Financial Institutions and Markets (J)
Contact: Camden R. Webb; Williams Mullen’s (North Carolina & Virginia, USA)
A federal court in Washington DC has ruled that a lawsuit against federal bank regulators challenging “Operation Choke Point” may proceed. Operation Choke Point is a program begun by the United States Department of Justice that was designed to “choke off” banking services to persons who were engaging in illegal activities, such as money laundering. According to the original intent of the program, the DOJ would use the federal banking laws to crack down on banks that, according to the DOJ, knew or should have known that their customers were engaging in unlawful conduct. However, after the program was implemented, some banks severed ties with bank customers of certain industries even where there was no indication that these industry members were engaged in anything but lawful business. Then, evidence surfaced that the federal government was not only attempting to choke off banking services to illegal actors but was also using the federal bank regulatory regime to advise banks that it was too risky to do business with certain industries such as tobacco retailers, firearms and ammunition, and payday lending. Members of these industries lost banking relationships, which adversely affected their businesses.
Author: Att. Ozgur Kocabasoglu
The Communiqué on the Principles Regarding Security Investment Companies (III-48.5) (“Communiqué”) published in the Official Gazette dated 27.05.2015 and numbered 29368. The Communiqué abolishing the Communiqué on the Principles Regarding Security Investment Companies (III-48.2) sets forth provisions on Investment Companies with Variable Capital (“ICVC”) for the first time in Turkish law.
By: Arnie Spevack
When a borrower requests a commercial loan for a new business or a business acquisition, lenders frequently require the borrower to secure the business loan with a mortgage on a personal residence. The residence may be taken as additional collateral, or because of the insufficiency of other business collateral to secure the loan. Using a residence as additional collateral frequently is the best way to meet a lender's collateral requirements.
By: Alison Rind
A recent 7th U.S. Circuit Court of Appeals case reminds lenders that it is incumbent upon the lender to verify the income stream before extending credit based on rental income. In Wells Fargo Equipment Finance Inc. v Titan Leasing, Inc., the bank extended non-recourse credit (a loan secured only by collateral) to a manufacturer of locomotives relying on the income stream from a specific lease executed by the borrower and its lessee for a locomotive. The borrower presented a fully executed copy of the lease to the bank as evidence of the income stream. The borrower warranted in the loan documents that the locomotive was delivered and accepted by the lessee and that the lessee acknowledged the locomotive’s receipt and acceptance.
By: Michael Smith
In most commercial loan transactions, a lender will secure a loan by filing a Uniform Commercial Code (UCC) financing statement to perfect its security interest in the borrower’s personal property. A loan is perfected when the lender receives priority over other creditors wishing to obtain a lien against the collateral. Typically, the lender files the financing statement after the loan has closed. However, it is possible to file a financing statement pre-closing, provided the lender obtains the borrower’s prior written authorization. A lender may want to pre-file a financing statement if the lender is concerned that an intervening lien may be filed during the gap of time between when a UCC lien search was last conducted and the time that the loan