transaction accounts regardless of dollar amount
for a period of time. Participants will be charged a 75 basis point fee to protect their new debt issues,
and a 10 basis point surcharge will be added to a participating institution’s current insurance assessment
in order to fully cover the non-interest bearing transaction accounts. Institutions that choose not to
participate in deposit program must opt-out or be assessed their participation after the initial 30 day
period is over.
On November 3, 2008 the FDIC announced that it has extended the opt-out deadline for participation in
its Temporary Liquidity Guarantee to December 5, 2008. The original deadline was November 12.
The Department of Financial Institutions strongly encourages all eligible licensees to seriously consider
using the Treasury Department’s Capital Purchase Program. We at DFI recognize that each bank’s
circumstances are different and that accepting government capital through this program comes with
some costs. However, we urge you to think carefully about possible future economic conditions when
making a decision about your participation in this program. None of us knows what the future may
hold, but it is certainly a good time to be cautious about your future capital condition. The Treasury
program must be thought of as a one time offer.
2 Monthly Bulletin October 2008
With respect to the Temporary Liquidity Guarantee Program, the guarantee of unsecured debt involves a
cost that each bank must evaluate on its own. However, any bank that is interested in attracting and
retaining business relationship accounts should strongly consider the benefits of having full coverage of
non-interest bearing deposits. Community banks have had a difficult time competing with large
institutions for these types of relationship-based accounts in recent years, and this program should
improve the balance.
Governor Schwarzenegger Announces the Deputy
Commissioner of Credit Unions
Governor Arnold Schwarzenegger announced on October 24, 2008 the appointment of RaAnn Wood as
the Deputy Commissioner of Credit Unions at the Department of Financial Institutions. Since 2004, she
has served as president and chief executive officer of the California Center Credit Union. Prior to that,
Ms. Wood worked as the professional networks manager for the California Credit Union League from
1997 to 2004. From 1993 to 1997, she was a mortgage loan compliance officer for Provident Savings
Bank and, from 1986 to 1993, Ms. Wood was the assistant vice president of training and compliance for
Heritage Thrift and Loan. She is a member of the Rancho Cucamonga Chamber of Commerce and
serves as vice president and small credit union advocate for the Mount Baldy Chapter of the California
Credit Union League.
Highlights of 2008 State Chaptered Legislation
Attached is HU2008 State Chaptered LegislationUH. This summary is a compendium of most but not all of the
legislation that may have an impact on financial institutions. There is a brief description of each
measure with a link to the chaptered version of that legislation.
We hope you find the “Highlights of 2008 State Chaptered Legislation” to be a productive tool. We
encourage any suggestions you may have to improve its usefulness to you and your organization.
SAFE Act Requires Registration of Employees that
On July 30, 2008, the President signed into law the Housing and Economic Recovery Act of 2008 (the
“Act”). Title V of the Act is the Secure and Fair Enforcement for Mortgage Licensing Act of 2008
(“SAFE”). Among its other provisions, SAFE contains new requirements on licensees of the
Department that originate residential mortgages.
Starting July 30, 2009, licensees that employ persons who are considered mortgage loan originators will
be responsible for ensuring that those employees are registered with the National Mortgage Licensing
System Registry (the “NMLSR”). The NMLSR is a state-sponsored licensing and registration system
that is intended to provide a nationwide data base that will allow employers and consumer to research
the background of loan originators with whom the employer or consumer is conducting business. To
learn more about SAFE and the NMLSR, please HUclick hereUH.
3 Monthly Bulletin October 2008
Details of the registry system and requirements affecting all participants in the program are still being
finalized. As developments occur, the Department will provide updates to our licensees. If you have
any question regarding this matter, please contact Marilyn Davis, Deputy Commissioner, Legislation, at
916-322-1571 or at HUmdavis@dfi.ca.govUH.
NASCUS to Host Webinar on Form 990
State-chartered credit unions (SCUs) are required to file Form 990, Return of Organization Exempt
From Income Tax. In an effort to enhance transparency and promote compliance, the Internal Revenue
Service has completely redesigned Form 990 beginning with the 2008 filing year.
The National Association of State Credit Union Supervisors (NASCUS), in cooperation with state
regulators has organized training for SCUs on completing the revised Form 990. On November 19,
2008, Kevin Fincher, Clifton Gunderson, LLP will help SCUs gain an understanding of the new Form
990 and its filing requirements.
The webinar will include discussion on compensation reporting, new management and
governance disclosures and an update on additional reporting requirements. Even if your credit union
still participates in a group filing, this information will be useful in understanding the new information
your credit union will be required to disclose this year.
Registration is $59 for NASCUS members, $39 for small credit unions with assets under $10 million
and $119 for nonmembers. HUClick here to registerUH.
Commercial Bank Activity
UAcquisition of Control
CapGen Capital Group II LP and CapGen Capital Group II LLC, to acquire control of Pacific Western
UPurchase of Partial Business Unit
Ojai Community Bank, Ojai, to acquire certain branches of Pacific Capital Bank, N.A., Santa Barbara
UChange of Name
The Mechanics Bank, Richmond, to change its name to Mechanics Bank
4 Monthly Bulletin October 2008
Industrial Bank Activity
UConversion to State Charter
CapitalSource Bank, Pasadena, to convert to state-chartered commercial bank
Premium Finance Company Activity
UNew Premium Finance Company
Integrity Premium Finance Corporation
8530 La Mesa Boulevard, La Mesa, San Diego County
UAcquisition of Control
NSK Enterprises to acquire control of Fulcrum Capital Strategies, Inc.
UVoluntary Surrender of License
Mid-America Premium Finance Company West
Foreign (Other State) Bank Activity
Nevada Commerce Bank
City of Folsom, County of Sacramento
Credit Union Activity
UField of Membership
One credit union received approval to add one new field of membership during September 2008.
5 Monthly Bulletin October 2008
Embarcadero Federal Credit Union, San Francisco, to merge with and into 1st Pacific Credit Union,
M-N Employees Credit Union, San Jose, to merge with and into Star One Credit Union, Sunnyvale
Transmitter of Money Abroad Activity
UAcquisition of Control
Thomas H. Lee Partners, L.P., to acquire control of MoneyGram Payment Systems, Inc.
WILLIAM S. HARAF
Commissioner of Financial Institutions
Bulletin for Month ended
October 2008, issued pursuant
to Financial Code section 258
The Monthly Bulletin is available without charge via e-mail. To subscribe, go to HUhttp://www.dfi.ca.gov/bulletin/subscription/public.aspUH. To
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