Cyber-Graham® Archive

Here you will find our most recent Cyber-Grahams authored by our attorneys.

Kathleen T. Petrich
December 11, 2009
U.S. Patent and Trademark Office Announces its New Green Technology Pilot Program
On December 7, 2009, the U.S. Patent and Trademark Office (“PTO”) announced, in conjunction with the United Nations Framework Conference on Climate Change being currently held in Copenhagen, Denmark, an expedited procedure for pending “Green Technology” patent applications called the Green Technology Pilot Program (“Pilot Program”). This announcement was greeted with a bit of fanfare and eager anticipation, as the normal pendency for examination of the application can be up to 30 months. But the pilot program is limited to the first 3000 petitions.

Stephen M. Klein
November 18, 2009
Don’t Play With Fire Boys and Girls
Well, Senator Dodd, bless his heart, has come out with yet another proposal to restructure the financial regulatory system. If you haven’t seen it, at its heart is a new oversight body called the “Financial Institutions Regulatory Agency” or “FIRA.” I think a more appropriate name would be the “Financial Institutions Regulatory Entity” or “FIRE.”

Casey M. Nault
November 17, 2009
Incentive Compensation: The Federal Reserve Speaks
On October 22, 2009, the Federal Reserve Board issued proposed guidance designed to ensure that incentive compensation practices and policies at Fed-regulated institutions, including U.S. bank holding companies, state member banks and certain other categories of institutions, do not undermine the safety and soundness of those institutions. The Fed explained its action in part by noting that corporate governance structures related to compensation practices may not be sufficient to protect the safety and soundness of institutions, since the federal “safety net” may lead shareholders to tolerate a degree of risk that is inconsistent with safety and soundness. Like the Treasury rules applicable to institutions participating in the Troubled Asset Relief Program (TARP) and recent proposed rules from the Securities and Exchange Commission (SEC), the proposed Fed guidance focuses on identifying and eliminating compensation practices that may encourage employees to take excessive risks. The Fed guidance does not impose pay caps or limit the forms of compensation, but rather imposes a framework of key principles within which Boards and management must design incentive compensation programs. In addition to the guidance, the Fed also announced two new supervisory initiatives to drive progress toward compensation practices that are better aligned with safety and soundness and to identify and spread best practices.

Stephen M. Klein
October 2, 2009
Going, Going, Gone 
As I head down to San Francisco for yet another meeting with a federal banking regulator on behalf of a client, I ask myself, “What is happening in this crazy world of banking?” The past year has been littered with historical and severe financial crisis. Now we are facing the ravages that ensue – as bank after bank in the West suffers the consequences.

Irvin W. Sandman and Russell C. Savrann
September 17, 2009
Entering The Asset Management Game - A Guide To Successfully Making The Transition 
The hotel industry is seeing an increased interest among hotel companies to provide hotel asset management services. What are the pressures that are driving this trend? What are the best practices for securing asset management engagements?

Stephen M. Klein
August 24, 2009
Life After the Scorched Earth
It’s been over a year of economic turmoil and while things haven’t really stabilized yet, there seems to be a glimmer of light at the end of the tunnel. The question that has occurred to me, as we have visited with numerous Boards of Directors and regulators, is what is in store for the next chapter for community banks.

Clemens H. Barnes
July 22, 2009
Union Organizers Turn Up the Heat in Olympia and D.C.
Four months ago, the “Employee Free Choice Act”—which would have helped union organizers by eliminating secret ballot elections in favor of accepting signed union cards, increased penalties for employers for misconduct in union organizing campaigns, and provided for arbitrator-dictated terms of an employer’s first union contract if bargaining failed—fell short of the votes required to break a filibuster in the U.S. Senate. In Olympia, the “Worker Privacy Act”—which would have limited the ability of employers to tell their side of the unionizing issue—was killed after inappropriate lobbying by organized labor was uncovered by the Seattle Times. In the news this past week are developments on both fronts.

Casey M. Nault
July 10, 2009
Executive Compensation and Corporate Governance - The SEC and Treasury Strike Again
On July 1, 2009, the Securities and Exchange Commission (SEC) voted to propose new rules on executive compensation and corporate governance and to approve a controversial rule change with respect to broker voting in director elections. These actions come on the heels of the U.S. Treasury Department’s issuance of rules on executive compensation and corporate governance applicable to companies receiving government assistance or investment under the Troubled Asset Relief Program (TARP), including its Capital Purchase Program.  All public companies should begin to consider how the SEC’s actions will impact them, and all TARP companies must take prompt action to comply with the Treasury rules. In addition, all companies - regardless of their participation in TARP - may want to consider applicable portions of the Treasury rules for potential best practices.

Stephen M. Klein
July 6, 2009
Banking on the Brink
Most banks are operating under a bleak cloud. It is composed of two elements: a dismal economy and a stressful regulatory environment. Unfortunately, the economies in most areas of the West – primarily fueled by rising unemployment and deteriorating real estate values – have not bottomed out yet. Compound that with aggressive regulatory exams designed to look under every rock – and you have a bad recipe. Feedback from our clients suggests that exams are very harsh, the standards for classifying loans have changed – with single and double downgrades on CAMELS ratings the norm. Regulatory enforcement actions abound and are now commonplace.

