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Annual Convention

Truth in Lending Case has Serious Ramifications
The 11th Circuit Court of Appeals has issued a ruling that could have major ramifications on lenders who may have technically violated the Truth in Lending Act (TILA).  TILA requires creditors to disclose in writing each amount that is paid to third persons by the creditor on the consumer’s behalf.  If the lender retains any commission or fee, then the disclosure “paid to others” is not technically correct because the lender retained a portion of the fee.  In the Jones v. Bill Heard Chevrolet case, the lender did not disclose they retained a portion of a fee they collected for an extended warranty.  The Court ruled that the failure to include such a disclosure could amount to a violation of TILA.  The Court stated:  “For example, the creditor could add to the category “amount paid to others” language such as “we may be retaining a portion of this amount.”  We suggest our members review your loan files and the ancillary products you are selling in conjunction with your loans to ensure that your TILA disclosures are accurate.  Typical products that may need clarifying disclosures could be credit insurance, VSI insurance, home warranties or club programs.  TILA has a 12-month statute of limitations for violations and the Act also allows creditors to correct disclosure mistakes by sending a notice within 60 days after the creditor learns of the error.  We have put on the GBA website a sample letter several lenders have used to notify their customers when they found their disclosures were not technically correct.  Of course, you would want to discuss this issue with your bank’s counsel and document your actions in your compliance files.  

Thrifts Make Generous Contribution
A $350,000 contribution has been made to the Georgia Bankers Association Chair of Banking at the University of Georgia by the members of the Georgia League of Savings Institution.  The League members voted for the association to cease operations three years ago.  John Holle, Chairman of Flag Financial Corporation, LaGrange, and Chairman of the League when it dissolved said upon making the donation, “We wanted to use the League’s reserves in a way that contributed to the betterment of the entire banking industry and we felt the Chair of Banking fit that goal.”  Dr. Jim Verbrugge is the current chairholder.  He chairs the Department of Banking and Finance at the Terry College of Business and serves as the academic director of GBA’s Georgia Banking School.  Virtually every Georgia savings institution is a GBA member.  Our thanks for your generosity!

Federal Legislative Issues
State Legislative Issues
Georgia House of Representatives
Georgia State Senate
U.S. Congress
Bank Regulators

Predatory Lending Bill Hits Every Bank
As we have reported to you, we expect a bill to be introduced in the General Assembly to address predatory lending.  Unfortunately, the draft bill we have seen goes far beyond that intent, and some estimate that as many as 50 percent of all mortgage loans will be considered “high cost” and therefore subject to severe restrictions.  We believe that in addition to many traditional mortgage loans, practically every home equity loan and mobile home loan would be covered by the restrictions.  GBA staff has met with the bill’s author, Sen. Vincent Fort, and representatives of the Atlanta Legal Aid Society, the organization spearheading the effort.  Although we have explained the serious negative effects contained in his bill, he assures us he will offer a bill in January.  In planning for our response to this and other legislative initiatives, GBA is revamping our Contact Banker Program.  We will be asking every CEO to serve as a Contact Banker for your state senator and state representative.  Many of you have served as Contact Bankers in the past and your personal calls and letters to our elected officials have made the difference in the outcome of many votes.  Be looking for more information soon.

OCC/OTS and Payday Partnerships
National banks and thrifts should have received a warning from the Comptroller of the Currency or Office of Thrift Supervision about possible relationships with companies selling short-term, low-balance credit products, primarily payday lenders.  In the advisory, the regulators suggested banks carefully consider the risks involved in relationships with these other lenders which, in the regulators’ views, cause both safety and soundness threats and also compliance and reputation risks.  The regulators also pointed to relationships between banks and title pawn companies and suggested many of the vendors of these products are abusive.  This statement was the strongest released yet by the regulators in the growing public debate about the role of non-traditional lenders.  In the 2000 General Assembly session, legislation passed the Senate outlawing pay day lending but stalled in the House.  While we have not been specifically told of legislation which may be introduced in 2001, we should safely assume the issue will be considered again.  This recent pronouncement from the federal regulators will most likely be used by the supporters of such legislation to foster their positions.

Calendar of Events
Schools
Conferences
Seminars
Georgia AIB
Professional Development Guide
Internet Training

Advanced Compliance Symposium
GBA’s annual two-day Advanced Compliance Symposium is a ‘must’ for compliance officers in Georgia.  It provides information about new regulations, emphasizes areas of regulators’ greatest concerns, and stimulates discussion about managing the compliance function. Some of the topics to be discussed include the Fair Credit Reporting Act, Reg CC, New IRA Rules, RESPA, Reg O, Bank Secrecy Act and Reg C.  This highly professional program is led again by Blair Rugh, Executive Director and Senior Vice President with the Kirchman Regulatory Service, a division of Kirchman  Corporation.  We anticipate some discussion this year about the increased attention now being placed on compliance as it applies to the Internet and other technologies in the bank.  The Symposium will be held at the Crowne Plaza Hotel in Macon on January 17-18.  Call GBA’s Marybeth Jones at (404) 420-2032 to register.

What’s the “Deal” with E-Learning?
GBA, in partnership with IBT Financial, Inc., is offering online training at an incredibly low price of $750.00.  This offer, available until January 15, 2001, will provide three months of unlimited access to GBA’s entire online course library.  You can train as many employees as you want and there is no limit.  Popular courses include:  Introduction to Banking, Reg Z: Truth in Lending, Customer Service, Account Ownership, Privacy of Consumer Financial Information, Bank Secrecy Act, Fair Lending and many more – 55 courses are now online.  It’s simple: click Internet Training or call IBT Financial, Inc. at 1-877-275-4428.

Atlanta, SunTrust Bank
E. Jenner Wood has been appointed President of the bank’s Georgia unit and will assume the roles of Chairman and Chief Executive Officer upon the retirement of Robert E. Long in March 2001.

GBA’s e-Bulletin List
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