0

Feds ease banking restrictions for marijuana biz

The Obama administration issued new guidelines Friday that’ll make it easier for banks to work with marijuana-related businesses.

This had been a big problem for businesses in the 20 states – including California – plus the District of Columbia where medical use of marijuana is legal under state law, and particularly in Washington and Colorado, which have legalized marijuana for recreational use.

Marijuana is generating millions of dollars in those states, but because it’s still banned by federal law, many banks and credit card issuers were loath to let such businesses open accounts. That left many marijuana businesses to do all their transactions in cash, and having so much cash around increases the risk of robbery and other violent crimes.

But on Friday, the Treasury Department’s Financial Crimes Enforcement Network in coordination with the Justice Department issued guidelines to clarify “how financial institutions can provide services to marijuana-related businesses” consistent with their Bank Secrecy Act obligations.

“Now that some states have elected to legalize and regulate the marijuana trade, FinCEN seeks to move from the shadows the historically covert financial operations of marijuana businesses,” Jennifer Shasky Calvery, the Financial Crimes Enforcement Network’s director, said in a news release. “Our guidance provides financial institutions with clarity on what they must do if they are going to provide financial services to marijuana businesses and what reporting will assist law enforcement.”

Banks should check with state authorities whether the business is duly licensed and registered and review the information it provided to get that license; learn as much as possible about the business’ owners, products and customers; and monitor the business for any suspicious activity or news reports of legal problems, the memo advised.

Even so, banks must file “suspicious activity reports” on any funds derived from marijuana, the memo says – but they can file special “limited” reports for businesses that are believed to be complying with state law.

Drug reform and marijuana legalization advocates are pleased.

“It appears that the Obama administration is trying to provide as much protection as possible for the marijuana industry, given the constraints of federal law,” Ethan Nadelmann, the Drug Policy Alliance’s executive director, said in a news release. “The assurances the administration have provided appear fairly substantial and will hopefully prove sufficient so that banks will feel safe doing business with the marijuana industry. I have to say I’m impressed by how the White House is trying to make this work, especially given the inability of Congress to do anything constructive in this area.”

Steph Sherer, executive director of Americans for Safe Access, said advocates have been pushing for such concessions for years, but it’s still a piecemeal approach.

“We will certainly be working with banks, credit unions, and credit card companies to ensure proper implementation of this federal guidance,” she said. “Removing the risks of operating as an ‘all-cash’ business cannot be overstated, but we will also continue to put pressure on the Obama Administration to wrap these types of discrete practices into a more comprehensive medical marijuana policy.”

3

California gets foreclosure-prevention funding

State Housing Finance Agencies (HFAs) in California and four other states can start using $1.5 billion in “Hardest Hit Fund” foreclosure-prevention funding under plans approved by the Obama Administration, the Treasury Department announced this morning.

President Obama established the fund in February to provide targeted aid to families in the states hit hardest by the housing downturn. The states approved to receive aid today as part of the first round of funding each experienced a 20 percent or greater decline in average housing prices.

Each state HFA gathered public input and created Hardest Hit Fund programs designed to meet their own states’ unique challenges. The plans were submitted to the Treasury Department in April, and the approved states can now set up and roll out their programs.

California’s share is $699.6 million, with which the state will implement its plan:

    Unemployment Mortgage Assistance (UMA) – Intended to help homeowners who have lost their jobs. CalHFA will provide a temporary mortgage payment subsidy of varying size and term to unemployed homeowners who wish to remain in their homes but are in imminent danger of foreclosure due to short-term financial problems. These funds could provide up to six months of benefits with a monthly benefit of up to $1,500 or 50% of the existing total monthly mortgage, whichever is less.
    Mortgage Reinstatement Assistance Program (MRAP) – Intended to help homeowners who have fallen behind on their mortgage payments. CalHFA will provide limited money to reinstate mortgage loans that are in arrears in order to prevent potential foreclosures – up to $15,000 per household or 50 percent of the past due amount, whichever is less, with a required dollar-for-dollar contribution match from the lender, servicer, insurer and/or borrower.
    Principal Reduction Program (PRP) – Intended to help homeowners who have severe negative equity – or are “underwater,” in the common slang. CalHFA will put up money, matched by participating financial institutions, to reduce outstanding principal balances of qualifying underwater borrowers. Principal balances will be reduced to market levels needed to prevent avoidable foreclosures and promote sustainable homeownership. The principal reduction program should most likely be a prelude to loan modification.
    Transition Assistance Program (TAP) – Intended to help stabilize communiteis by giving homeowners help in relocating when it’s determined that they can no longer afford their home. CalHFA’s transition assistance will be used along with servicer/investor short sale and deed-in-lieu of foreclosure programs to help borrowers transition into stable and affordable housing elsewhere. Borrowers will be responsible to occupy and maintain the property until the home is sold or returned to the lender as negotiated. Funds will be available on a one-time only basis.

