American Express 2015 Annual Report Download - page 38

the liquidation or other resolution of the institution by a receiver. As a result, whether or not the FDIC ever sought to
repudiate any debt obligations of Centurion Bank or American Express Bank, the debt holders and depositors in non-
U.S. offices would be treated differently from, and could receive substantially less, if anything, than the depositors in
U.S. offices of the depository institution.
Orderly Liquidation Authority under Dodd-Frank
Dodd-Frank created the Orderly Liquidation Authority (“OLA”), a resolution regime for systemically important
non-bank financial companies, including bank holding companies, under which the Treasury Secretary may appoint
the FDIC as receiver to liquidate such a company if the company is in danger of default and presents a systemic risk to
U.S. financial stability. OLA is similar to the FDIC resolution model for depository institutions, including granting very
broad powers to the FDIC as receiver. Though creditors’ rights under OLA were modified from the FDIC regime to
reduce disparities in treatment between OLA and the U.S. Bankruptcy Code, substantial differences exist between the
two regimes, including the right of the FDIC to disregard the strict priority of creditor claims in limited circumstances,
the use of an administrative claims procedure to determine creditor claims (as opposed to the judicial procedure used
in bankruptcy proceedings), and the right of the FDIC to transfer claims to a “bridge” entity. The OLA is separate from
the Company’s resolution plan discussed in “Resolution Planning.”
The FDIC has developed a strategy under OLA, referred to as the “single point of entry” or “SPOE” strategy, under
which the FDIC would resolve a failed financial holding company by transferring its assets (including shares of its
operating subsidiaries) and, potentially, very limited liabilities to a “bridge” holding company; utilize the resources of
the failed financial holding company to recapitalize the operating subsidiaries; and satisfy the claims of unsecured
creditors of the failed financial holding company and other claimants in the receivership by delivering securities of one
or more new financial companies that would emerge from the bridge holding company. Under this strategy,
management of the failed financial holding company would be replaced and shareholders and creditors of the failed
financial holding company would bear the losses resulting from the failure.
Cross-Guarantee Provisions
Under the “cross-guarantee” provision of the Financial Institutions Reform, Recovery and Enforcement Act of
1989 (“FIRREA”), insured depository institutions, such as Centurion Bank and American Express Bank, may be liable
to the FDIC with respect to any loss incurred or reasonably anticipated to be incurred by the FDIC in connection with
the default of, or FDIC assistance to, any commonly controlled insured depository institution. Centurion Bank and
American Express Bank are commonly controlled within the meaning of the FIRREA cross-guarantee provision. A
cross-guarantee claim of the FDIC against a depository institution is generally superior in right of payment to claims of
the holding company and its affiliates against such depository institution.
Community Reinvestment Act
Centurion Bank and American Express Bank are subject to the CRA, which imposes affirmative, ongoing
obligations on depository institutions to meet the credit needs of their local communities, including low- and
moderate-income neighborhoods, consistent with the safe and sound operation of the institution. The CRA requires an
institution’s primary federal regulator, as part of the examination process, to assess the institution’s record in meeting
its obligations under the CRA, and also to take such assessment into account in evaluating merger and acquisition
proposals and applications to open or relocate a branch office. American Express Bank was examined by the OCC
during the fourth quarter of 2012 and received a “satisfactory” CRA rating. Centurion Bank was examined by the FDIC
for CRA compliance during the third quarter of 2015. We are awaiting the results of this examination. In its last
examination, Centurion Bank received a “satisfactory” CRA rating.
Privacy and Data Protection
Regulatory and legislative activity in the areas of privacy, data protection and information security continues to
increase worldwide. We have established and continue to maintain policies that provide a framework for compliance
with applicable privacy, data protection and information security laws, meet evolving customer privacy expectations
and support and enable business innovation and growth.
Our regulators, including regulatory examiners, are increasingly focused on ensuring that our privacy, data
protection and information security-related policies and practices are adequate to inform customers of our data
collection, use, sharing and/or security practices, to provide them with choices, if required, about how we use and
share their information, and to safeguard their personal information in accordance with applicable privacy, data
protection and information security laws.
In the United States, certain of our businesses may be subject to the privacy, disclosure and information security
provisions of the Gramm-Leach-Bliley Act (“GLBA”) and its implementing regulations and guidance. Among other
things, the GLBA imposes certain limitations on the ability of a financial institution to share consumers’ nonpublic
personal information with nonaffiliated third parties; requires that a financial institution provide certain disclosures to
27