1. FIRMA Training Conference Anniversary Washington, D.C. Regulatory & Legislative Update Sally Miller ABA smiller@aba.com (202) 663-5325

2. April 10, 2006 2 Mutual Funds Bank Brokerage Tax Pension Issues Other

3. April 10, 2006 3 Mutual Funds Market Timing Late Trading

4. April 10, 2006 4 Market Timing What is it? SEC response –Not mandatory –Up to 2% fee –Turnaround of 7 or more –Calendar days Compliance Date – 10/16/06

5. April 10, 2006 5 Rule 22c-2 Fund required to have signed agreement with financial intermediary Financial intermediary –Bank that holds securities of record in nominee name –Participant directed employee benefit plan: retirement plan administrator or any entity that maintains plan records

6. April 10, 2006 6 Model Contracts ICI/SIASPARK Both negotiable

7. April 10, 2006 7 SEC 2/28/06 Guidance Small intermediaries Intermediary chains Privacy issues/shareholder committees

8. April 10, 2006 8 Inform customers? Defined benefit plans/charitable foundations Name of investment professional

9. April 10, 2006 9 Late Trading SEC proposes “Hard 4” ABA/others object ABA/SPARK alternative –Fraud proof/time-stamping orders –Annual certifications –Annual audit –Supervisory oversight SEC is considering alternative

10. April 10, 2006 10 Collective Funds Operational controls to monitor: –Admissions and withdrawals to deter opportunities to engage in late trading –Compliance with collective investment fund plan provisions regarding market timing

11. April 10, 2006 11 Soft Dollars

12. April 10, 2006 12 Gramm-Leach Bliley Act Implementation of Title II/Push-out provisions Loss of blanket exemption from brokerage registration

13. April 10, 2006 13 Trust and fiduciary Custody Dual employee/compensation issues

14. April 10, 2006 14 Trust and Fiduciary How do bank trust departments get paid? SEC focus –12b-1 fees –Transaction fees –Measure on an account-by-account level

15. April 10, 2006 15 Custody Prohibition on order-taking Industry position –Non-negotiable –Limits: Flat, securities movement fee Advertising

16. April 10, 2006 16 Compensation Commercial side of house: institutional and retail Nominal, one-time referral fee Impact on bonus plans

17. April 10, 2006 17 Dual Employee Fix for compensation issues Host of other problems What are other banks doing?

18. April 10, 2006 18 Status Broad opposition Delayed until 9/30/06 Bank industry: new proposal needed

19. April 10, 2006 19 Estate Tax Phase-out by 2010 Repeal but carryover basis 2011, reverts to $1 million exemption (2002 level)

20. April 10, 2006 20 Congressional Response House – complete and permanent repeal –Carryover basis Senate – compromise –$5 million exemption/15% tax rate –Step-up in basis

21. April 10, 2006 21 Other Tax Issues Tax free contributions to charity from IRA Type III supporting organizations Dividend and capital gains tax rates

22. April 10, 2006 22 Pension Issues 2001 Tax Act – Permanency –Deferral amounts: $15,000/$5,000 –Roth 401(k) –Portability –Catch-up provisions

23. April 10, 2006 23 Other Pension Issues Investment advice Automatic enrollment Cash balance plans Prohibited transaction relief

24. April 10, 2006 24 Taft-Hartley Plans LM-10 reporting requirements Bank exception

25. April 10, 2006 25 Other FDIC insurance coverage –Raised to $250,000 –Collateral requirements Entitlement Commission HSAs

26. April 10, 2006 26 CONCLUSION