Advising Financial Institutions in an Era of Heightened Regulatory Scrutiny

Responding to Government Investigations and Refining Compliance Strategies

Number of Troubled Banks Jumps 30% in 2Q '08

Recording of a 90-minute premium CLE webinar with Q&A

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Conducted on Tuesday, October 28, 2008

Course Materials


Due to the subprime market collapse, all financial institutions face serious new risks. Over a year after that collapse, the government has taken control of Fannie Mae and Freddie Mac. On one terrible Monday, Sept. 15, Lehman Brothers announced its bankruptcy, Merrill Lynch sold its assets to Bank of America, and AIG announced it was restructuring and seeking emergency Federal Reserve help.

Financial troubles are hitting financial institutions of every size. During the second quarter of 2008, the number of troubled U.S. banks grew by 30 percent to 117 banks, the highest level since 2003.

Federal regulators are increasingly vigilant, stepping up investigations and enforcement actions against even apparently well-managed financial institutions. The FDIC also plans to charge higher premiums for all insured financial institutions.

Listen as our panel of banking law attorneys reviews the current enforcement environment and offers best practices for banks and other financial institutions as they navigate through this highly volatile period.



  1. Overview of current enforcement activity
    1. Types of enforcement and what they mean
    2. Agency updates — Office of Thrift Supervision RB 37-23 — Guidance on enforcement actions (July 18, 2008)
    3. Recognizing the warning signs for government investigation
    4. Criticisms in examination reports
    5. Asset quality erosion
    6. Risk management, controls and capital
  2. Dealing with regulatory investigations
    1. Limiting the scope
    2. Cooperation
    3. Attorney/Client Privilege
  3. Simultaneous internal investigations by the Bank
    1. Independent reviews by Board Committees
    2. Protecting investigatory work product
    3. Dealing with whistleblowers
    4. Sharing of information with regulators
  4. Settlement vs. Confrontation
    1. Multi-agency actions and the complexity of settlement
    2. Terms of settlement
    3. Cost analyses
    4. Protective provisions in consent orders
    5. Complication caused by criminal investigations


The panel will review these and other key questions:

  • What current enforcement efforts are underway to ensure that U.S. banks are not engaging in risky lending practices? 
  • How should banks and financial institutions respond to the heightened scrutiny by bank regulators? 
  • What are some best practices banks and financial institutions should employ immediately to prevail in a government investigation?
  • What ongoing compliance strategies should banks craft to reduce the future risk of failure?


Thomas P. Vartanian
Thomas P. Vartanian

Fried Frank

He chairs the firm's Financial Institutions Transactions Group and advises financial services clients in compliance and...  |  Read More

Ronald R. Glancz
Ronald R. Glancz

He chairs the firm's Financial Services Group, representing banks and other financial institutions in matters involving...  |  Read More

John L. Douglas
John L. Douglas
Paul Hastings

He concentrates in the regulation of financial institutions and in advising officers, directors and shareholders in the...  |  Read More

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