1. Navigating the Waters of Multi-Agency Regulation Pointers and Pitfalls for Practitioners

2. Presenters James E. Davis, Office of the Attorney General Jon L. Gillum, Locke Lord LLP Leah Gillum, Texas Department of Insurance Catherine Reyer, Texas Department of Banking Michael Rigby, Office of Consumer Credit Commissioner

3. GAP: Guaranteed Asset Protection

4. Financial product that typically protects borrower from negative equity caused by unexpected loss of collateral. Key Variations: 1.Payment covering borrower’s negative equity 2.Waiver/cancellation of borrower’s negative equity What is Guaranteed Asset Protection (GAP)?

5. Is GAP regulated by states as insurance? Key elements of insurance: 1.Transfer of risk 2.Pooling of risk 3.Fortuitous event 4.Indemnity Guaranteed Asset Protection How is GAP regulated?

6. Is GAP regulated according to the type of obligor? TYPE OF INSTITUTION PRIMARY REGULATOR National Bank Office of the Comptroller of the Currency (OCC) Texas State- Chartered Bank Texas Department of Banking Federal Savings & Loan OCC (formerly Office of Thrift Administration) Texas State Savings Bank Texas Department of Savings & Mortgage Lending Federal Credit Union National Credit Union Administration Texas State Credit Union Texas Credit Union Department Guaranteed Asset Protection How is GAP regulated?

7. Is GAP regulated by states as a unique product with special laws and regulations? Pursuant to Texas Finance Code Chapter 348, the Office of the Consumer Credit Commissioner (OCCC) oversees the sale of certain GAP products sold with motor vehicle installment contracts: 1.Limited to debt cancellation 2.Limited to total loss or theft 3.Limited to motor vehicles Guaranteed Asset Protection How is GAP regulated?

8. Texas Department of Insurance (generally) Texas Office of the Consumer Credit Commissioner (Texas motor vehicle retail installment sales) Office of the Comptroller of the Currency (national banks and federal savings & loan institutions) Texas Department of Savings & Mortgage Lending (Texas state savings associations) National Credit Union Administration (federal credit unions) Texas Department of Banking (Texas state-chartered banks) Texas Credit Union Department (Texas state credit unions) BENEFIT TYPE DIRECT PAYMENTDEBT CANCELLATION How is GAP regulated in Texas? Guaranteed Asset Protection (generally)

9. Texas Department of Insurance Position Statement Example GAP multi-agency solution: Guaranteed Asset Protection

10. 1.Subtle differences can have a profound effect on multi-agency problems. 2.“Answers” to multi-agency problems likely have important limitations. 3.Try to be understanding of the goals and limitations of each party involved in a multi-agency problem. GAP Takeaways: Guaranteed Asset Protection