House Education and Labor Committee Chairman George Miller, D-Martinez, issued a news release praising the funding.

“Every family in our community has felt the effects of this severe economic recession and the problems in California’s housing market,” he said. “People have lost their jobs and their homes through no fault of their own. This new federal program is intended to help homeowners in our state and to help stabilize our economy.

“Of course there is more to do, and we’re continuing our work in Congress to save and create good American jobs to turn the economy around and get people back on their feet. In the end, the best way to help avoid foreclosure is to get more Americans back to work. We’re making progress in that direction but that remains our top priority.”

The other states cleared for funding today were Arizona, Nevada, Michigan and Florida.

1

California law students nab D.C. internships

Law students from the University of California, Berkeley and UCLA are beltway-bound in a new full-semester academic internship program.

“UCDC Law” will place second- and third-year law students in congressional offices, the Justice Department, regulatory agencies and elsewhere around the nation’s capital; UC-Irvine students eventually will take part, too. Only a handful of U.S. law schools have academic programs in Washington, D.C.

“This is a direct and powerful way to expose students to aspects of lawyering in Washington and thereby broaden their thinking about professional paths available to them,” says Berkeley Law Dean Chris Edley Jr., who recently advised President Barack Obama’s transition team. “Our new classroom technology will also enable us to connect our students and experts in Washington with law students on campus, combining resources for dynamic interactive instruction.”

The first batch of interns, including seven from Berkeley, already has settled into Washington. Second-year Berkeley student Dyanna Quizon, placed in the Justice Department’s Civil Rights Division, said the level of responsibility they’ve been given “is amazing.”

“I’ve been asked to help lead a substantive training session for federal employees on making programs more accessible to non-English speaking communities,” she said. “A law student telling government officials what to do in important situations? Pretty incredible.”

More, after the jump…
Continue Reading

0

Barbara Lee gets new Appropriations assignment

Rep. Barbara Lee, D-Oakland, says she’s “extremely pleased” with her appointment yesterday to three key Appropriations subcommittees: She retained her position on the Labor, Health and Human Services and Education and the State, Foreign Operations subcommittees, and also gained a new assignment to the Financial Services Subcommittee.

That new assignment gives her a say in jurisdiction over appropriation of funds to key federal offices including the Office of Management and Budget, Department of the Treasury, Federal Trade Commission and the Small Business Administration.

Said Lee: “I look forward to continuing my work on the committee to address the challenges confronting our nation and world.”

0

Oh, so NOW they want an exit strategy?

House Republican leaders sent a letter to Treasury Secretary Henry Paulson and Federal Reserve Board Chairman Ben Bernanke yesterday outlining their concerns about the lack of transparency in the Troubled Assets Relief Program (TARP) — the $700 billion financial-markets bailout — even as Treasury officials decide whether to ask Congress to release more of the money.

Such opaqueness is unacceptable, particularly if it is your intention to ask Congress to release the remaining $350 billion in taxpayer funds that were conditionally authorized by Congress this fall. It is our strongly held view that before any such request is made, the American people need satisfactory answers to a number of important questions. While the Treasury and Federal Reserve play different roles within the government, many of your recent activities have been coordinated efforts. As a result, we request answers to the following questions:

    1. What is your exit strategy for the government’s sweeping involvement in private business?

Whoa. I’m all for more transparency and accountability, but I spend much of my day writing so I’m a little sensitive to use of the language, and I think House Republicans should be banned from using the phrase “exit strategy” for the time being, don’t you? I mean, by some estimates we’ve spent well over $600 billion — some say it’s way into the trillions — on the war in Iraq (not to mention the steep human costs), but I didn’t see these same Republicans pushing the Bush Administration for an exit strategy there. I guess big government is in the eye of the beholder.