Fall 2012
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Leadership Message

Nikki Munro
Vice Chair
Consumer Financial Services Committee

Dear CFSC Members:

Please allow me to introduce myself. My name is Nikki Munro and I serve as Chair of the ABA Business Law Section's Consumer Financial Services Committee (CFSC). Together with my Vice Chairs Jim Brown, Tom Buiteweg, and Andrew Smith, I welcome you to participate in committee activities. The CFSC has a lot to offer, and by actively participating and encouraging your colleagues to participate, you can get the most out of your CFSC membership.

There are many opportunities to help you get the most out of your CFSC experience, but we think the best way to get involved is to join the over 130 committee members at one or more of the three CFSC off-site meetings a year.

Each January, we have a stand-alone meeting of just the CFSC. From Saturday evening through Tuesday afternoon, we provide over 12 hours of substantive CLE accredited programming lead by the country's brightest and most accomplished consumer financial services lawyers. The lawyers represent consumers, the industry, the government, the bench, and academia. We foster lively discussions on the most relevant topics in today's fast paced and constantly evolving world of consumer financial services law.

The winter meeting typically alternates between a ski venue and a golf venue. This year our CFSC stand-alone meeting will be at the LaPlaya Beach and Golf Resort in Naples, Florida from January 5th through January 8th.

During the Spring, we meet with the ABA's Business Law Section. In addition to the substantive consumer financial services CLE programming, and the collegiality of the Winter Meeting, at this meeting, we often partner with other Business Law Section Committees, such as Banking Law and Cyberspace, to expand the educational and networking opportunities for CFSC lawyers. The Spring Meeting includes both substantive subcommittee meetings and three to four consumer financial services focused CLE programs. These CLE programs are supplemented by the many CLE programs offered by other committees within the Business Law Section.

Our third meeting occurs in late summer when we meet with the entire American Bar Association. In 2014, we'll transition to a late summer early fall meeting with just the members of the Business Law Section within the ABA. By transitioning out of the ABA Annual meeting and conducting another Business Law Section meeting, we will be able to retain the more focused spring meeting atmosphere.

At all of our meetings, we strive to create panels made up of diverse lawyers with diverse practices and perspectives. We welcome new lawyers into our committee through participation in our young lawyer's subcommittee activities and panels, mentoring programs, and as young lawyer liaisons to subcommittee leadership. Our goal is to provide educational and participation opportunities to lawyers who have been practicing for many years and those just entering the practice.

In addition to the tremendous educational opportunities, the meetings also provide client and colleague development time, and fun activities. Whether you attend a committee dinner, golf with your colleagues and friends, or ski with your clients, you are sure to enjoy the time outside the conference room as much as your time inside of it.

To get the most out of your CFSC membership, come join us for a great education and good times with good friends. You will not regret it.

If you have any questions about the upcoming meetings, or would like to participate more in the committee, please feel free to call or email me.

Nikki Munro
Consumer Financial Services Committee

Meeting Promos/Postcards

Naples in January - The Best Way to Start the New Year

Please join us at the beautiful La Playa Beach & Golf Resort in Naples, Florida from January 5-8, 2013 for the CFSC Winter Meeting. We start with the "Beer and Basics" program on Saturday, January 5, at 4:00 pm. Our Welcome Reception will follow at 6:30 pm.

Sunday, we start bright and early at 7:30 am, kicking off 3 very full mornings of excellent programming, packed with CLE credit, and all focused on current consumer financial services issues.

Don't miss out on the highly anticipated Committee Reception and Dinner Sunday evening at Roy's Hawaiian Fusion, starting at 7:00 pm.

Excellent timely programs, a beautiful setting, the opportunity to network with friends and colleagues, meet new people, and discuss important topics of the day. What better way is there to start a bright new year?

See you in Naples!

Sweet Home Chicago - The CFSC Gets the Blues!
By David Melcer, Bass & Associates P.C.

