First 100 Days of Obama Administration Pave Road for More Regulation

Financial Institutions Should Prepare Now for Regulatory Change as Mood in
Washington Shifts to More Aggressive Protection of Consumers
MINNEAPOLIS--(Business Wire)--
The first 100 days of President Barack Obama`s administration have been marked
by much pressure to address the financial crisis, help the U.S. economy, and
establish regulatory reform. While substantial regulatory changes have already
been made, lawmakers are in the process of debating additional legislation that
would help protect consumers even more aggressively. Wolters Kluwer Financial
Services` compliance experts agree that development alone has already changed
the mood within the financial services industry.

"Regulators are feeling much more empowered than they were during the previous
administration," said Edward Kramer, executive vice president for Regulatory
Programs at Wolters Kluwer Financial Services. "More stringent regulatory exams,
a rising number of enforcement actions and the growing number of financial
institution closings during the first quarter of this year are evidence of
that."

Kramer said he believes the mortgage reform bill Congress debated last week
could be the beginning of major financial services regulatory reform. The bill
would fundamentally change the mortgage lending market, placing tighter
restrictions on non-prime mortgage lending and lender compensation. Perhaps more
importantly, it would require lenders establish what the bill calls a "duty of
care" in proving borrowers could repay a loan or that refinancing gave them a
net tangible benefit.

"The proposed mortgage reform bill combined with numerous regulatory changes
already scheduled to take effect this year could likely put financial
institutions in a significant crunch," said Amy Downey, senior regulatory
consultant at Wolters Kluwer Financial Services. "These changes are very
different from those of previous years that required a simple update to a
document or disclosure. Instead, they will require institutions to change the
way they do business. Many institutions are just starting to figure this out and
scrambling to adapt."

The securities industry has also seen a number of issues discussed during the
first 100 days of the new presidential administration, including the potential
regulation and registration of hedge funds, changes to credit rating agencies,
and harmonizing rules between investment advisors and broker-dealers.
Legislation concerning some of these issues has been introduced, and more will
likely come.

"I think it`s clear that we are going to see more regulation in the coming
months, as well as the regulators working to flex their muscles and extend their
influence," said David Thetford, securities compliance principal analyst at
Wolters Kluwer Financial Services. "The Securities and Exchange Commission (SEC)
has already highlighted a number of areas where it would like to see reform, and
has indicated it would like to increase the size of its staff. I`m anticipating
we`ll also see similar activity from other regulators, including the Financial
Industry Regulatory Authority (FINRA)."

Thetford notes that this has created a level of suspense within the financial
services industry, as it prepares for the growing pains associated with
regulatory change, which will likely include adjusting and modifying compliance
procedures and educating staff.

In addition to assessing their compliance programs in anticipation of regulatory
changes, financial services firms are also evaluating the types of products they
offer.

Kathy Donovan, senior compliance counsel for Insurance Compliance Solutions at
Wolters Kluwer Financial Services, says during the last few months, there has
been a growing interest related to products deemed more traditional, such as
whole life and term life policies.

"We`re definitely seeing a shift in the insurance industry," said Donovan.
"Insurers are looking at products that are less market sensitive. Given that the
SEC plans to regulate fixed indexed annuities as securities under Rule 151A,
some insurers might put less focus on growth in that market and rework their
offerings so they can minimize the chance that their products are identified as
securities."

Jason Marx, vice president and general manager, Mortgage, at Wolters Kluwer
Financial Services says mortgage companies continued to expand their Federal
Housing Administration (FHA) lending programs at a fast pace to keep up with
market demand for government-insured lending programs. He expects them to
increase their activities in reaction to currently lower rates, refinance
initiatives and loan modification programs throughout the rest of the year as
they take advantage of the Treasury`s new Making Home Affordable Program.

"Lenders are very interested in becoming involved with the program," said Marx.
"They realize that by helping distressed borrowers refinance or modify their
loans, they can assist those borrowers that have the intent and ability to make
regular payments and stay in their home."

The auto finance market has also been affected by this shift as subprime loans
have become much less prevalent.

"Many consumers and auto dealerships have found that most of the near-prime and
subprime lenders have pulled out of that market niche," said Kevin Kopp, general
manager of Indirect Lending at Wolters Kluwer Financial Services. "This has
inhibited retail sales, leaving many auto dealerships feeling the pinch."

Kopp says the greater focus on consumer protection and industry regulation
should make dealers pause and reflect on their own practices, and make sure
their business is doing everything possible to manage risk.

Kevin Byrne, senior regulatory consultant at Wolters Kluwer Financial Services
agreed, and said financial institutions will also need to make sure they`re
doing all they can in the coming year to combat identity theft, money laundering
and terrorist financing. He cited the record number of Suspicious Activity
Reports (SARs) filed by institutions in 2008 as direct evidence that such
financial crimes are on the rise.

"In a down economy, instances of fraud committed out of desperation by
consumers, as well as an institution`s own employees, often grow dramatically,"
Byrne said. "When you combine that trend with the growing sophistication and
globalization of today`s financial criminals, you create an environment ripe for
an overall spike in fraudulent activity."

"Managing operational and compliance risks like fraud can no longer be viewed as
a necessary evil," added Downey. "It has to be seen as a reality of doing
business in today`s marketplace. Regulators and consumers were much more
tolerant when times were good. But they`re not so much now that times aren`t so
good. That`s not likely to change anytime soon."

About Wolters Kluwer Financial Services

Wolters Kluwer Financial Services provides best-in-class compliance, content,
and technology solutions and services that help financial organizations manage
risk and improve efficiency and effectiveness across their enterprise. The
organization`s prominent brands include Bankers Systems, VMP Mortgage Solutions,
PCi, AppOne, GainsKeeper, Capital Changes, NILS, AuthenticWeb and Uniform Forms.
Wolters Kluwer Financial Services is part of Wolters Kluwer, a leading global
information services and publishing company with annual revenues of (2008) €3.4
billion and approximately 20,000 employees worldwide. Please visit our Web site
for more information.

Wolters Kluwer Financial Services
Jennifer Marso, 612-852-7912
Director, Corporate Communications
jennifer.marso@wolterskluwer.com
or
Charles Miller, 320-240-5457
Senior Public Relations Specialist
charles.miller@wolterskluwer.com
or
Angela Peterson, 612-656-7745
Senior Public Relations Specialist
angela.peterson@wolterskluwer.com

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