The New Legislative Landscape and Beyond

1. The New Legislative Landscape and Beyond FIRMA New Orleans, LA April 27, 2009 Sally Miller 202-663-5325 smiller@aba.com

2. Emergency Economic Stabilization Act • $700 Billion to purchase troubled assets (Troubled Assets Relief Program) • $150 Billion in tax cut extensions

3. Emergency Economic Stabilization Act • Fannie Mae/Freddie Mac losses treated as ordinary losses for tax purposes • FDIC insurance coverage for interest bearing accounts raised to $250,000

4. Emergency Economic Stabilization Act • Charitable IRAs • One-year AMT patch • Cost basis reporting

5. Other Emergency Measures • PPIP • TGLP • TALF • MMIFF • Common/ Collective Funds

6. FDIC Insurance • Premiums- 12-16 bps • Special Assessment- 10-20 bps • Impact on deposit insurance levels • Sweep disclosures

7. American Recovery and Reinvestment Act • Executive Compensation • Bonuses/ Clawbacks • Golden Parachutes • Say on Pay

8. Accounting • Mark-to Market • OTTI

9. Market Issues • Naked Short Selling/Uptick Rule • Credit Rating Agencies • Commodities

10. Safety of Trust and Custody Assets • Segregated from bank assets • Custody assets on trust system: same • Deposit instruments of trustee bank, collateralized over insured amount

11. Safety of Managed Assets • Supervision/Examination • Segregation of Duties • Recordkeeping • Audit

12. Regulatory Restructuring • Systemic Regulator • Resolution Process for Non-Banks • GAPs • Regulatory Groups • Credit Default Swaps • Hedge Funds

13. Trust and Wealth Management Issues • Tax • Employee Benefit • Securities

14. Deductibility of investment advisory fees • Section 67(e)(1) exception to 2% floor: “costs which are paid or incurred in connection with the administration of the estate or trust and which would not have been incurred if the property were not held in such trust or estate.”

15. IRS Proposal • IRS Proposal: Only costs that are “unique” are fully deductible; “unique” if an individual could not have incurred the cost in connection with property held in trust/estate, e.g., accountings, fiduciary income tax filings, estate tax returns, beneficiary communications, will or trust contests or constructions, fiduciary bonds.

16. IRS Proposal • Non-unique: custody, management, investment advice, gift tax returns, and property management, thus subject to 2% floor. • Unbundling of trustee fees required under proposal to identify unique/non-unique portions.

17. Supreme Court Decision • Supreme Court decision: Investment advisory fees subject to 2% floor of Section 67(e). • Rejected taxpayer argument. • Impact on IRS proposal?

18. Practical Considerations • Practical Considerations as a result of Knight decision: • Knight does not require unbundling of trustee fees for 2008 tax year. • Impact on income beneficiaries • Next Steps

19. Cost-basis Reporting • Require brokers to report adjusted cost basis, and acquisition or disposition dates • Equity 1/1/11 • Mutual Funds: 1/1/12 • Debt: 1/1/13 • Treasury to issue proposed regulations

20. Estate Tax Reform • Economic Growth and Tax Reconciliation Act of 2001 (EGTRA) • Complete repeal of estate tax in 2010 with carryover basis; • Reverts in 2011 to a 55% tax rate on that portion of an estate exceeding $1 million with step-up basis.

21. Estate Tax Reform • Administration Proposal – freezes in 2009 form - $3.5 million exemption; top tax rate of 45% • Retroactivity?

22. Tax Filing For Trusts • Auto. filing extension for K-1: currently 10/15 • IRS Regulations: shorten to 9/15 • Possible compromise 9/30

23. Employee Benefit Issues • Fee disclosure • Collective fund education • Investment advice

24. Employee Benefit Issues • Defined benefit funding • Required minimum distributions • Target date funds

25. Call Report Changes • Confidential treatment eliminated • Fiduciary Income, Expense & Loss Data • Effective 3/31/09 • Other changes- 12/31/09

26. Questions?