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by JOHN REOSTIs part of the continuing assault on payday lender-bank partnerships, following the lead of the Office of Comptroller of the Currency and the Office of Thrift Supervision. Jean Ann Fox, the director of consumer protection for the Washington-based Consumer Federation of America, The comptroller and the OTS put a stop to their charters working with payday lenders, so the only place left for them to go is state-chartered banks, Ms. Fox said. The FDIC regulates state-chartered banks, and the Fed oversees holding companies. Harry Madonna, Republic First's president and chief executive, had not returned calls by press time. Payday loans are made for two weeks at high interest rates. They are secured by the borrower's postdated check, and when the loan comes due -- after the borrower's next payday -- the lender cashes the check. A few years ago payday lending seemed like a growth industry for financial institutions, because the loans were being made by banks. Consumer groups and regulators blasted the arrangements, There is no incentive to abide by even modestly restrictive state laws when a payday lender can partner with a bank, Ms. Fox said. Over the past two years a withering succession of regulatory actions, mostly by the OCC and OTS, and legal challenges underwritten by consumer groups have forced 11 banks to quit the payday business. Those still involved are small, state-chartered institutions like First Bank
Published in American Banker (2003)
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by ROB BLACKWELLThe Financial Crimes Enforcement Network announced Friday that it had, struck a deal with federal bank, thrift, and credit union regulators to, improve the sharing of information about financial institutions' compliance, with anti-money-laundering regulations., Fincen Director William Fox praised the regulators for signing a, memorandum of understanding that would require them to quickly notify his, agency of significant Bank Secrecy Act compliance problems, even those that, do not require official action. He said Fincen has generally not been informed until the regulator was preparing to take formal enforcement action., avoids a situation like we ran into with Riggs National, Corp. earlier this year, where we don't really get involved until the point, where it is beyond doing anything but a significant enforcement action, Fox said., In return, Fincen has pledged to analyze the information, collected from the five regulators and provide feedback to them and the, industry at large., We are going to be able to identify common deficiencies in compliance, that will lead to better and more frequent guidance to the industry, The banking agencies have just been terrific. ... They understand how important this issue is, Fincen signed the agreement with the Federal Deposit Insurance Corp., Office of the Comptroller of the Currency, the Office of Thrift, Supervision,, the Federal Reserve Board, and the National Credit Union Administration., after, The agreement requires Fincen to provide quarterly reports that summarize, all the data from federal regulators and to notify the appropriate, supervisor, as it analyzes data from the supervisors., Mr. Fox said the pact would help both sides and strengthen efforts to combat money laundering., We are going to understand the banks and their regulatory regime better, Mr. Fox said that Fincen is seeking a similar agreement with the Securities and Exchange Commission, the Internal Revenue Service, and the Commodity Futures Trading Commission, which also oversee industries covered by the money-laundering provisions of the USA Patriot Act.
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by DAMIAN PALETTAmall banks had William J. Fox's ear long before he started working at the Treasury Department. His great-grandfather, Jim Fox, I've spent enough time with my family to know the frustrations of a small-town banker, William Fox said. No doubt, banks large and small will be hoping for his ear now. This month Mr. Fox became the fourth director of the Treasury's Financial Crimes Enforcement Network, the agency in charge of tracking money laundering and terrorist financing. That makes him an ally -- or an opponent -- of banks, depending on the issue. Mr. Fox said in an interview at Fincen's headquarters this month that he wants financial companies at the table as his agency reevaluates core issues, I think we need to really engage in a very candid discussion with law enforcement and with our financial community about whether or not this is being successful, Suspicious activity reporting has mushroomed, with 136, 115 reports filed in the first six months of this year, nearly twice as many as in all of *1997-, according to Fincen records. Bankers complain about the lack of direction on what to report and when, What is the value of all this reporting, He also wants Fincen to start doing more analysis of the data it collects. Doing so should help the agency get ahead of launderers and terrorist financiers, who meet with Fincen officials at least twice a year. Bankers also have repeatedly questioned the usefulness of the information they provide, so Fincen reported Dec. 17 that financial institutions have helped law enforcement obtain 407 grand jury subpoenas, 11 search warrants, It seems to me that we have to be sort of after [law enforcement] to find out about how that information was valuable to law enforcement and package that in a way that's appropriate, and then get that information back to the financial community, Mr. Fox said. He succeeded James Sloan, who retired in November after heading Fincen, which has 250 employees and a $57.6 million budget, for four and a half years. Mr. Fox, was born in Nebraska and received his undergraduate and law degrees there from Creighton University. Right out of school, he joined the Bureau of Alcohol, Tobacco, and Firearms, also part of the Treasury. In December 2000 he became the Treasury's acting deputy assistant general counsel for enforcement. When he moved to Fincen, he recruited a former colleague, William D. Langford, I want to help break down some of those barriers by taking the information we obtain and ensuring that it's available to everyone
