The BankinBits blog, which discusses recent developments in the banking industry, has within the first quarter of 2014 addressed a diverse range of topics including banking services for the marijuana industry, the shuttering of REOdeedwagon.com, income tax allocation agreements between bank holding companies and their subsidiary banks, and if recent lawsuits signify an increase in litigation pertaining to mortgage loans.
RECENT BANKINBITS POSTS
Banking the Marijuana Business: Banker Beware
The Financial Crimes Enforcement Network and the U.S. Department of Justice issued guidance seeking to clarify expectations and requirements for financial institutions that are looking to provide services to marijuana businesses. Before making the decision to provide services to any marijuana business, it is recommended that you familiarize yourself with the red flags described in the guidance.
REOdeedwagon.com Goes Offline
I heard it from a friend who, who heard it from a friend who, heard it from another that the site is being taken down. The popular website, which was established to help banks market REO (real estate owned) inventory, has been taken offline due to declining REO inventories. The website provided valuable assistance to bankers who were ”Ridin’ the Storm Out” and helped them to “Keep Pushin’” REO off of their balance sheets.
BBA LIBOR Is Dead
The British Bankers Association handed over administration of the London Interbank Offered Rate (LIBOR) to The Intercontinental Exchange Benchmark Administration Ltd. This change in LIBOR’s administration comes on the heels of concerns that certain banks were manipulating LIBOR by submitting inaccurate rate information in order to appear more creditworthy. This change will require banks to review and update loan documents.
Agencies Propose New Rules Regarding Income Tax Allocation Agreements
Federal agencies recently issued a notice requesting comment on supplemental rules regarding income tax allocation agreements between bank holding companies and their subsidiary banks. The proposal is intended to resolve the growing number of disputes between holding companies in bankruptcy and failed banks regarding the ownership of tax refunds generated by the banks. Corporate groups should consult with their legal counsel to ensure that the terms of their tax allocation agreement will be effective in providing mutual benefit to both the holding company and its insured depository institutions.
Safe Harbor for Investments in Partnerships Claiming Historic Rehabilitation Credits: IRS Releases Revenue Procedure 2014-12
Internal Revenue Service released Revenue Procedure 2014-12, providing the much-anticipated safe harbor for investors in partnerships claiming historic rehabilitation credits under Section 47 of the Internal Revenue Code. The Revenue Procedure addresses a number of issues raised by the Third Circuit's landmark decision in Historic Boardwalk Hall, LLC v. Commissioner.
Recent Lawsuits Against Banks Could Signify an Increase in Litigation Pertaining to Mortgage Loans
Residential Funding Company, LLC (RFC), a longtime aggregator of residential mortgage loans and issuer of mortgage-backed securities, has recently filed a series of lawsuits against banks and other financial institutions from whom RFC purchased mortgage loans. The lawsuits, which already number in the dozens, assert that the defendants violated their agreements with RFC by selling loans that were not properly originated or underwritten.