BB&T 2010 Annual Report Download - page 39

Consumer Protection Laws
In connection with their lending and leasing activities, each of the Banks is subject to a number of federal and
state laws designed to protect borrowers and promote lending to various sectors of the economy and population.
These laws include the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Truth in Lending Act,
the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act, and their respective state law
counterparts.
The Dodd-Frank Act creates a new, independent federal agency, the CFPB, which is granted broad
rulemaking, supervisory and enforcement powers under various federal consumer financial protection laws,
including the laws referenced above and certain other statutes. The CFPB will have examination and primary
enforcement authority with respect to depository institutions with $10 billion or more in assets. Smaller
institutions will be subject to rules promulgated by the CFPB but will continue to be examined and supervised by
federal banking regulators for consumer compliance purposes. The CFPB will have authority to prevent unfair,
deceptive or abusive practices in connection with the offering of consumer financial products. The Dodd-Frank
Act authorizes the CFPB to establish certain minimum standards for the origination of residential mortgages
including a determination of the borrower’s ability to repay. In addition, the Dodd-Frank Act will allow
borrowers to raise certain defenses to foreclosure if they receive any loan other than a “qualified mortgage” as
defined by the CFPB. The Dodd-Frank Act permits states to adopt consumer protection laws and standards that
are more stringent than those adopted at the federal level and, in certain circumstances, permits state attorneys
general to enforce compliance with both the state and federal laws and regulations
The Dodd-Frank Act also requires the Federal Reserve to adopt rules regarding the interchange fees that
may be charged with respect to electronic debit transactions. The limits to be placed on debit interchange fees
may significantly reduce BB&T’s debit card interchange revenues. Interchange fees, or “swipe” fees, are charges
that merchants pay to BB&T and other credit card companies and card-issuing banks for processing electronic
payment transactions. The Dodd-Frank Act provides the Federal Reserve with authority over interchange fees
received or charged by a card issuer, requiring that fees must be “reasonable and proportional” to the costs of
processing such transactions. Although final rules have not yet been adopted, this provision of the Dodd-Frank
Act and the applicable rules ultimately promulgated thereunder are expected to cause significant reductions in
future card-fee revenues generated by BB&T, while also creating meaningful compliance costs.
Federal law currently contains extensive customer privacy protection provisions. Under these provisions, a
financial institution must provide to its customers, at the inception of the customer relationship and annually
thereafter, the institution’s policies and procedures regarding the handling of customers’ nonpublic personal
financial information. These provisions also provide that, except for certain limited exceptions, an institution may
not provide such personal information to unaffiliated third parties unless the institution discloses to the customer
that such information may be so provided and the customer is given the opportunity to opt out of such disclosure.
Federal law makes it a criminal offense, except in limited circumstances, to obtain or attempt to obtain customer
information of a financial nature by fraudulent or deceptive means.
The CRA requires the Banks’ primary federal bank regulatory agency, the FDIC for Branch Bank and the
OTS for BB&T FSB, to assess the bank’s record in meeting the credit needs of the communities served by each
Bank, including low- and moderate-income neighborhoods and persons. Institutions are assigned one of four
ratings: “Outstanding,” “Satisfactory,” “Needs to Improve” or “Substantial Noncompliance.” This assessment is
reviewed for any bank that applies to merge or consolidate with or acquire the assets or assume the liabilities of
an insured depository institution, or to open or relocate a branch office. The CRA record of each subsidiary bank
of a financial holding company, such as BB&T, also is assessed by the Federal Reserve in connection with any
acquisition or merger application.
Automated Overdraft Payment Regulation
The Federal Reserve and FDIC have recently enacted consumer protection regulations related to automated
overdraft payment programs offered by financial institutions. In November 2009, the Federal Reserve amended
its Regulation E to prohibit financial institutions, including BB&T, from charging consumers fees for paying
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