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by Luke Mullinsfter years of alerting consumers to the dangers of high-cost credit products such as payday loans and fee-based overdraft protection, Car title loans are the latest in a set of fringe credit products that are really a problem for lower-income consumers, said Jean Anne Fox, the group's director of consumer protection. Speaking at a Nov. 17 press conference, latest, fastest-growing form of high-cost, Car title loans are a form of credit used by cash-strapped consumers who agree to hand over the title to their vehicles to secure short-term loans, usually one month in duration. The interest rates on such loans generally run about 25% a month, or 300% a year. When borrowers are unable to repay the loan in full at the end of the month, lenders usually allow them to pay the interest and roll over the principal. As interest accrues and additional fees are tacked on, consumers can quickly become trapped in a dangerous cycle of debt, Ms. Fox said. When the borrower has nothing left to pay, the lender has the right to repossess and sell the borrower's car. The study found that most lenders obtain a duplicate set of keys when they finalize the loan, makes it possible for the lender to come in the dead of night and drive your car away, but the study found one particular lender that advertised a loan of up to $50, a review of 17 online lenders
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by Elizabeth CarvlinNebraska's largest museum, the Josyln Art Museum in Omaha, plans to sell a mix of $10 million of refunding and new-money revenue bonds, tomorrow through Douglas County., A portion of the sale will refund $4.1 million of debt -- part of a $20, million issue sold in *1993-, according to Jim Fox, senior vice president and, manager with Ameritas Investment, the underwriter on the deal. Those bonds allowed the museum to expand its building in Omaha, The sale is set for Thursday but could change, depending on market, conditions, Fox said., The new-money proceeds of the issue will provide about $2.5 million for, land acquisition, $2.5 million for the purchase of works of art, and $1.7, million for general renovations, Fox said., The museum, established in *1928-, is the largest such institution in the, area. Its collections include European and American art, with special emphasis in western American art. The Joslyn owns the Prince Maximilian and Karl Bodmer collection of prints, drawings, and manuscripts from the explorers' expedition across the American West from 1832 to 1834 on behalf of the American Fur Company, owned by John Jacob Astor., The museum's first major sale of bonds was in *1993-, Fox said. That sale allowed the museum to expand its building, which provided a major boost for the institution, with attendance after the renovation jumping about 33%. The 1993 bonds were repaid using donations raised through community events, which raised approximately $45 million., Omaha has a very strong base of giving within the community, said., according, to market participants. Community support and an institution's endowment are strong indicators of credit strength for such debt, said Kenneth Kerznar, a managing director who heads the cultural institutions sector at Chicago-based Bank One Capital Markets Inc., Cultural bond sales generally fall into two categories -- the, infrequent borrowers who use a letter of credit or bond insurance to access, Kerznar said. About 80% of sales are by the former, he added., The Joslyn Museum bonds will carry insurance from MBIA Insurance Corp., The museum is putting up a pledge of its unrestricted assets as the, primary security, Fox said, and currently has approximately $16 million in, foundation assets. The bonds are secured by a first mortgage on the facility and a negative pledge on the art collection, Any time a bond is issued out of the city, Though investors do not usually express an exclusive interest in buying, cultural bonds, Kerznar said, the bonds often are attractive to a national, investor audience rather than to local investors solely. The bonds may be mixed in with a portfolio of higher-education bonds., In assigning its underlying rating of A-minus for Joslyn, Standard &, Poor's cited the museum's regional prominence, measured in collection size, attendance, and membership., The strength of cultural bonds in general can be difficult to quantify, Kerznar said, adding that the wide diversity of such institutions precludes, any set criteria that can be applied to all bonds., If you look at museums as a whole, they run the whole gamut from the, children's museum in a storefront to the J. Paul Getty Museum in Malibu, Neither Moody's Investors Service nor Fitch rate the bonds., Analysts have tried to set specific standards for a category of bonds, sold by cultural institutions, Kerznar said. Most often the institutions come under the heading of museum, but cover a wide variety of services -- a zoo will be quite different from a science museum, for example., Another key is the diversity of the revenue stream to ensure the museum, of the museum's, business as one of its offsetting factors in rating the credit. It also cited Joslyn's significant reliance on annual fundraising to support museum operations and pay debt service, a small endowment given the size of the museum, and low earned income from admissions and membership relative to total operation expenses., The strength of the rating was based on the balanced operations of the, Joslyn, strong liquidity, and the record of community fundraising, Standard, & Poor's analysts said. Also, the museum has no additional plans for debt and the term of the bonds will be just 12 years, the agency said., It's a relatively short issue, which is keeping in step with the, board's goals and objectives to not take significantly long-term debt, said Ameritas' Fox., Baird, Holm, McEachen, Pedersen, Hamann & Strasheim are acting as bond, counsel on the sale.
