Cabela's 2013 Annual Report Download - page 32

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22
or otherwise adversely affecting the Financial Services segment’s business. A description of the Reform Act and
other legislative and regulatory developments is contained in “Management’s Discussion and Analysis of Financial
Condition and Results of Operations - Developments in Legislation and Regulation.”
As directed by the Reform Act, the United States Government Accountability Office released a report on
January 20, 2012, that examines the potential implications of eliminating certain exceptions under the Bank
Holding Company Act of 1956, as amended (“BHCA”), including the exception for credit card banks. It is unclear
whether this report will lead to any additional legislative or regulatory action. If the credit card bank exception
were eliminated or modified, we may be required to divest our ownership of WFB unless we were willing and able
to become a bank holding company under the BHCA. Any such forced divestiture may materially adversely affect
our business and results of operations.
The Reform Act will also affect a number of significant changes relating to asset-backed securities, including
additional oversight and regulation of credit rating agencies and additional reporting and disclosure requirements.
In addition, the Reform Act will prohibit issuers and payment card networks from placing certain restrictions on
vendors relating to credit card transactions, which could affect consumer behavior and the use of credit cards as a
form of payment.
The Reform Act will also likely result in increased scrutiny and oversight of consumer financial services
and products, including credit cards, primarily through the establishment of the Consumer Financial Protection
Bureau (the “Bureau”) within the Federal Reserve. The Bureau has broad rulemaking and enforcement authority
over providers of credit, savings, and payment services and products, and WFB is subject to its regulation. While
the Bureau will not examine WFB, it will receive information from the FDIC, WFB’s primary regulator. The
Bureau also has rulemaking and interpretive authority under existing and future consumer financial services laws
and supervisory, examination, and enforcement authority over institutions subject to its jurisdiction. The Bureau,
the FDIC, and other agencies have recently announced several high-profile enforcement actions against credit card
issuers for deceptive marketing and other illegal practices related to the advertising of ancillary products, collection
practices, and other matters. By these public enforcement actions, the Bureau and the FDIC have signaled a
heightened scrutiny of credit card issuers. We anticipate increased activity by regulators in pursuing consumer
protection claims going forward.
The Reform Act also limits the ability of federal laws to preempt state and local consumer protection laws.
This legislation could have a material adverse effect on WFB, for example, if a new consumer protection agency,
or state officials, were to impose new restrictions on risk management, pricing, disclosure, or other aspects of the
credit card business.
The Reform Act also requires fees charged for debit card transactions to be both “reasonable and proportional”
to the cost incurred by the card issuer. Although the Reform Act applies this restriction only to debit cards, Congress
has expressed its desire to regulate interchange fees for credit cards and such regulation could have an adverse
impact to WFB. For example, members of Congress have held hearings on certain practices in the credit card
industry, and Congress is also expected to continue consideration of legislation introduced in 2009 to regulate the
assessment of interchange fees.
Many provisions of the Reform Act require the adoption of rules to implement. In addition, the Reform
Act mandates multiple studies, which could result in additional legislative or regulatory action. The effect of the
Reform Act and its implementing regulations on the Financial Services segment’s business and operations could
be significant. In addition, we may be required to invest significant management time and resources to address
the various provisions of the Reform Act and the numerous regulations that are required to be issued under it. The
Reform Act, any related legislation, and any implementing regulations could have a material adverse effect on our
business, results of operations, and financial condition.