By William M. Aukamp
I began representing banks in late 1968, when I joined a Long Island-based two person law firm that served as general counsel to a 30 branch community bank. Today, I am of counsel to a 180 lawyer firm with offices in four states. During the intervening years, I have served as both inside and outside bank general counsel, as president of a state bankers association, and as a member of the American Bankers Association’s Government Relations Council. In addition, I have served as an outside bank director and as a bank president & ceo for four years. The latter was an unplanned career move that afforded me an opportunity to learn more about the banking business. The banks I have served have ranged in size from community, to regional, to money center, and have included national, state member and state nonmember banks. I mention all this to give you a sense of my perspective, having dealt with bank legal, regulatory, and legislative issues in a number of different capacities. Over these years there have been enormous changes in the field of banking law and they have greatly increased the demands on bank lawyers.
One of the obstacles faced by aspiring bank lawyers today is a lack of opportunities to work in a variety of areas within the field of banking law. Often they become pigeonholed early in their career in fairly narrow areas. This makes it difficult to get the well rounded experience necessary to become a banking law generalist. It is not likely that such opportunities will come your way if you merely sit back and wait for them. You must seek them out. Over the years, I have seen too many bank lawyers who have been content to do the work assigned to them, and no more. The best way to get noticed is to do more than what is expected from you. You should make an effort to learn as much as you can about the business of the bank you serve, about the banking industry generally, and about the industries with which banks compete. Also, make an effort to learn about the functions and purposes of the banking regulatory agencies. A good source of information is the agencies’ web sites. The Federal Reserve’s site is www.federalreserve.gov, the FDIC’s is www.fdic.gov, the OCC’s is www.occ.treas.gov, and the OTS’s is www.ots.treas.gov. The state banking agencies also have web sites.
It is important to keep abreast of legal and regulatory developments. There are a number of ways to do this, and I will touch on some of the publications I have relied upon later. Issuances of the federal banking and other agencies that have jurisdiction over bank activities are often published in the Federal Register. They include proposed, interim, and final rules, regulations, and policies. I scan the Federal Register every day and hardly a week goes by in which there isn’t an item that can affect banks. It is available free and on line. Giving bank management an early heads up on new developments is something they appreciate. This gets back to my point of learning about the bank’s business. This is necessary to ensure that you direct the information to the right people. It is also a good idea to meet with representatives of the various business units from time to time to find out what is going on in their world. Another reason to do this is that standard bank forms do not always accurately reflect the transactions for which they are intended. Sometime changes in systems are made that require changes to these forms; however they are not brought to the attention of those responsible for creating and updating them. This is particularly true in the case of credit card systems, but this kind of problem can occur in other areas as well. I can recall counseling a bank that had been using a form for major loan transactions that had been drafted years earlier by a prominent Wall Street law firm. The language describing a Libor pricing option stated that to determine the applicable rate, the bank would solicit two bids through its London office. I asked the bank’s treasurer if this procedure was actually followed and he replied that it was not. Instead, he determined the rate by calling a New York money broker.
We have a complex banking regulatory system and it takes time and effort to understand it and the interplay between state and federal law. Some things are counter intuitive. For example, one would not logically think that investments permissible for state chartered banks are governed by a section of the National Bank Act that delineates the powers of National Banks and by implementing regulations promulgated by the Comptroller of the Currency. Another example not rooted in the law, but in custom and practice, is the deference given by the other federal regulators as well as state regulators to the Comptroller’s fiduciary regulations. They are considered to be the banking industry’s standard.
Once you have gotten up to speed in banking law, another good way to become noticed by both your department management and potential clients is to write articles for industry trade publications. There is no way that my old three person law firm could provide full service to a bank client today, not only because of the proliferation of banking laws and regulations, but because of developments in other areas of the law that have an impact on banking organizations. Back in 1968 employment law was not a separate discipline. Today, employment law looms large among a bank’s needs for legal support. Fortunately, my current firm’s practice groups cover virtually every area of the law important for banks and we can provide full service to banking organizations of any size. Before I list the various banking law resources that I have found helpful over the years, I will make one final point about broadening your experience. I think every aspiring bank lawyer should spend time in a litigation group. I have found my experience in both banking and general litigation to be very useful when counseling bank clients in matters not involving litigation. I am sure the same could be said for every legal discipline, not just banking.
There are many fine publications and services on the market that are useful to bank lawyers. I will mention some that I have kept close at hand in my office and frequently rely upon. They are: 4 volume loose leaf Federal Reserve Regulatory Service (updated monthly); 10 volume CCH Federal Banking Law Reporter (updated bi-monthly); Federal Bank Holding Company Law by Heller & Fein, published by Law Journal Seminars-Press (periodically updated); 2 volume Brady On Bank Checks, published by A.S. Pratt & Sons (periodically updated) 2 volume Clark’s Law of Bank Deposits Collections and Credit Cards, also published by A.S. Pratt & Sons (periodically updated).; Pratt’s Payment System Library – this includes Brady on Bank Checks and Clark’s Law of Bank Deposits, etc. and is available electronically; and the Federal Reserve’s loose leaf Consumer Compliance manual.
The federal banking agencies all publish examination manuals, which provide a wealth of information relating to compliance with laws and regulations. They are free and available on line. I have in my office the FDIC’s Trust Examination Manual and FFIEC’s Bank Secrecy Act/Anti- Money Laundering Manual. Compliance with the Act and the Department of the Treasury’s implementing regulations commands a very high priority. The US Code and Code of Federal Regulations are available through Cornell Law School’s Legal Information Institute web site. (www.law.cornell.edu.) Although 12 CFR is available through some of the other sources mentioned, I find the US Government Printing Office’s 7 volume paperback version to be a useful quick reference… The UCC is, of course, important for bank lawyers. I do not presently have a UCC service in my office – after all, you can’t have everything. Over the years, I have found Hawkland’s UCC Service to be very good. It is now available through Westlaw.
I have written a handbook for bank directors, titled Banking Law For Bankers. While it is intended for laymen, lawyers who have not had a lot of experience in the field of banking law may find it to be of some use. If you would like to have a copy, contact Nancy Grimes at email@example.com or 800-875-3820.
Bill Aukamp has represented financial institutions since 1968, as both outside and inside counsel. He has contributed numerous articles on the subject of bank regulation to the American Banker, US Banker and Bank Director and has appeared as a panelist discussing banking legal topics on programs sponsored by the New York State Bankers Association, Bank Administration Institute, Consumer Credit Association of Metropolitan New York, Financial Women International, Delaware State Bank Commissioner, the Delaware State Bar Association, and National Law Foundation.