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by ROB BLACKWELLIndustry representatives said Monday that forcing financial institutions, to report international wire transfers to the government would be an, inefficient and costly addition to the already burdensome anti-laundering, compliance., But Treasury Department officials said the data could be immensely, valuable in the fight against terrorist financing., said William Fox, the director, of the Financial Crimes Enforcement Network., Sounding a common theme among the skeptics, Peter Djinis, a former top, The government is going to have the burden of, trying, In last year's intelligence reform law, Congress required the Treasury to, report on the feasibility of requiring banks to report information on, international wire transfers. The assessment must include how valuable the information would be in preventing money laundering, what form the reporting would take, the potential burden of such a requirement, and any privacy or security concerns., All these issues would have to be explored and thought about before we, ever get to the point where this is something we want or are able to do, Fox said. Any new reporting requirements are several years off, Congress set no deadline, but Fincen is expected to complete the study, this year, and it has created a task force to work on this issue. The New York Times first reported the creation of the task force Sunday., Supporters argue that information collected from wire transfers could be, critical. As potential models, they point to Canada and Australia, which currently have systems to get at this information quickly, and claim the information has been useful in detecting terrorist financing., But industry representatives and outside observers said the U.S., government does not have the resources to comb through the vast number of, wire transfers looking for criminal activities., The idea you are going to stop terrorism by having the government, rummage through 9 zillion wire transfers a day is silly, said Robert, Serino,, a senior adviser for financial services at Watkins Consulting Inc. in, Washington and a former deputy chief counsel with the Office of the, Comptroller of the Currency., Critics claim law enforcement agencies already have data they do not use, including hundreds of thousands of Suspicious Activity and Currency, Transaction reports, which bankers are required to be file., There is already discussion about whether or not the process with SARs, and CTRs is efficient, given the sheer volume of SARs that are being filed, because of the sense that it is better to file than not to file, said, Thomas, Vartanian, a partner in the Washington office of the New York law firm, Fried,, Mr. Fox said that law enforcement agencies use the SAR and CTR data, and that the Treasury probably would not require reporting on all international wire transfers. For example, bank-to-bank transfers might be exempt to focus on information that could yield the best leads, He also said the Treasury could relieve banks of another burden in, return. For example, If there is a redundancy, we are not going to make banks do the same, If they are giving us the information, there is no sense on keeping records on it, too. ... I think we can do this in a way that would be less burdensome on banks and more powerful for law enforcement. If we can't find a way, Several observers pointed to past government efforts to tackle wire, because of the volume of wire transfers., Many said that problem would be even worse today. Officials estimate there are 500 million domestic and international wire transfers each year., Some observers said the government already has the authority to ask all, banks to check for any financial transaction, not just wire transfers, on a, suspected criminal, and then look at the resulting data by getting a, subpoena., If you know the name of the terrorist, you can always get that, information from all banks in the United States by requesting it, Serino said.
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by John ReostiNorth Fork Bancorp. Inc. of Melville, N.Y., has added itself to a growing list of banks that have cut ties to money service businesses., John Adam Kanas, North Fork's president and chief executive, said, Wednesday that the $60 billion-asset company had recently sent, discontinuance, letters to about two dozen wire-transfer businesses -- he described them as, -- because compliance issues had become a, burden., The decision to close the accounts was among the most difficult of his, career, Mr. Kanas said., At the same time, Mr. Kanas said, Wire-transfer businesses are not the only ones smarting. Rick Lyke, a spokesman for the Financial Service Centers of America, which represents more than 5, 000 check cashers, said banks have been preemptively closing check cashers' accounts for several years and that the problem has grown increasingly acute over the past year., For example, Provident Bankshares Corp. of Baltimore closed the accounts, of about 36 check cashing businesses earlier this year, said Brian I., Satisky, the president of the Maryland Association of Financial Service Centers., said Provident, money-service businesses., Mr. Satisky said all the companies whose accounts it closed were able to find new banks. But those institutions that still serve money service providers are getting jittery, They're looking at all the ones that have stopped and saying, 'Why are, Mr. Satisky said in an interview Tuesday., Combating money laundering has been at the top of regulators' agenda, since the 9, 11 attacks. But even senior government officials acknowledge that the fight may have been taken too far when regulators singled out check cashers, wire-transfer firms, and other money service businesses for special scrutiny., Gerald Goldman, the Financial Service Centers of America's general, counsel, said many banks dealt with the matter by severing ties with, clients, in the money service business. The number of check cashers alone whose accounts have been terminated over the past few years is well into the hundreds, William J. Fox, the director of the Financial Crimes Enforcement Network, an agency of the Treasury Department, said bank examiners have contributed to the bank discontinuance problem by discouraging banks from doing business with check cashers and wire-transfer firms, even though most have never been tainted by money laundering., Examiners are advising banks to monitor the transactions of, or jettison them, Mr. Fox said cutting money service providers off from banks might force them into the underground economy and make it all but impossible for the