The ABA had the wisdom to host its annual meeting in Chicago this summer, which gave us the opportunity to enjoy a unique music form, Chicago Blues. While the blues grew up in the south, it wasn't until the blues musicians moved north and electrified it, that it became the music that we know today, and the music form that gave birth to rock and roll. That transformation took place largely in Chicago, and the musicians that pioneered it are the household names that people think about when they think about the blues. Luckily for us, the musical descendants of Muddy Waters, Howlin' Wolf, and Sonny Boy Williamson (I and II) are alive and well in the windy city, and on August 2, those members of the committee with enough foresight to have bought tickets were treated to some of that original product at clubs that are definitely non-tourist, and the most representative of the kinds of places that spawned the blues.

Boarding the bus after an open bar reception for a warm-up, our pub crawlers soon pulled up at The Water Hole Lounge, located in a vintage building on Chicago's west side. At The Water Hole, we were treated to an up and coming blues band touring from the south, which had definite Chicago chops. Featuring a lead guitarist who reeled off classic blues riffs, we were rocked with some traditional and new blues tunes. The club itself is definitely representative of the traditional Chicago blues club, and the atmosphere provided a great environment for the music. Unfortunately, far too soon, our host gathered us up for our trip to our second, and best, blues club.

Rosa's Lounge in Chicago (the weekend hangout for many years of yours truly) has a fascinating story. Many years ago, an aspiring blues drummer in Italy by the name of Tony Mangiullo met the blues legend Junior Wells who was on an international tour. Junior liked the young fellow and told him that if he ever came to Chicago, he should look him up. Tony got on the next plane after Junior and was soon at his door. Working odd jobs, Tony saved up enough money to buy an old building with a bar in it, sent for his mother (Mama Rosa) to help him out, and Rosa's was born (your author was at opening night). Since then, Rosa's has been named as Chicago's best blues club by such notable publications as the New York Times and Rolling Stone.

When we arrived at Rosa's, we were treated to one of the remaining old time Chicago blues musicians, James Wheeler. Having played with such notables as Billy Boy Arnold, Otis Rush, and Magic Slim, James treated us to traditional Chicago Blues at its finest. Additionally, we were able to soak up the ambiance of Rosa's. Those who had the opportunity to talk with Tony or to meet Mama (still tending bar at an indeterminate advanced age) were able to understand why Rosa's bills itself as Chicago's friendliest blues lounge. Unfortunately, that time also ended too soon and we had to board the bus back to the hotel.

Hopefully everybody that attended was able to get a flavor of the real Chicago Blues. I would like to thank our host Steve "MrBIG" Pasek of BIG Productions in Chicago, who has been organizing successful blues tours and club crawls for many years. For those of you who were not lucky enough to snag a ticket, Steve does do private tours on a small and even individual scale, so if you are ever in Chicago and have an evening free, I would commend you to his care. He can be reached at http://www.chicagobluestour.com/index.html. Thanks to everyone who had the opportunity to experience the authentic Chicago.

CFSC Pro Bono/Community Service

"JA in a Day"
By John DiNome, ReedSmith

In May 2012, a team of volunteers from Reed Smith's Philadelphia office visited John L. Kinsey Elementary School, a pre-K through 8th grade elementary school located in the West Oak Lane section of Philadelphia, to participate in the "JA in a Day" program through Junior Achievement of Delaware Valley. Junior Achievement is a nationwide nonprofit organization that provides business, economic and life-skills programs to enhance the education of young people. "JA Day" is a one-day presentation of Junior Achievement's programs to various grade levels, and gives volunteers the opportunity to spend the majority of the school day interacting with students.

The Reed Smith team, consisting of partners Len Bernstein and John DiNome, associates Valerie Eifert, Georgee Thevervelil, Maria Guerin, Cassandra Matos, Melissa Wojtylak, and Sonia Shariff, and marketing coordinator Julie Maher, spent the day at the school teaching lessons ranging from financial literacy to the global marketplace to students in 3rd through 8th grades. The day was a great success and the team looks forward to future partnership opportunities with the school.

