Cabela's 2013 Annual Report Download - page 44

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The Reform Act was signed into law in July 2010 and has made extensive changes to the laws regulating
financial services firms and credit rating agencies and requires significant rule-making. The changes resulting
from the Reform Act may impact our profitability, require changes to certain Financial Services segment
business practices, impose upon the Financial Services segment more stringent capital, liquidity, and leverage
ratio requirements, increase FDIC deposit insurance premiums, or otherwise adversely affect the Financial
Services segment’s business. These changes may also require the Financial Services segment to invest significant
management attention and resources to evaluate and make necessary changes.
The Reform Act established the new independent Consumer Financial Protection Bureau (the “Bureau”)
which has broad rulemaking, supervisory, and enforcement authority over consumer products, including credit
cards. WFB is subject to the Bureau’s regulation, and while the Bureau will not examine WFB, it will receive
information from WFB’s primary federal regulator. The Bureau is specifically authorized to issue rules identifying
as unlawful acts or practices it defines as “unfair, deceptive or abusive acts” in connection with any transaction
with a consumer or in connection with a consumer financial product or service. It is uncertain what rules will be
adopted by the Bureau, how such rules will be enforced, and whether or not such rules will require WFB to modify
existing practices or procedures.
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 recent 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.
Several rules and regulations have recently been proposed or adopted that may substantially affect issuers of
asset-backed securities.
On December 10, 2013, the Federal Reserve, the Office of the Comptroller of the Currency, the FDIC, and
the SEC approved joint final regulations implementing the provisions of the Reform Act commonly referred to
as the “Volcker Rule.” Generally, the Volcker Rule and the implementing regulations prohibit any banking entity
from engaging in proprietary trading and from investing in, sponsoring, or having certain relationships with a
hedge fund or private equity fund, subject to exemptions for certain permitted activities. These regulations limit
our ability to engage in the types of transactions covered by the Volcker Rule, and may impose compliance,
monitoring, and reporting obligations on us and WFB under certain circumstances. Although the effective date
of the regulations is April 1, 2014, the Federal Reserve approved an extension of the conformance period until
July 21, 2015. We are continuing to assess the impact, if any, that the Volcker Rule and the implementing regulation
will have on our Retail, Direct, and Financial Services segments.
The Cabela’s Master Credit Card Trust and related entities (collectively referred to as the “Trust”) is
structured to qualify for the exemption from the Investment Company Act of 1940, as amended (the “Investment
Company Act”) provided by Investment Company Act Rule 3a-7. On August 31, 2011, the SEC issued an advance
notice of proposed rulemaking regarding possible amendments to Investment Company Act Rule 3a-7. At this
time, it is uncertain what form the related proposed and final rules will take, whether the Trust would continue to
be eligible to rely on the exemption provided by Investment Company Act Rule 3a-7, and whether the Trust would
qualify for any other Investment Company Act exemption.
On July 26, 2011, the SEC re-proposed certain rules for asset-backed securities offerings (“SEC Regulation
AB II”), which were originally proposed by the SEC on April 7, 2010. If adopted, SEC Regulation AB II would
substantially change the disclosure, reporting, and offering process for public and private offerings of asset-backed
securities. As currently proposed, SEC Regulation AB II would, among other things, impose as a condition for
the shelf registration of asset-backed securities the filing of a certification concerning the disclosure contained in
the prospectus and the design of the securitization at the time of each offering off the shelf and the appointment
of a credit risk manager to review assets when credit enhancement requirements are not met or at the direction
of investors. Issuers of publicly offered asset-backed securities would be required to disclose more information
regarding the underlying assets. Moreover, proposed SEC Regulation AB II would alter the safe harbor standards