government to keep tabs on them., On March 8 he hosted a meeting of bankers, money service providers, regulators to discuss bank discontinuance. After the all-day session, The hope is that added clarity will give banks confidence that they can, keep serving money service clients without incurring exorbitant costs or a, heightened risk of regulatory action., Mr. Goldman said he worried that without some kind of firm action, He said he was hopeful the new guidelines and improved examination procedures that Mr. Fox promises will eventually help remedy the bank discontinuance problem., We really believe that with clarity, there will be a greatly reduced, chance that banks will opt to discontinue services to money service, Mr. Goldman said., Mr. Fox said he is determined to find a solution that satisfies all three constituencies -- banks, regulators, and money service businesses., The last thing in the world I want for a money service business is for, it to be thrown out of the transparent world of financial services and go
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by Elizabeth AlbaneseThe two top guns in the Dallas municipal finance office of, UBS PaineWebber Inc. are working in tandem these days as the one prepares, for a late January retirement and the other gets ready to take over as, managing director., This is really a fairy tale story I've not previously seen in my, said Dan Wilson, a managing director and manager for UBS, PaineWebber who will retire at the end of January after nearly 20 years of, If you had to write a textbook about transitions, Wilson, started at the bond department of the First National Bank, of Fort Worth, and then moved to PaineWebber as a trader in 1982. He left the firm in 1985 to run the trading desk for the Houston office of Cowen & Co. but returned to PaineWebber in 1987 in his current position., Patrick Fox, joined UBS PaineWebber as a first vice president and, He has built such an incredible business here, Wilson said he was involved in every step of the process that brought, Fox on board and will work with him to create a smooth transition., This has really been a unique experience. In many cases, what tends to happen in a situation like this is that there's a cut-off date for one guy and then the next guy starts up -- and there's little room for overlap, however, have worked for several months, Fox said Wilson has been extremely generous in helping prepare him for, the role of managing director, introducing him to key players and, acclimating him to the region., We are working closely together in what I think is absolutely the, right way to make this transition as smooth as possible, said Wilson., The Dallas office of UBS PaineWebber is pretty smoothly oiled
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by Damian Paletta and Rob BlackwellMinutes after William Fox, the director of the Financial Crimes Enforcement, Network, told agency employees last week that he was leaving, questioning, began: What happens to Fincen now?, The answer is critical for bankers. Fincen used to be an obscure agency, with only a small role in setting policy on anti-money-laundering, regulations, Mr. Fox helped push it to the forefront. He was an industry, ally, against banking regulators and the Justice Department on significant issues, including suspicious-activity reporting., Lawmakers and industry representatives worry that without Mr. Fox, will join Bank of America Corp. this month as a senior compliance executive, on anti-laundering issues, Fincen will change course., Rep. Spencer Bachus, R-Ala., said, I hope in doing so they will look to somebody who, appreciates that the Bank Secrecy Act is the largest burden on our, Much depends on who Treasury Secretary John Snow selects as Mr. Fox's, successor. Several names have begun circulating, such as John Roth, chief, of the fraud and public corruption section of the U.S. Attorney's Office in, Washington, and Patrick O'Brien, the Treasury's assistant secretary for, terrorist financing., Another possibility is William Langford, Fincen's associate director of, regulatory policy and programs. He was a confidant of Mr. Fox's and is, widely, respected in the financial services industry. He would be the first Fincen, staff member promoted to the top post., William Baity, Fincen's deputy director, is scheduled to serve as acting, director until a successor is chosen., I think they will make every effort they can to fill this quickly, said, Peter Djinis, a former Fincen executive who now runs his own law firm., They, Mr. Fox will be a tough act to follow. Fincen has found itself in the, middle of a nasty fight between the Treasury Department, the Justice, Department, bank regulators, the industry, and Capitol Hill over how to, stop, money laundering., Mr. Fox was the most visible director in Fincen's 16-year history, despite having the shortest tenure -- just over two years. He made more, than, 50 public appearances before banking groups and others to talk about the, agency's missions and challenges., His talks were known for being unusually candid. He often acknowledged, bankers' concerns about the burden of complying with anti-laundering rules., Indeed, he was the first regulator to acknowledge the problem of, defensive-SAR filing., After AmSouth Bancorp. was hit with $50 million in fines in October *2004-, for failure to file SARs, bankers began filing reports on activity, regardless, of whether it was suspicious out of fear of regulatory criticism or fines., Mr. Fox said the issue had to be corrected because a glut of useless SARs, could inhibit law enforcement from finding actual anti-laundering, activity. He, told bankers he was working with the banking regulators and the Justice, Department -- the chief architect behind the AmSouth fine -- to establish, consistent anti-money laundering rules., The final result was a banking exam manual released last summer that laid, out what regulators expected of banks. Treasury and Justice also reached an, agreement that said local U.S. Attorneys must seek permission from Justice, before pursuing a criminal action against a bank related to money, laundering., Observers said Mr. Fox and his staff played a key role in making those, things happen., You cannot overstate his impact on BSA matters throughout the nation, said John Byrne, senior, vice, president of anti-money laundering strategies at Bank of America. (Mr., Byrne, joined B of A in September and previously worked with Mr. Fox as a senior, With people like William, Langford and others still there, we are optimistic Fox's philosophy and, Banks filed a record number of SARs last year, and many banking officials, blamed defensive filing. Mr. Fox had also pledged to make Fincen's, resources, available to the industry and banking regulators, including providing more, feedback on common anti-laundering issues faced by institutions., But whether Fincen, tucked among shopping malls and car dealerships in, the northern Virginia suburbs, has the resources to accomplish that is, unclear., having a mission for 10,000 and, Mr. Fox said in an interview last week., is a big mission. We need to rely both on law enforcement agencies that we, not direct or control and on regulatory agencies that we do not direct or, They have authority to do certain things, but they do have the bodies to, asked Robert Serino, a partner at Buckley Kolar LLP and a former, deputy chief counsel at the Office of the Comptroller of the Currency., That's one question I have