Casey M. Nault
May 28, 2009
Recent and Proposed Corporate Governance Reforms: What Do They Mean for Public and Private Companies?
As we make our way through and eventually out the other side of the financial crisis, Congress, the SEC, the Treasury Department and other governmental authorities are poised to implement, and expand beyond troubled financial institutions, major pillars of the shareholder activist agenda and new regulations on executive compensation. At the state level, Delaware has enacted, and many other states also can be expected to adopt, significant corporate governance reforms. The remainder of 2009 is likely to bring new rules and legislation with respect to some or all of the following major issues.

Irvin W. Sandman and Russell C. Savrann
May 27, 2009
Hotel Owners, Lenders and Stakeholders Square Off: Equitable Subordination
The hotel industry’s year-over-year declines continued in the second quarter of 2009. Demand is leveling out at a lower baseline, and the hotel industry is adjusting to a new reality.
Hotel owners, lenders and stakeholders are now beginning to square off to determine who will take a haircut and who will be squeezed out altogether. This process will not be quick or easy. As this process lurches through its early stages, an issue has temporarily taken center stage: equitable subordination.

Marcia K. Fujimoto
May 27, 2009
Washington Residents May Owe Unanticipated Estate Tax
Washington residents may need to review their estate plans because of changes in estate tax laws. The current Washington state estate tax is no longer tied to the federal estate tax system. This unlinking of the tax systems means that estates of Washington residents may face unanticipated tax liabilities.

Elaine L. Spencer
May 4, 2009
What the 2009 Legislature Did (and Didn’t) Do for the New Green Economy – Four Things Your Business Should Know
“Sustainability” is the new economy. For established and emerging business alike, being, staying, or becoming green is the future. The dominant force in the 2009 Legislature was of course the collapse of tax revenues in the face of the worst economy since the 1930s. In spite of the grim economy and a staggering budget shortfall, the Legislature did make some strides in advancing the green agenda. But in the final analysis, the session may be defined as much by what did not pass as what did. This newsletter presents a few of the highlights. 

Elaine L. Spencer
May 4, 2009
Legislature Moves Towards More Energy-Efficient Buildings
The Legislature took three steps towards long-term reduction in carbon emissions from the residential, commercial and industrial building stock. Ecology’s December 2008 Climate Comprehensive Plan estimates that nearly 9% of Washington’s carbon emissions come from commercial and residential buildings. Reduction in electricity use by the residential and commercial housing stock will in turn reduce the need for additional electrical generation capacity.

Judith A. Endejan
May 4, 2009
The Legislature Tinkers with Energy Legislation
While the Legislature did pass some financial measures designed to promote renewable energy development and energy conservation it did not pass a controversial measure that would have changed the Washington voter-approved clean energy standards. 

Zachary R. Hiatt 
May 4, 2009
Cap-and-Trade: Where Do We Go From Here?
The fate of Governor Gregoire’s cap-and-trade bill was one of the most noteworthy developments in the 2009 Legislature. As initially introduced, the governor’s bill (SB5735/HB1819) was a far-reaching cap-and-trade proposal that broke new ground by seeking for the first time to include residential and small commercial fuel use within the cap. This bold proposal, which was based largely on Washington’s participation in the Western Climate Initiative, was not without its flaws and was sure to face some opposition in the legislature and business community. Nonetheless, most scientists and politicians now agree that decisive action must be taken to curb greenhouse gas emissions and the cap-and-trade bill was an important part of the Governor’s legislative agenda.

Judith A. Endejan
May 4, 2009
Bills Aim to Spark the Green Economy
Sparking the economy in general was a major theme of the 2009 Legislature, and how to capture the benefit of the emerging green economy was no exception. Two bills were designed to bring economic development through innovation to rural areas and to insure that the state is training workers to fill green jobs as they emerge. 

Claire L. Molesworth
May 4, 2009
Bills Look to the Future of Forestry and Agriculture Industries in Washington’s Green Economy
The Legislature passed two bills this year that are notable for the forestry and agriculture industries. Both bills create opportunities to study how the forestry and agriculture industries may step up their roles in Washington’s growing green economy. The bills aim to decrease Washington’s dependence on oil by creating alternate energy sources while also increasing the value of forest and agricultural lands. The Legislature did not pass the cap-and-trade legislation that Governor Gregoire had pushed for, which in some ways was unfortunate for the forest and agriculture industries, as the Legislature had made considerable progress in defining the role of natural resource industries in carbon sequestration and offsets in a cap-and-trade program. Those issues will now turn to the federal legislation, without the benefit of this state having officially taken a stand.

Stephen M. Klein
April 27, 2009
What's A Bank To Do When The Regulators Come Knockin'?
Over the past year, as the economy has continued to deteriorate, the bank regulatory environment has become more and more challenging. Many “experts” have predicted that as many as half the banks in the United States will be under some form of administrative action by year-end. Based on what we are seeing out there, that may become a reality.

As we get deeper into the recession, more current bank examinations uncover more problems, reflecting continuing credit deterioration. In part, this is purely a function of the economy, stressed borrowers and collateral values. In part, it probably reflects the increased scrutiny and caution of the bank examiners, who are concerned about missing any problems.

Irvin W. Sandman
April 3, 2009
Hotel Loans in Trouble - Pointers for Lenders
Lenders who understand the unique and complex aspects of hotel collateral can avoid costly missteps and resulting losses. The “recession-turned-meltdown” has put intense pressure on the hotel industry. As the pressure continues to build, many hotel loans are in default or soon will be.

What should lenders with hotel collateral do? In January, we responded by forming our Hotel Asset Resolution Task Force (HART Force), bringing the specialized legal and industry skills and resources to stakeholders involved with troubled hotel assets. Below are now some obvious—and not-so-obvious—pointers specifically for hotel lenders.