CFSC Constituents

CFSC Welcomes New Ambassadors and Fellows
By Soyong Cho, K&L Gates LLP

The Fellows, Ambassadors and Diplomats ("FAD") program promotes diversity within the Business Law Section by actively recruiting young lawyers (Fellows), lawyers of color (Ambassadors), and lawyers with disabilities (Diplomats). The program offers meaningful opportunities to actively participate in the substantive work of the Section and the Committee to which a FAD is assigned by contributing financial assistance to attend ABA, Section, and Committee meetings and by assigning Committee and FAD mentors. Each year, the Section selects up to five Fellows and up to five Ambassadors. Every other year, the Section selects one Diplomat. Each FAD class serves a two-year term.

To date, the Business Law Section has sponsored 67 Fellows, 61 Ambassadors, and 5 Diplomats. The program has proven to be successful in retaining and developing diverse attorneys, as 75% of former FADs are active Section members and 40% currently hold leadership positions. Read More...

Roland Brandel: Join the Navy, See the World-and then Advise the Inventors of Mastercard!
By Rachel F. Marin, Maurice & Needleman, P.C.

You might be surprised to know that Roland E. Brandel, a former chair of the ABA Consumer Financial Services Committee, achieved few leadership positions in his early years of high school and college. Today he is a prominent figure in the world of consumer financial services, serving as Senior Counsel at Morrison & Foerster and the first chair of its financial services group. But, Brandel remained in the shadows until his life-changing service in the United States Navy. Join the Navy, see the world-and then advise the inventors of MasterCard!

During his formative years, Brandel had minimal time and inclination to pursue school activities, or even academics, seriously. He worked an after-school job all the way through high school, preventing him from playing a very active role in school clubs. Of note, he was the first member of his family to finish high school, much less college. After undergraduate school, during which he also worked, Brandel was commissioned as an active duty naval officer. His leadership skills began to be inculcated, emerge and evolve. As an officer, he was repeatedly expected to develop and exercise those leadership skills. During one deployment what he refers to as a "serendipitous occurrence" took place. Brandel was a line officer (a designation for those who exercise general command authority) and assigned to the then newest attack aircraft carrier in the Navy, the USS KITTY HAWK, which was being built in Camden, New Jersey. Read More...

Subcommittee Spotlight

Privacy Subcommittee
By Adam Maarec, McIntyre & Lemon, PLLC

The Privacy Subcommittee, led by Chair Obrea Poindexter of Morrison & Foerster and Vice Chair Peter Gilbert of Capital One, focuses on the most challenging information privacy issues facing consumer financial service companies. Following the Consumer Financial Protection Bureau's issuance of its final rule identifying "larger participant" credit bureaus, we discussed the agency's impact on various compliance issues, including interpretations of the Fair Credit Reporting Act, at the ABA Annual Meeting in Chicago this Summer. The consumer privacy regulatory landscape is rapidly developing as consumer finance companies adjust to new rules, federal supervision for the first time, and enforcement by a new regulator.

Join us this January at the winter meeting in Naples, Florida for privacy updates from Andrew Smith of Morrison & Foerster and Doug Smith, Assistant General Counsel of Capital One. They will focus on the FCC's revised Telephone Consumer Protection Act (TCPA) regulations requiring prior express written consent to make autodialed and prerecorded telephone calls, the TCPA's application to SMS and text messages, and recent TCPA developments in litigation.

Internet Delivery/Electronic Banking Subcommittee
By Crystal Gray, Hudson Cook, LLP

The Internet Delivery/Electronic Banking Subcommittee is chaired by Veronica Kristine McGregor of Jones Day, with vice chairs Eric Johnson of Phillips Murrah and Mark Furletti of Ballard Spahr, LLP, and young lawyer liaisons Tara Potashnik of Venable, LLP and Crystal Gray of Hudson Cook, LLP. The subcommittee is focused on regulatory and legal developments related to electronic banking.