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by Steve BillsThe big bad numbers at Bisys Group Inc. kept getting bigger last week., On Wednesday the New York outsourcer and insurance company said charges, against earnings going back to 2001-- charges first estimated in April at, $24.7 million -- would be at the high end of the $70 million to $80 million, it spoke of four weeks later., Then, in a Friday morning conference call with investors and analysts, executives acknowledged that the whole writedown would be more than $100, million., said chief financial officer James Fox. The last bump up reflects a $23.6 million adjustment to goodwill and other accounting categories., to be as squeaky clean, in its accounting, Mr. Fox said., The company has blamed the initial problems on overestimates of sales, commissions in its life insurance unit, which has grown by acquisition. Its other main businesses are outsourced record keeping for mutual funds and core processing of deposits and loans for 1, 400 community banks., Because of the changes in the earnings numbers, the company and its, auditors also reexamined the values attributed to goodwill, a balance-sheet, item., None of this is cash. None of it affects us on a go-forward basis, Russell P. Fradin, president and chief executive since February, said the accounting problems have not hurt relationships with bank customers or the company's ability to win new ones., in bidding against other processors, The $24.7 million charge announced in April was to have been for Bisys', fiscal third quarter, which ended March 31. Later the company said the much larger estimated charge would be spread across the previous three years., Last week's filing with the Securities and Exchange Commission -- which, is investigating Bisys' accounting problems -- was a delayed third-quarter, statement. Though preliminary numbers for the previous years were included, revised annual reports are still pending., Over all, the adjustments reduced Bisys' profits in each of the previous, years, but none of the cuts pushed the company into a net loss. The biggest reduction would be for fiscal 2002., Results for the current fiscal year, which will end June 30, were, improved, because the charge originally assessed in the fiscal third, quarter, was eliminated., They were correct at the time they were done. The company used a consistently applied methodology, Over time, the business changed but the assumptions didn't, Mr. Fox said., The company has completed a thorough review of the numbers in conjunction, We dug pretty deep, Craig Peckham, an analyst at Jefferies & Co. said the additional, A goodwill adjustment is something we were logically expecting after an $80 million adjustment to earnings, I don't think you saw another shoe drop, which was one of the concerns we had, Mr. Peckham said., The new management team is attacking the issues in insurance and education very proactively, Bisys said it is cooperating with investigations by the SEC and its own, audit committee, which has retained outside counsel to review the past, financial results., Mr. Fradin also said that the problems have been limited to the insurance division, It's only prudent to make sure you look at the whole company, not just the affected division, Carla N. Cooper, an analyst at the brokerage firm Robert W. Baird & Co., said questions will remain until Bisys files its final amended annual reports, which are due by the time it files its fiscal 2004 annual statement., They've taken a step forward by putting these [preliminary statements], in conjunction with the quarterly report, Ms. Cooper said., But the details on the individual lines of business will remain cloudy, until the detailed annual reports are filed and analysts can compare the, revised numbers with those of the company's peers, Bisys is now technically in breach on a $400 million credit agreement due, to the financial misstatements, but its lenders have agreed to waive the, violation if it files updated annual reports by the time it files its, annual, report for fiscal 2004. Bisys said it expects to meet the deadline., We have a very good relationship with our banking group, Though Bisys has received notice of two lawsuits on behalf of, shareholders, and several other law firms have announced plans to sue over, the accounting issue, the company has not set aside a reserve to pay
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by WILL WADEFidelity National Financial Inc., a title insurer with ambitions to, become a full-service vendor to the financial services industry, went a, long way toward that goal with a $1.05 billion deal to buy the unit of, Alltel Corp. that provides mortgage processing and other technology to, banks., The question now is whether Fidelity National can take a business that, Alltel Information's own executives said was not exactly getting lavished, with parental attention and turn it into a stronger player in an intensely, competitive field., Fidelity National -- which is based in Santa Barbara, Calif., and is of, no relation to Fidelity Investments -- agreed to pay $775 million in cash, and $275 million in stock for Alltel Information Services. The deal, which was announced Wednesday and is expected to close by the end of this quarter, would give the title company technology contracts with 47 of the top 50 U.S. banks and a piece of the fee-income stream on 46% of U.S. residential mortgages., Alltel Information Services president Jeff Fox said that his division's, parent company wants to concentrate on its core operations and that it, could not adequately support the banking business., Alltel is not in a position to put the strategic capital into my business unit, Leslie Muma, the president and chief executive of Fiserv Inc. in, Brookfield, Wis., said Fidelity National has to