Banking the Underbanked

In many nations outside the United States, new  banking institutions are being formed to serve the billions of individuals who have had little to no exposure to basic banking services. Most traditional banks have had little interest, in part because they are not structured to profitably provide the small balance accounts and small transactions needed by low income consumers. Recent developments in technology and new approaches to banking have dramatically lowered costs and greatly enhanced the ability of financial institutions to serve this market. New institutions have emerged offering an extensive array of micro business and consumer credit, microsavings and remittance services in nearly every emerging market. New services such as housing loans and health and crop insurance are being added every year.

Profitability and growth greatly exceed that of conventional banks in the West. By definition, these underbanked markets are characterized by undercapacity, rather than overcapacity we find at home. With too few banks, existing institutions can, and do, reach out for customers new to banking rather than compete for existing bank customers.  Consequently, growth rates and returns on assets and equity are substantially higher than that found in more developed economies. Balance sheets tend to be simpler in structure and  capital ratios tend to be much higher.

We will discuss:

• What makes this market very different?
• Why are savings accounts so important, perhaps  more so than loans?
• What role have new technologies and new strategies played?
• What are the regulatory challenges created by new technologies and strategies?
• Three examples of banks serving the underbanked in three very different ways.

Michael Abrahams:

Mr. Abrahams is the founder and portfolio manager of the New Markets Financial Fund, a fund created to invest in financial institutions which serve the underbanked. For over 20 years, he was an investment banker covering the financial services industry. He has raised capital for a number of institutions serving the underbanked consumer and has served on the board of directors of two major financial institutions. Mike opened the Fund in January 2007 to invest in financial institutions serving underbanked markets, firms that both substantially improve the living standards of their customers and provide strong investment potential. The investments are chiefly in small to mid-capitalization companies trading in Africa, Asia and North America. While markets have been turbulent for much of this period, the Fund has realized a gross return of approximately 58% through year end 2011.

Separate from the Fund, Mike has trained individuals living in West Africa to lead locally based savings and credit groups and is currently working to expand and institutionalize that effort.

Mike received his Ph.D. in Economics from Berkeley and, prior to Wall Street, was an economist for the Reagan Administration in the Office of Management and Budget helping to craft the Administration’s banking policy.

COST: Law Firm Members – $62; In-house Members – $59; Solo Members – $55

The Double Mo Show: Dodd-Frank and More

Maurine Padden, EVP and Chief Administrative
Office of the California Bankers Association, and Maureen Young, Partner, Bingham McCutchen
LLP, will present a pithy review of federal and
state legislative and regulatory developments and a look at what’s
ahead for 2012.

“Show Me The Money”: The Interim Final Garnishment Rule

In an effort to protect federal benefit payments, the federal agencies have issued a rule having a significant impact on the manner in which banks respond to levies. This regulatory development affects all U.S. banks, large and small, as well as savings associations and credit unions. The presentation includes a simple recipe for compliance with the new rule.

Ted Teruo Kitada:

Mr. Kitada is the chief payment counsel to Wells Fargo, providing advice and guidance on many payment matters, including primary payment systems (wire transfers, checks, ACH, and prepaid and debit cards); deposit services and products; bank operations; Check 21; image exchange arrangements; mobile banking; electronic banking; unclaimed property; and compliance with a variety of state and federal laws and regulations relating generally to bank deposits and operations.

Mr. Kitada received his B.A. from Stanford University (magna cum laude and Phi Beta Kappa), his J.D. from the University of California, School of Law, Berkeley, and a Masters in Regional Studies-East Asia from Harvard University.

COST: Law Firm Members – $62; In-house Members – $59; Solo Members – $55

The Subprime Shakeout: Trends and Forecasts in Mortgage Backed Securities Litigation

Isaac will provide an overview of the most important recent developments in this space, including:

• An analysis of the likelihood of success and impact of bondholder efforts to
  remove the proposed $8.5 billion Bank of New York settlement on Countrywide RMBS to federal court;
• The strategy behind and strength of the FHFA’s 18 recent lawsuits on behalf
  of the GSEs against MBS issuers based on misrepresentations and securities law
  violations;
• An update on the status of the bond insurer lawsuits against BofA and JP
  Morgan, and their precedential value in the RMBS litigation landscape; and
• The relative benefits and drawbacks of securities law claims compared to
  putback claims and a discussion of the mechanics of a mortgage putback,
  including procedural requirements, burden of proof and timelines.

COST: Law Firm Members – $62; In-house Members – $59; Solo Members – $55

Getting Back on Track – Lessons Learned From the Crisis

William Haraf will discuss financial stability in an era of instability and new mechanisms designed to preserve financial stability.

Patent Reform & Financial Services: What You Need to Know

Mallun Yen, Executive Vice President of RPX Corporation, will discuss the relevance of patent law to financial services companies, including:

• the increase in non-practicing entity (NPE) lawsuits;
• the patent marketplace post-Nortel and Google-Motorola; and 
• patent system reform

Changing the Balance Between Merchants and Cardholders

At our September luncheon, Christopher James will discuss the impact of antitrust policy and the Durbin Amendment to Dodd-Frank on U.S. payment systems.

The Consumer Financial Protection Bureau: Its Effect on the Cost of Consumer Credit

The CFPB has now assumed responsibility for defending consumers from the firms that provide them financial services.   Professor Wright, along with co-author, David Evans, has analyzed the likely effect that the CFPB will have on the price that consumers now pay for access to consumer credit.  He will discuss his research and explain why he believes that consumers will pay dearly for the protection provided by the CFPB.   

Innovation in Corporate Form and Lending

• Corporate forms for social enterprise – the California experience
• Impact of non-chartered lenders on consumers as borrowers and providers of funds
• California Department of Corporations' perspective on peer-to-peer lending

COST: Law Firm Members – $62; In-house Members – $59; Solo Members – $55

Recent Technological Developments in Payments

• New card acceptance channels and payment methods
• New security controls
• Social media's influence on payments and marketing 

DOWNLOAD MATERIALS

Payment Card Institute 2011 (6-9-11)

Emerging Payments and Virtual Currencies

• New and growing forms for emerging payments
• How and where emerging payments are being used
• Legal and regulatory issues posed by these products and services

COST: Law Firm Members – $62; In-house Members – $59; Solo Members – $55

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What Every Lawyer Should Know About Computer Crime Statutes

• Growth of computer crime statute claims in consumer class actions
• Offensive use of computer crime statute claims by companies to protect their brands
• Courts' responses to computer crime statute claims 



COST: Law Firm Members – $62; In-house Members – $59; Solo Members – $55

DOWNLOAD MATERIALS

Computer Crimes Presentation (4-4-11)