In the past, the subcommittee has presented panels on developments in mobile wallets and stored value cards, two areas that have seen substantial growth as the consumer shifts from brick and mortar shopping and banking to online and mobile options. With the changes in the market, the importance and convenience of electronic banking is gaining momentum and many of the leaders in the consumer financial services industry, from credit card companies to banks, have capitalized on electronic banking in hopes of gaining an edge on the competition and staying ahead of the curve.

We look forward to the Winter Committee Meeting and providing CFSC members with a glimpse into the electronic banking world and the regulatory and legal developments it has to offer with a panel on The Latest Developments in Mobile Banking and Commerce and Tips for Handling the Mobile Banking and Commerce Applications Your Clients are Starting to Use.

CFSC Legal Feature

Fair Lending Enforcement a Top Priority for Regulators
By Alexis A. Amezcua and Thomas J. Noto, Morrison & Foerster LLP

Recently, the DOJ and federal regulators have placed a renewed emphasis on fair lending enforcement and have taken an expansive view of what the fair lending laws require. The Supreme Court is poised to weigh in on whether a preferred theory of liability-disparate impact-remains a viable option. In the meantime, the trend continues to be an increase in the level of enforcement, and, increasingly, enforcement based on a disparate impact theory of liability.

Two federal statutes govern fair lending in the mortgage context: (1) the Equal Credit Opportunity Act (ECOA), 15 U.S.C. §§ 1691, et seq.; and (2) the Fair Housing Act (FHA), 42 U.S.C. §§ 3601, et seq. Both ECOA and FHA prohibit discrimination on the basis of race, color, religion, sex, marital status, or national origin. 15 U.S.C. § 1691(a)(1); 42 U.S.C. § 3605. Read More...

Pennington Decision Provides Support for Mortgage Companies in HAMP Cases
By Harry N. Arger and Brett J. Natarelli, Dykema

The Fifth Circuit's recent decision in Pennington v. HSBC Bank, 2012 WL 4513333 (5th Cir. Oct. 3, 2012) perhaps signals what will become the dominant trend in the next generation of cases alleging mortgage servicers failed to provide loan modifications under the Home Affordable Modification Program's ("HAMP") Trial Period Plans ("TPP"). The Fifth Circuit joins the Eleventh Circuit (and arguably the Seventh Circuit) in rejecting the argument, often advanced by borrowers' counsel, that TPPs promise a permanent modification regardless of eligibility for HAMP. The Seventh Circuit's decision in Wigod v. Wells Fargo, 673 F.3d 547 (7th Cir. 2012), was the first Circuit decision to address the issue and is believed by borrowers' counsel to open the door to HAMP TPP claims. However, Wigod left unanswered what the TPP actually promises. The Fifth Circuit's decision in Pennington now answers those questions.

The Typical HAMP TPP case

The HAMP TPP case has become, like TCPA or FACTA cases, something of its own genre. In the typical case, a borrower in default (or close to it) on his mortgage loan applies for a loan modification through his mortgage servicer. Then the mortgage servicer evaluates the borrower for qualification under the federal HAMP program. If the borrower meets some threshold requirements, the servicer issues a TPP. Prior to June 2010, the federal HAMP program guidelines allowed servicers to issue TPPs to borrowers based on stated income or other non-verified eligibility criteria. The purpose of the TPP was to ensure the borrower could make the modified payments for a temporary period of time before receiving a permanent modification. In addition, the guidelines called for the borrowers' eligibility to be evaluated and verified during the TPP. Predictably, many borrowers provided stated income that could not be verified, sometimes due to borrower falsification, sometimes due to borrower mistake, and sometimes due to income that was not ultimately verifiable under the standards set by the HAMP program. Borrowers then file suit against their mortgage servicers alleging they made the monthly payments required by the TPP, and as to the additional eligibility requirements, borrowers argue either the TPP did not clearly spell them out or the servicer erroneously applied them. Read More...