learn some new skills if it, This is their first major move into processing, and it's a completely different business, We've been competing against Alltel for years, Analysts said that on a purely financial level, the deal was probably, an easy decision for Fidelity National. Some said the price tag was a bargain because it amounted to only 1.3 times the $820 million of revenue that the unit took in last year., This is a portfolio that is going to generate long-term income, said, Alenka Grealish, a senior analyst with Celent Communications LLC, Others said the Alltel's motivation may have had more to do with a, two-year-old shakeout in the telecommunications industry. Some speculated that Alltel might use the proceeds to buy assets for its core telecom business while they are on the cheap. In contrast, there was little to suggest that a major upheaval among bank technology vendors was about to begin, they said., I don't expect to see a shakeout in this space or any type of, said Craig Focardi, a senior analyst with the, TowerGroup research firm in Needham, Mass., The parent company would keep the division of Alltel Information, Services that offers telecom processing, but the rest of the unit would be, transferred to Fidelity National., Fidelity National would gain a consistent revenue stream as a hedge, against the cyclical nature of title insurance, which, like mortgage, origination, does well when interest rates are falling but not when they, rise., William Foley, Fidelity National's chairman and chief executive, said, his company wanted a countercyclical hedge and that it also liked other, products in the Alltel Information Services stable. He said he expects the combination of the two operations will help Fidelity National to both retain and add customers., Mr. Focardi said Fidelity National would probably try to integrate all of the pieces of Alltel Information Services to create a more comprehensive line., In the short term, that means Fidelity National will expand beyond the, real estate market to become a player in the larger banking world. In the long term, Mr. Focardi said, it could be very well positioned to supply both real estate and loan processing expertise if any banks eventually attempt to expand into offering real estate brokerage services., Alltel Information Services generated revenue of about $300 million, last year from processing mortgages, but an even larger share of its, business, more than $500 million, came from retail banking loans, Mr. Fox said. Fidelity National will be able to leverage its mortgage business to expand into other parts of the loan processing market, The deal would make Alltel the largest outside shareholder in Fidelity, National, and the telecom company would also gain a seat on Fidelity, National's board.
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by Shelly SigoDespite warnings from attorneys that it could be in, contempt of court, the Florida Water Services Authority proceeded Monday, with its planned $507 million purchase of the state's largest private, utility, Florida Water Services Corp., The authority, a government agency, voted 3 to 0 at a contentious, public hearing to proceed with the acquisition. The agency's finance team is planning to sell bonds simultaneously, with the closing to take place before Dec. 15. Salomon Smith Barney Inc. will negotiate the sale., The authority plans to cover $433 million of the purchase price through, the sale of tax-exempt revenue bonds and will sell an additional $112, million for acquisition and start-up costs, capital improvements, repairs to the 153 water and wastewater plants that will be purchased in 26, counties throughout Florida., Susan Fox, an appellate attorney with MacFarlane, Ferguson & McMullen, representing Collier County and the city of Palm Coast, told authority, board members during Monday's hearing that pending litigation should stop, the board from holding the meeting. The lawsuit she has filed contests the conditions under which the authority was created., Under Florida court rules, Fox said that when the jurisdiction of a, -- here the Water Services Authority -- is challenged, a party, can file a petition with an appellate court. In this case, Fox said., Michael Twomey, an attorney who is representing Marco Island, said the, judge's ruling should have prevented the authority from holding its meeting, Monday., Numerous representatives of cities and counties throughout the state, asked the authority to stop the sale and allow them to participate in a, process that, to date, has disallowed them an active role., Approximately 20 of the nearly 80 people in attendance at Monday's, hearing -- most representatives of local governments, but many attorneys as, well -- objected to the authority's purchase of the utilities because they, want the opportunity to own the systems themselves., Jeff Clunie, a principal with R.W. Beck, The assessment found that most of the capital improvements being, planned by the authority over the next five years are adequate, except that, some fund increases were needed in the renewal and replacement plans, mostly concerning smaller utilities, Clunie said., The study recommended an additional $25 million over the next five, years, bringing the new total for capital improvements to $177 million., Clunie also said the general useful life of the utilities would support the 30 years over which the bonds would mature., We feel the decision to acquire these systems is a business decision, the politics of which are not part of our consideration, said the, authority's financial adviser, Jon Eichelberger, a vice president at J. P. Morgan Securities Inc., Eichelberger said his firm's review of the figures supporting the bond, transaction showed that the strength of the credit, the revenues, and the, terms of the contract support the bond issuance. He also said the bonds should be insurable., However, he added that the engineering assessment, unveiled publicly, for the first time Monday, was not considered in the financial evaluation., The panhandle cities of Gulf Breeze and Milton created the authority to, buy the utilities. They have approximately 14, 000 residents, but none of the affected utilities, which have 500, 000 customers, are within their jurisdictions. Both cities will receive payments from the profits of the utilities for their assistance in creating the authority., However, Gulf Breeze city manager Edwin Eddy told the authority Monday, that the cities have plans to incorporate their water and wastewater, customers into the Florida water system., The authority's bond counsel, Richard Lott of Miller, Canfield, Paddock, and Stone, are people, From my observation, every gentleman here has on a tie, he added, referring to the number of attorneys, elected officials, and consultants, who were there., Lott told the authority that no court would hold them in contempt for, holding a public hearing. He said Florida law, as created by the state Legislature, specifically allows for the establishment of an authority created by an interlocal agreement., From a pure public standpoint, you are entitled to take into account, the findings of the state Legislature in this type of public acquisition, Lott said., I think this is going to be very good for these people, said, Authority board member Brenda Pollack said she attended meetings around, the state sponsored by Florida Water Services Corp. and spoke to, ratepayers who told me privately they do not want their local officials
Published in Bond Buyer (2002)
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by MATT ACKERMANNWells Fargo & Co.'s recent acquisitions in wealth management are just, the beginning of a drive that will ultimately double the company's private, banker force to 450 within the next 18 months, the new head of that, business line says., acquiring, said Lane Fox, an executive vice president and the managing, director of a new wealth management group within Wells' private-client, services division., When compared to where the company was just last fall, when it had, about 175 private bankers, the growth expectations are even more dramatic., Mr. Fox, whose promotion was announced Wednesday, said Wells is expanding its private banking operation despite the down market because the wealthy are not seriously hobbled by recessions., Wells wants to expand its presence in wealthy communities in Nevada, Arizona, California, Texas, and Colorado, where the company already has a, banking presence, Mr. Fox said. Some of the new bankers will work in branches, and others in already established wealth management offices., Our goal is to increase our sales force by hiring brokers, portfolio managers, Wells will train current employees, hire, and acquire small firms in, targeted areas of the country in order to grow, Mr. Fox said. The company announced two deals last month. On July 31 it signed a definitive agreement to buy Nelson Capital Management Inc., a privately held investment advisory firm in Palo Alto with more than 400 wealthy clients in northern California, and on July 23 it bought privately held FAS Holdings Inc. of San Diego., We are looking to strategically expand our customer base, and the, We have been told to look for acquisition opportunities to get boutique money management firms, wealth managers, Analysts have expected Wells to be willing to make deals to expand its, wealth management business. In a research report published two weeks ago, Andrew Collins, an analyst at U.S. Bancorp Piper Jaffray, wrote that he expected the San Francisco company to be active in expanding its geographic reach through acquisitions., Mr. Collins said in an interview Thursday, moreover, that he thinks Wells wants eventually to earn 20% to 25% of its profits from asset management and private banking., They are well on their way to that goal, and it is really the right, time to build market-sensitive businesses because there is so much talent, out there right now, given the weakness in the market, Other banking companies are looking to expand their private banking and, wealth management businesses as well during the bear market. Bank of America Corp., based in Charlotte, N.C., has expanded its roster of private bankers from 400 to 460 so far this year and plans to have 500 by yearend., a significant number of private bankers from competitors such as Bank of America, Wells attracts private bankers by offering a full array of products and services for them to sell, highly competitive compensation, and an ever-expanding customer base, We have solid market share in a lot of attractive markets, Mr. Fox, who has worked at Wells since *1996-, said his unit will try to cross-sell to customers of Wells' investment management and trust divisions, which manage $38 billion of assets owned by high-net-worth investors in the company's 23-state footprint., Jeff Davis, a banking analyst at Midwest Research in Nashville, said, Wells is well positioned for this push in private banking and wealth, management. Because wealthy customers are turning to their banks to borrow money these days more than to their brokers, private bankers can cross-sell other products to them while they are on the premises., Mr. Davis said this is a good time for banking companies such as Wells, Bank of America, and SunTrust Banks Inc. in Atlanta, to bolster operations in private banking and wealth management. But these businesses are not good opportunities for every bank, This is a good time to leverage what you have, not to build from, If a bank has historically been retail and blue-collar-oriented
Published in American Banker (2002)
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by Hannah BergmanConsumer advocates said Tuesday that online payday lending is growing, rapidly and is more dangerous than traditional short-term lending., A report released by the Consumer Federation of America said that, thousands of Web sites are offering payday loans, and that little is known, about the size of the business or the sites' operators. It is also unclear whether the online lenders are meeting state consumer protection requirements, and whether those requirements apply to sites run from other states or countries, the report said., Payday loans made online combine the negative aspects of storefront, payday loans (extreme high cost, loan flipping, and coercive collection, tactics) with the additional problems of jurisdiction and applicable law, security and privacy risks of entering personal financial information, online,, and gaps in the federal laws and industry rules for electronic fund, the report said., Most online lenders are not affiliated with nationwide payday loan chains, or banks, the report said., Steven Schlein, a spokesman for the Community Financial Services, Association, payday lenders' main trade group, said it does not defend the, He and Consumer Federation officials said many of the online lenders are, Mr. Schlein said., Jean Ann Fox, the Consumer Federation's director of consumer protection, said it is difficult to find contact information for the online lenders, discover if they are licensed by a state, and if so, whether they comply, with, that state's laws., We don't know who they are and where they are, but yet they're asking, consumers to give them all of their personal financial information, Also, lenders can debit borrowers checking accounts for fees and, automatically roll over the loans from pay period to pay period, Ms. Fox said. They can do so, by using the automated clearing house system and the access to checking accounts that borrowers give to lenders when they receive the loans., New York, Kansas, and Colorado have taken actions against these, companies, the report said., Last week New York Attorney General Eliot Spitzer announced a settlement, with Cashback Payday Loans Inc. of Las Vegas, which made online loans at, interest rates that exceeded New York's limits. The company has to close all accounts with state residents, interest rates, and not make new loans in New York., Lenders that are not insured depository institutions are subject to the, laws of states' in which they do business, said Timothy R. McTaggart, a former Delaware banking commissioner who is a partner at the Washington law firm of Willkie Farr & Gallagher., what it means to be doing business in the, The report said more states should pursue online lenders and update their, laws or ban all loans based on electronic access to consumer bank accounts., It also said the Federal Reserve Board's Regulation E, which implements the Electronic Fund Transfers Act
Published in American Banker (2004)
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by ROB BLACKWELLDefensive filing of suspicious-activity reports is becoming a growing, problem in the fight against money laundering by creating a mass of, paperwork, and distracting law enforcement, regulators warned., But just what can be done to resolve the problem is unclear., William Fox, director of the Financial Crimes Enforcement Network, said, on ways to deter, banks, that seek to avoid criticism from regulators by filing unneeded reports., The defensive filing of SARs frankly, in our view, is as big a failure, Mr. Fox and officials from the Federal Reserve Board and the Office of the Comptroller of the Currency told the call participants, estimated at more than 1, that bank examiners should be focused on an institution's policies for filing the reports -- and not on second-guessing every individual decision., If what we are doing in examining is leading to the defensive filing of, these reports, then we are failing and we have to figure out a better way, Mr. Fox said., Bridget M. Neill, the Fed's manager of anti-laundering policy and compliance, said that sometimes banks see legitimate exam questions on a bank's filing policies as second-guessing., I'd like to stress that the purpose of this step in the exam process, should be a review to ensure that a process is in place, that appropriate, events were flagged, and that the bank can evidence a process for, investigating a flagged event and ultimate disposition, Unless there is evidence of systemic, obvious oversight, But many bankers are worried that field examiners are still looking over, their shoulders after every decision., There is a Washington view and there is a regional view, said John, Byrne, the director of the ABA's Center for Regulatory Compliance, in a, phone, The Washington view is very reasonable, very rational. But when you get out to the field, that's when you have examiners -- even if it is informal -- criticize a bank because the SAR filing volume has gone down. With all of these things, the better course for many institutions has been to say, Even regulators acknowledged that the costs of not filing a report have, become more serious., said Daniel P. Stipano, deputy chief counsel for the OCC, on the conference call. In light of the 9, 11 terrorist attacks and highly publicized reporting deficiencies at Riggs National Corp., So what is a bank supposed to do?, may be clearing exceptions without, We are looking for a process that provides an explanation of decision. We're not second-guessing the decision, Mr. Stipano said banks should also make sure there is a commitment to the prevention of money laundering and that it starts at the very top., We've seen in the past some institutions have attempted to do Bank, Secrecy Act compliance on the cheap, viewing it as a cost but nothing, If ever there was a time you could get away with that
Published in American Banker (2004)
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by Elizabeth Albanesenticipating that a presidential election year will boost voter support at the polls, Colorado school districts are expected to request more than $1 billion of general obligation bond authorizations on Nov. 2. According to the Colorado Association of School Executives, which monitors school bond issuance, But a lot of the districts are asking for money for renovations, Fox said. Jefferson County Public Schools, located near Denver, The Jefferson request marks the largest authorization placed on the ballot so far this year, but several other districts - Adams 12, North Glen, Grand Junction, and Colorado Springs No. 11 - each have referendums planned for authorizations more than $100 million. According to a report Fox wrote with Rudy Andras, a vice president at RBC Dain Rauscher Inc., school bond elections fare well when they appear on the same ballot as a presidential race. Since the 1992 Taxpayer Bill of Rights was implemented, We wrote the report to reflect elections after TABOR, because prior to that time, elections could take place about six times during the year, After TABOR, According to the report, school boards requested a total of $453.84 million in 1996. With 67.9% of registered voters turning out for the election, 93% of school bond questions were approved. In *2000-, schools asked for authorizations totaling $665.7 million, and voter turnout of 66.8% led to an approval rate of 98%. Those numbers are compared to an average approval rate of 79% from 1993 to *2002-, Based on the analysis, it would appear that higher voter turnout is good for school bond referendums, And this year, That number tops a previous record of $983.9 million in 2002. Voters approved $816.9 million of debt that year. Last year, But if you adjust the number of inflation, this is not the largest bond authorization that school districts have asked for, Andras said. Andras said that Colorado school districts asked for authorizations totaling $691.8 million in *1992-, The state also topped $1 billion in *2002-, when districts asked for $983.9 million, Andras said. Although most of the authorizations request debt service to back bonds or override levies to support operations, Their bonding capacity is insufficient to get the facilities they need through bonding, However
Published in Bond Buyer (2004)
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